***UPDATED BELOW***

WASHINGTON -- Budget referees and transportation officials in Wisconsin have informed Gov. Scott Walker (R) that if he were to pass his controversial anti-union legislation into law, he could be forfeiting tens of millions of dollars in federal funds for transportation.

Under an obscure provision of federal labor law, states risk losing federal funds should they eliminate "collective bargaining rights" that existed at the time when federal assistance was first granted. The provision, known as "protective arrangements" or "Section 13C arrangements," is meant as a means of cushioning union (and even some non-union) members who, while working on local projects, are affected by federal grants.

It also could potentially hamstring governors like Walker who want dramatic changes to labor laws in their states. Wisconsin received $74 million in federal transit funds this fiscal year. Of that, $46.6 million would be put at risk should the collective-bargaining bill come to pass -- in the process creating an even more difficult fiscal situation than the one that, ostensibly, compelled Walker to push the legislation in the first place.

The governor is certainly aware of this. While the potential loss of funds may have escaped the attention of many observers, sources familiar with the state's transportation policy tell The Huffington Post that Walker's office has been informed of the relevant legal language. Moreover, in an a nearly unnoticed report filed by the state's Legislative Fiscal Bureau, the non-partisan budget scorekeeper, the stakes are laid fairly bare.

"According to information from the U.S. Department of Labor, the proposed changes in collective bargaining rights included under SS SB 11 could impact the ability of unionized transit systems in the state to receive existing federal transit aid, unless actions are taken to protect the collective bargaining rights of their employees," the memo reads. "If the federal Department of Labor makes the determination that the changes under SS SB 11 affect the continuation of collective bargaining rights, and protections of transit employee's wages, working conditions, pension benefits, seniority, vacation, sick and personal leave, travel passes, and other conditions of employment, the Federal Transit Authority could not provide federal transit funding under there provisions." (See the full document below.)

A call to Walker's press shop was not immediately returned. A local report said that the governor's office felt SB11 would meet all the requirements necessary to continue receiving federal aid, though their reasoning isn't entirely clear. The state could conceivably void the projects that were dependent on the federal money. It could also try to privatize those projects.

Another option would be to petition the Department of Labor to grant a pass for the changes in collective-bargaining laws in state; that, however, would be dependent on a Democratic administration being willing to, more or less, turn a blind eye on the measure aimed at unions. The Department of Labor cannot force states to adopt collective bargaining agreements for transit workers by withholding federal funds for transit projects. But it can exert its influence on those states that seek to eliminate them.

As the Legislative Fiscal Bureau notes: "at the time of application for federal funding, each applicant has to certify that the 13 (c) collective bargaining provisions have been met. [The Federal Transit Authority] than provides certifications to the U.S. Department of Labor for their review and for public comment."

Officials from the Department of Transportation, which oversees the FTA, refused to comment for this article. Officials at the Department of Labor did not immediately return a request for comment.

***UPDATE 2/23***

Faced with the prospects of forfeiting $46.6 million in federal transit funds, Democrats in the Wisconsin House of Representatives have crafted an amendment to Gov. Scott Walker's anti-public union bill that would protect collective bargaining rights strictly for transit workers.



The amendment, authored by Reps. Tamara Grigsby (D-Milwaukee) and Penny Bernard Schaber (D-Appleton), would add transit employees to the list of "public safety employees" that are exempted from some of the harsher measures under Walker's bill.



While protecting the rights of only a small sliver of the union members -- Grigsby's office said she "would much rather maintain employee rights for all" -- the amendment could, nevertheless, be worth tens of millions of dollars for the state. As the Huffington Post reported on Tuesday night, Wisconsin stands to lose nearly all federal transit funds if it were to wipe out the collective bargaining rights of transit workers.



"We are here to do the right thing," said Grigsby in a statement announcing her amendment. "CEO Walker's bill is an attack on Wisconsin's working families and a poorly thought-out one at that. Currently, this bill will cost the state almost $47 million in federal transit aid, something I hope is an unintended consequence of this legislation. What we're proposing today is a way to preserve our vital transit systems."