Rell pitches retirement incentive plan in meeting with legislative leaders

Gov. M. Jodi Rell Monday signed on to an idea proposed by legislative Republicans last week to offer another round of retirement incentives to state employees.

The Republican governor confirmed late Monday that an early retirement incentive program–the second in two years– was among a package of budget-cutting options she outlined in closed-door talks earlier in the day with legislative leaders.

But a spokesman for state government’s unionized employees said late Monday that a second program would harm vital services by shrinking an already thin workforce, and would be unacceptable to the unions.

Though Rell did not disclose specific details in her proposal, legislative leaders said she also discussed reducing the state’s contribution to the worker pension fund for a third consecutive year as part of an overall plan to eliminate a $725.7 million deficit in the preliminary, $18.93 billion budget for the 2010-11 fiscal year.

Following a one-hour meeting with top Democrats and Republicans from the House and Senate, Rell said most of the proposals she outlined in private were “things that we’ve seen before in one fashion or another.”

One of those things involves new incentives to further shrink state government’s more than 50,000-member workforce.

Rell and the legislature agreed in November 2008 to launch an incentive program in mid-2009 designed to save $106 million this fiscal year, and $102 million in 2010-11. Just over 3,800 employees took advantage of this program. Numbers are still being compiled to determine how many state government positions vacated through this program have since been refilled.

The Republican minorities in the House and Senate suggested late last week that a second incentive program be offered later this spring. And unlike the 2009 version, it should be aimed at both workers currently eligible to retire, and some who are just a few years of experience short of eligibility. Republican legislators estimated that about 2,000 workers would participate in the program as they designed it, and about half of the vacated posts would be refilled with less-experienced, lower-paid workers. That would save the state about $64 million per year.

Legislative leaders said following Monday’s meeting with Rell that the governor’s retirement incentive proposal also was aimed at both eligible and near-eligible workers, and would save between $60 million and $70 million per year.

Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn, and House Speaker Christopher G. Donovan, D-Meriden, said they would review the early retirement incentive plan and Rell’s other suggestions to cut costs.

“I don’t think that anything’s been ruled out at this point,” Williams said.

The 2009 incentive program was implemented after the governor and the State Employees Bargaining Agent Coalition agreed on a concession package originally worth nearly $702 million in total spread across three fiscal years.

But SEBAC spokesman Larry Dorman said Rell and lawmakers should be focusing this year on proposals that create jobs, expand the economy and preserve vital state services.

“State public service workers are already struggling to deliver important services to the citizens of Connecticut,” Dorman said. “What we don’t need is another mass exodus of employees. That’s just going to make the economy worse, not better. We are not going to be a party to ideas that make the economy worse.”

Another component of the 2009 concession package reduced state contributions to the workers’ pension and retirement health care funds by $129 million total across this fiscal year and next. The benefits the state must pay out were not scaled back, only the amount government must deposit into the savings accounts now. That means the state eventually will have to come up with the money to fund these retiree benefits.

The concession deal also allows the governor to reduce payments by another $100 million, both this fiscal year and next, if state government falls into deficit.

Rell already has exercised the state’s option to reduce its 2009-10 payment by another $100 million, and legislative leaders said she discussed cutting next year’s payment by $100 million as well.

This would put Rell at odds with her own party. Senate Minority Leader John McKinney, R-Fairfield, said that Republican lawmakers in both chambers believe the pension and retirement health care accounts already are badly under-funded, and other cost-cutting steps should be taken to close the $725.7 million deficit that legislative analysts are forecasting for next fiscal year.

Dorman added that while the governor has plenty of ideas for reducing labor costs, “that just won’t work. She clearly doesn’t want to develop the revenue solutions that are necessary to pull us out of the difficult times we are in.”

Rell confirmed she didn’t propose any tax hikes during her meeting.

Democrats, who hold large majorities in the House and Senate, have proposed increasing the tax on multi-million-dollar estates. They also recommended a 5.5 percent levy on gross hospital revenues as part of a scheme to leverage $103 million in additional federal Medicaid funds for Connecticut.

Williams and Donovan said that while tax hikes weren’t discussed Monday, that doesn’t mean they would not be on the table in the near future.