Gov. Dannel P. Malloy’s efforts to reduce the state’s workforce are progressing more slowly than originally planned — an issue that could worsen a likely deficit this fiscal year and pose a bigger threat to finances after July 1.
As of June 1, 693 Executive Branch workers and 239 in the Judicial Branch have received layoff notices, a total of 932. That’s only about half of the 1,900-to-2,000 layoffs the governor said two months ago that he anticipated being ordered by June 10.
The reason for hitting that deadline, administration officials said, was to enable the state to reap the savings starting with the final two pay periods of the 2015-16 fiscal year, which ends June 30.
The administration, which began serving pink slips on April 11, would not commit Wednesday to hitting its target, nor did it discuss why fewer than half the planned layoffs had been achieved.
“Adjustments to agency operations and staffing levels based on the budget now on the governor’s desk are ongoing,” Gian-Carl Casa, spokesman for Malloy’s budget office, said.
Budget counts on big labor savings
But the fiscal implications of reducing the state workforce — and of not doing so — are huge.
According to the legislature’s nonpartisan Office of Fiscal Analysis, just under 2,000 layoffs would save $133 million per year.
The new $19.76 billion budget Malloy and legislators crafted for 2016-17 cut $255 million from departmental salary accounts and also assumes the administration will find another $69 million in “general employee” savings.
Several legislators, including Sen. Beth Bye, D-West Hartford, co-chair of the Appropriations Committee, conceded this budget assumes more in labor savings than the administration’s layoff plan would provide — even if all layoffs are achieved.
If the labor savings are not in place, the new budget could be out of balance significantly before the fiscal year even begins.
The Malloy administration also assumed having the layoffs resolved by mid-June would enable the state to save $6 million before June 30.
Connecticut already appears headed to finish its second consecutive fiscal year with a deficit. Comptroller Kevin P. Lembo projected a $259 million deficit Wednesday for the fiscal year that ends in one month.
Legislators and administration officials have said that shortfall probably would be resolved by drawing upon the state’s emergency reserve, which holds $406 million.
Connecticut also tapped its rainy day fund one year ago when it closed the 2014-15 fiscal year $113.2 million in the red.
Workforce ‘cut to the bone’
Union leaders said Wednesday that the state’s workforce cannot be reduced easily because it already is strained in too many areas.
“We’ve told them that state employees, the numbers, have been cut to the bone,” Lori Pelletier, president of the Connecticut AFL-CIO said, adding any layoffs will harm services. “It’s only going to make matters worse.”
While state government employed close to 50,000 full-time workers out of its budget during good economic times in the mid-2000s, the total under Malloy has fallen closer to 45,000.
And the new budget assumes it will drop by several thousand more.
“As far as I’m concerned, that’s more than 900 layoffs too many,” Larry Dorman, spokesman for Council 4 of the American Federation of State, County and Municipal Employees — the single-largest state employee union — said of the pink slips issued to date.
Connecticut’s Department of Children and Families, which is responsible for the care of thousands of neglected or otherwise abused children, has been under the eye of a federal court monitor since 1991.
The monitor provided state officials in January with data showing unreasonable caseloads for social workers and excessive wait lists for services such as domestic violence and substance abuse treatment.
The Department of Social Services faced two federal class-action lawsuits in recent years alleging that it had failed to meet federal timeliness standards for processing applications for Medicaid and the Supplemental Nutrition Assistance Program – the program formerly known as food stamps.
The Department of Transportation has just over 3,000 full-time employees. That’s about the same level it had six years ago when the legislature’s Program Review and Investigations Committee concluded it lacked adequate staff to complete projects on time and under budget.
According to the last monthly report from state Treasurer Denise L. Nappier, Connecticut has more than $3.2 billion in approved transportation bonding that it still has not issued and spent — nearly double the $1.7 billion backlog that existed when Malloy first took office in January 2011. Transportation advocates attribute that backlog, in part, to a lack of transportation planning staff, which translates into an inability to launch projects in a timely fashion.
Judicial Branch hit hard
And while the Judicial Branch is undergoing layoffs, Judge Patrick L. Carroll III, the chief court administrator, warned legislators earlier this year that budget cuts could leave the branch unable to meet all of its constitutional obligations.
There’s another legal factor that also makes it difficult to shrink state government’s workforce. Many of the larger unions have contract language prohibiting layoffs if they are being done to privatize services.
“The governor and the legislature know there are better solutions than cutting vital services,” Dorman said, adding that one “better solution” would have been for the state not to commit $22 million to assist Bridgewater Associates, one of the nation’s largest hedge funds, with an expansion project.
Malloy defended the assistance approved last week by the State Bond Commission, noting that the Westport-based hedge fund will invest $505 million to expand facilities in three locations, helping to sustain 1,400 financial services industry jobs and to create 750 more.
State employee unions, which agreed to concessions in 2009 and 2011, refused to grant them this year, saying the governor and legislators instead should raise taxes on wealthy households and on corporations.