Moody's Investment Services has placed 15 California transit agencies under review for a downgrade due to a potential lack of federal funding.
The transit agencies have and will continue to lose federal grants unless California can negotiate pension benefits with its transit workers.
The 2012 California Public Employees Pension Reform Act increased employee pension contributions along with an increase to the retirement age, among other things. Unions representing the transit employees have protested the law, invoking the Federal Transit Act, which allows the Department of Labor to withhold federal transit funding if it appears that collective bargaining rights are obstructed.
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Last November, the department withheld $1.6 billion in federal transit funds. Should the issue continue, California stands to loose another $1.5 billion for 2013. Los Angeles County Metro transit district alone estimates it stands to lose $3 billion in funding in the next few years should the issue go unresolved. To date, seven transit agencies have been denied federal funds. Moody's review applies to all 15 districts that would be impacted in 2013.
The districts affected include the Los Angeles County Metro transit authority, San Francisco's Bay Area Rapid Transit district, and Alameda-Contra Costa transit district. Altogether, the agencies under Moody's review represent almost $6.5 billion in rated debt.
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