California governor to seek to block San Francisco rail strike

Reuters News
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Posted: Aug 09, 2013 8:21 PM

By Laila Kearney and Jim Christie

SAN FRANCISCO (Reuters) - California's governor said on Friday he would seek a court order for a two-month cooling off period to avert a threatened San Francisco-area rail strike, unless a deal could be quickly reached to prevent a walkout that could cripple the rush-hour commute as early as Monday.

Democratic Governor Jerry Brown's move came as managers for the rail system, dubbed BART, and its unions were still tens of millions of dollars apart on contract terms despite several months of negotiations.

"I urge all parties to think of the public and resolve this matter without delay, but if there's no resolution by Sunday, I will seek a 60-day cooling-off period," Brown said in a statement.

Brown temporarily blocked a strike last week to avert what would have been the second walkout this summer. A strike on Monday would cause rush-hour traffic chaos in the state's second-largest metropolitan area.

BART's management said on Wednesday it could take two months to reach a contract, while unions said they could settle by Sunday. A negotiator for one of BART's unions has said a strike notice on Friday remained an option.

"In the event that negotiations fail, we may issue a 48-hour notice," Josie Mooney of SEIU 1021 said in a statement on Thursday. The sides had yet to emerge from talks on Friday.

Brown said that a panel he appointed to investigate the labor dispute had determined that a strike would cause "significant harm to the public's health, safety and welfare."

Brown said if the two sides fail to resolve their dispute over the weekend, he would seek an order on Sunday morning from the San Francisco Superior Court to block a strike.

If granted, the order would keep about 2,600 BART employees on the job and keep the trains that carry 400,000 riders a day running for at least 60 days.

BART's unions shut the system down last month for four and a half days, forcing passengers to work from home, drive, carpool or crowd onto a limited number of buses and ferries for prolonged, frustrating commutes.

"It's simply not possible to replace BART should another strike occur," BART General Manager Grace Crunican said.

BART management have said they offered workers a 9 percent pay raise over four years. The unions said they want raises of 5 percent per year over three years and that additional pay increases would be needed to offset higher benefit contributions workers are being asked to take on.

BIGGER SHARE OF BENEFIT EXPENSES

BART managers also want employees to pay 5 percent of their pay toward pensions, to which workers currently do not contribute. The move by BART is in line with trends across the nation, with public-sector employees being required to pay more toward pension and other benefits.

Unions said they were $56 million apart from management on contract terms over three years; BART management pegged the gap over the same period at $62 million.

BART management says the average employee gets an annual salary of $79,500 plus $50,800 in benefits, and it is concerned the cost of benefits will continue to climb after increasing by nearly 200 percent in 10 years.

"We're trying to play catch-up," BART spokeswoman Alicia Trost said.

Union representatives peg salaries of BART workers at $64,000 on average, saying that management's figures included higher salaries for managers.

"We are not ashamed to be bargaining to defend a middle-class wage and benefit package," union attorney Vincent Harrington said.

Rating agencies are looking past the dispute. Moody's Investors Service's analyst Eric Hoffmann said BART finances can withstand a strike of moderate length. Moody's rates the district's general obligation debt Aaa.

Standard & Poor's rates the district's general obligation bonds AAA with a stable outlook. Although BART would lose fare revenue during a strike, funds for paying general obligation and revenue bond debt would not be directly affected, S&P analyst Alda Mostofi said.

BART has about $411 million in outstanding general obligation bonds backed by a property tax and approximately $742 million in outstanding debt backed by sales taxes and fares.

BART, which has an annual budget of $1.5 billion, gets about $215 million a year from sales-tax revenue, which more than covers its $53 million annual debt service on its revenue bonds.

Fitch Ratings has an AA rating on the district's most recent sales tax revenue bonds and rates its general obligation bonds AA-plus. "We describe (the district) as having a solid financial profile," said Fitch analyst Matt Reilly.

(Writing by Jim Christie; Reporting by Laila Kearney; Editing by Cynthia Johnston and Eric Walsh)