Malloy mum on plans if bargaining units again reject pay freeze

EAST HARTFORD–Gov. Dannel P. Malloy declined to say Wednesday whether he would consider layoffs only to cover the cost of raises for unionized workers who refuse a wage freeze, or to help fill other holes in the state budget.

“I prefer to hope that they are all going to pass the agreement and that that’s not an issue,” Malloy told reporters after a mid-day meeting with business leaders at the Connecticut Center for Advanced Technology. “Clearly we need to get to a level of efficiency… I have spoken about my desire to do that over time versus overnight, but if I’m required to do it overnight, then we’ll do it.”

Because of a change in union bylaws, Malloy could receive the bulk of the $1.6 billion savings sought in the concession deal and still have options to lay off thousands of workers–a scenario that could happen if bargaining units that rejected wage givebacks one month ago do so again.

But while those rejections also sunk the overall concession deal under the old rules, they wouldn’t be enough to do so under the new one. And Malloy then could consider layoffs for any bargaining units that won’t forfeit a 2.5 percent raise this year.

In that event, would Malloy consider layoffs only to cover the cost of providing those raises, or would he use that flexibility to cover any other holes that spring up in the state budget?

“This is a comprehensive approach that we need to take, so giving an answer assuming one set of facts which are not proven doesn’t make a whole lot of sense,” the governor said, adding he’s hopeful workers will realize the concession deal takes several steps to secure quality wages, health care, pension and other retirement benefits over the long-term. “I understand it requires some short-term sacrifice. I presume that at some point people are going to look at the long-term.

Malloy, who has said the vast majority of the 3,600 layoffs he announced in a July 15 report to lawmakers would be canceled if the concession deal is adopted, insisted Wednesday that remains correct.

“It is the whole truth–if it’s passed,” he said. “I’m going to presume that we make progress and people see this agreement for what it is, which is stability, a guarantee of a job.”

The overall concessions package, which includes a two-year wage freeze, a new employee wellness program, restrictions on pension and other retirement benefits, and labor-management initiatives to cut spending in several areas, is supposed to save $700 million this year and $900 million in 2012-13.

The agreement also calls for annual raises of 3 percent in each of the three years following 2012-13, while the state’s health care and retirement benefit system–which expires in 2017–would be extended through 2022.

All of the changes except those involving the wage freeze will be decided by a vote of the State Employee Bargaining Agent Coalition’s 15 member unions. If at least eight of the 15 vote for the deal, and if those eight represent at least a bare majority of the membership, then all non-wage concessions are approved. The threshold for passage was much higher before the rules were changed, requiring 14 out of 15 unions and 80 percent of the rank-and-file membership to support ratification.

But if the other concessions are approved, the salary freeze is determined below the union level, with each of state government’s 34 bargaining units determining separately. Those that accept the freeze also receive a four-year guarantee against layoffs. Those that take their 2.5 percent raise, do not.

In last month’s vote, eight bargaining units representing 17,300 workers rejected the freeze.

The administration has other cost-cutting goals it must achieve besides the savings built into the concession plan. The legislature built about $130 million in undefined savings targets into this year’s $20.14 billion state budget.

That plan also lies just $1 million below the constitutional spending cap, and state agencies routinely face over $100 million in combined cost overruns each year. General Fund spending for the fiscal year that ended June 30 ran $199 million over budget.

If agency budget exceed their limits again in 2010-11, Malloy would either need to find savings elsewhere or seek legislative permission to exceed the spending cap.

“Right now, the coalition and all of its constituent unions are focused on getting accurate and relevant information about the revised tentative agreement out to their members,” SEBAC spokesman Matt O’Connor said Tuesday. “So much is at stake right now, we can’t afford to lose sight of what really matters. Thousands of state workers have already received layoff notices and thousands more will be unemployed without an agreement.