By Keith M. Phaneuf
September
2, 2011 Ctmirror.org
While talk of a double-dip
recession arose again Friday amid gloomy national job numbers, Gov. Dannel P.
Malloy's administration remained optimistic new union concessions will keep
labor costs affordable--even though the package lacks an out-clause to cope
with fiscal emergencies.
While talk of a double-dip
recession arose again Friday amid gloomy national job numbers, Gov. Dannel P. Malloy's administration remained optimistic new
union concessions will keep labor costs affordable--even though the package
lacks an out-clause to cope with fiscal emergencies.
The lack of any such provision,
coupled with a four-year prohibition against layoffs for most unionized state
employees, led minority Republican lawmakers to predict the Democratic
governor's deal will sink state finances if Connecticut's recovery from the
last recession is anything but robust.
"I'm pretty confident that
the steps we've taken will allow us to sustain balance over a long period of
time," Malloy's budget director, Office of Policy and
Management Secretary Benjamin Barnes said.
The administration estimates
the deal ratified last month by
the State Employees Bargaining Agent Coalition will save close to $700 million this fiscal
year and $900 million in 2012-13. Besides a two-year wage freeze for most
bargaining units, the deal also calls for a new employee wellness plan, new
limits on health care, pension and other retirement benefits, and joint labor-management
panels to find $170 million per year in efficiencies in health care, technology
and other state programs.
In exchange, most unionized
workers cannot be laid off through the 2014-15 fiscal year, and those who
accepted the wage freeze through 2012-13 will receive 3 percent annual hikes in
each of the three fiscal years after that.
One big difference between this
package and the 2009 concession deal negotiated
by then-Gov. M. Jodi Rell is the lack of any clause
allowing for additional cost-saving measures if state revenues fall below a
threshold level, or if the budget reaches a certain deficit level.
"It leaves us exposed for
incredible hardship should the economy fail to recover robustly," said
Sen. Andrew W. Roraback of Goshen, ranking GOP
senator on the Finance, Revenue and Bonding Committee. "Rather than
planning for the worst and hoping for the best, we have planned for the best
and have no game plan should we encounter the worst."
The national economy created a
net total of no new jobs in August, the U.S.
Bureau of Labor Statistics reported Friday, keeping the national unemployment
rate at 9.1 percent--the same as Connecticut's
current jobless rate.
The $20.14 billion budget
adopted for the current year was designed to run about $90 million in the
black. But Malloy has committed to spend $75 million of that projected surplus
to begin the process of converting state finances to Generally Accepted
Accounting Principles. A series of budgetary guidelines designed to promote
transparency and accountability, GAAP rules essentially require government
entities to have sufficient funds on hand before they incur new expenses--a
standard Connecticut
never has followed entirely throughout its history.
But Barnes said even though the
concession deal lacks an escape clause, that doesn't mean the administration
hasn't positioned itself to respond in the event the national economy slips, or
if federal deficit-cutting attempts lead to reduced state aid from Washington.
The administration has been
cautious in filling vacant posts since Malloy took office in January, and there
are roughly 2,500 unfilled jobs right now, Barnes said, adding more than 1,000
likely will remain unfilled as the fiscal year that began July 1 continues to
progress. "There's a large amount of vacancy right now and we certainly
feel we have some more flexibility there," he said.
Malloy won legislative approval
this past spring for a consolidation plan that eliminated more than 60 posts
and consolidated just over 80 departments, agencies, boards and commissions
down to 57.
The governor has said
repeatedly that he isn't finished looking for ways to shrink state government.
And Barnes said that even though downsizing proceeds more slowly without
layoffs, his office already is investigating more consolidations as it begins
advance preparations this month for the 2012-13 budget plan it must present to
the legislature in February.
"We're going to push to
see more consolidations and restructuring," he said.
Both the administration and
union leaders have said they are optimistic that the three joint efficiency
initiatives can produce major savings -- a prospect GOP lawmakers have been
openly skeptical about.
"I'm an employee too, so
I've made some suggestions." Barnes said, adding that while the concession
deal charges these labor-management panels with finding savings this fiscal
year and next, there is no reason the efficiency groups can't keep working to
trim government longer than that.
"The revised agreement just
ratified by the members of our unions and approved by the General Assembly
creates a process for putting cost-savings recommendations from front-line
workers to work," SEBAC spokesman Matt O'Connor said. He added that this
effort is long overdue and that workers have been waiting for years to outline
cost-saving ideas that past administrations did not want to discuss.
The unions also have noted that
the emergency trigger in the 2009 deal wasn't a great boon to the state's
finances. It allowed Rell to raid an additional $200
million from the state employee pension fund, further weakening an already
under-funded account and contributing to the Malloy administration's decision
to tighten pension benefits in the new concession deal.
"When we sat back down with
Governor Rell's representatives in 2010, they refused
to consider anything other than another early retirement incentive
(program,) which we opposed because of the negative impact it would have
on the state pension fund," O'Connor added.
The administration does have
the option to lay off state police troopers and prison guard supervisors, whose
bargaining units rejected the wage freeze. But those units represent fewer than
1,600 members combined out of roughly 45,000 unionized employees across all
state government, and the administration already has laid
off more than 75 from those two units.
But Barnes noted that the
agreement does allow the administration to lay off new unionized employees
hired after July 1, 2011 -- and that could potentially represent several
thousand workers by the fourth and final fiscal year of the no-layoff rule in
2014-15.
House Minority Leader Lawrence
F. Cafero, R-Norwalk, however, said that
doesn't change the fact that state government is committed to raising most
workers' salaries by 9 percent over the next five years.
"We're locked into paying
these raises and keeping these employees," he said, adding that there's a
good chance any federal deficit-cutting effort will slash state aid, which
would only compound Connecticut's problems if the economy is sliding downward
again. "We do not have the option of letting most of these people go. Once
that deal was signed, we were stuck."
And with state employee
salaries and benefits--which represent about 30 percent of the annual operating
budget -- effectively off the table for four fiscal years--Republicans said
state government likely would go back to the taxpayers for another big hit.
"Our options are all but
limited to this," Cafero said
http://ctmirror.org/story/13805/concession-deal-lacks-emergency-safeguards-if-economy-slumps