State government has a history of offering early retirement incentives to get out of its fiscal messes, but that’s not a lock to happen in 2011 if Gov.-elect Dan Malloy’s comments Tuesday were any indication.
Asked about recent comments from state legislators that more retirement incentives could be on tap after he takes office in January, Malloy, while cautious not to rule anything out, made it clear they aren’t his preference.
“I wouldn’t hold my breath on that one,” he said.
The governor-elect was critical during the past fall’s campaign of the fiscal gimmicks employed both by Gov. M. Jodi Rell and the last legislature to balance state finances without tax hikes or spending cuts.
Malloy stands to inherit a $3.67 billion shortfall built into the next state budget, a gap equal to nearly one-fifth of all current spending.
Though popular among workers, these incentive programs have been criticized by economists, some union leaders and others for providing illusory savings, offering a short-term reduction in salary costs that eventually is offset by larger, long-term losses suffered by a pension savings account robbed of investment earnings.
State government has offered five retirement incentive programs in the past two decades, providing them in 1989, 1992, 1997, 2003 and 2009.
The State Employees Bargaining Agent Coalition blocked Rell’s efforts in April to offer another incentive program in 2010, arguing the pension fund was too weak. The fund now holds less than 45 percent of the funds its needs to meet obligations to workers, its lowest point in more than two decades.
“We pointed out how years of hiring freezes and the loss of nearly 4,000 veteran state workers in 2009 created shortfalls in staffing for vital public safety, education, and health services,” SEBAC spokesman Matt O’Connor said, praising Malloy for staying consistent with his campaign message. “We also made clear that another (early retirement incentive program) would blow a hole in the state’s pension plan.”
The unions want to meet with Malloy to consider several proposals to improve government efficiency and stabilize retirement benefits, including offering incentives to get senior workers to delay retirement and postpone drawing pension benefits.