Cutting Off Your Nose To Spite Your Face? How Ending Collective Bargaining in Wisconsin and Beyond Could Damage Federal Transit Assistance.

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Dramatic events unfold at state legislative levels, as governors and legislators debate how best to achieve a level of budget balance. Competing demands, often based on political outlooks, drive legislative agendas. Stark conclusions have been reached in the state of Wisconsin, with Ohio and others close behind. There, the Republican legislature voted to greatly reduce, and for some categories eliminate, the collective bargaining rights of public employee unions. Absent this result, governors claim that massive layoffs of public employees will follow.

Yet the important budget issues and decisions are not without important economic pitfalls, which may not be readily apparent. Based on an inquiry from the Wisconsin Legislative Fiscal Bureau, the U.S. Department of Labor ("DOL") issued a letter, dated February 16, 2011, that raised the latent issue of a loss of federal transit funds if existing collective bargaining rights were extinguished. The impact of the DOL letter was immediate: the Appleton, Wis., area stated, in an alert, that "We need to find a solution or transit agencies in Wisconsin will lose $46.6 million in federal funding"; and in Ohio, the Cleveland Plain Dealer, in an article dated February 23, 2011, cited a potential loss of up to $171 million in federal transit money.

The Potential Federal Grant Issue

The issue identified by DOL resides in what is informally known as "Section 13(c)" collective bargaining rights, established under the Federal Transit Act. Essentially, as DOL stated, "Section 13(c) requires governing bodies to continue 'collective bargaining rights' that existed at the time of the initial influx of Federal assistance." The Federal Transit Administration ("FTA") cannot release grant funds until the DOL reviews and approves the protective collective bargaining rights arrangements when federal monies are to be used to "acquire, improve, or operate a transit system." The proposed Wisconsin legislative plan, and the proposed plans of other states, do not currently make provision to protect transit employees' collective bargaining rights (which the state does protect for police and fire employees).

Please see full Alert below for further information.

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