San Francisco faces possible new rail strike; governor could step in

Reuters News
Posted: Aug 09, 2013 6:28 PM
San Francisco faces possible new rail strike; governor could step in

By Laila Kearney and Jim Christie

SAN FRANCISCO (Reuters) - San Francisco area commuter rail workers were threatening to strike again, saying they could stop work as early as Monday unless a deal with management can be reached or California's governor steps in to intervene, with the sides still tens of millions of dollars apart on contract terms.

Governor Jerry Brown temporarily blocked a strike last week and is weighing whether to seek a court order for a "cooling off" period by Sunday to again avert what would be a second walkout this summer. A strike on Monday would hit rush-hour, causing traffic chaos in the state's second-largest metropolitan area.

Management for the region's rail system, dubbed BART, said 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 said a strike notice on Friday remains 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.

A notice would open the door for about 2,600 BART workers to walk off the job on Monday unless Brown intervenes to prevent a strike. A cooling-off period would ban a strike and keep the trains that carry 400,000 riders daily 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 on Wednesday told a panel appointed by Brown to investigate the dispute. Management has offered 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.

BART managers 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.

The panel Brown appointed to look into the dispute may report to him as early as Friday on its findings from Wednesday's meeting. Brown will then decide whether to seek a court injunction to block a strike.

Rating agencies are looking past the labor dispute.

Moody's Investors Service's analyst Eric Hoffmann said BART district 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.

The district, 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 and stable outlook 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 Leslie Adler)