Free Daily Headlines :

  • COVID-19
  • Vaccine Info
  • Money
  • Politics
  • Education
  • Health
  • Justice
  • More
    • Environment
    • Economic Development
    • Gaming
    • Investigations
    • Social Services
    • TRANSPORTATION
  • Opinion
    • CT Viewpoints
    • CT Artpoints
DONATE
Reflecting Connecticut’s Reality.
    COVID-19
    Vaccine Info
    Money
    Politics
    Education
    Health
    Justice
    More
    Environment
    Economic Development
    Gaming
    Investigations
    Social Services
    TRANSPORTATION
    Opinion
    CT Viewpoints
    CT Artpoints

LET�S GET SOCIAL

Show your love for great stories and out standing journalism

Union concessions still key focal point in a time of hard tradeoffs

  • Education
  • by Keith M. Phaneuf
  • December 27, 2016
  • View as "Clean Read" "Exit Clean Read"
State budget director Benjamin Barnes answers questions from members of the state Spending Cap Commission.

Claude Albert :: CTMirror.org

State budget director Benjamin Barnes in a recent appearance before the state Spending Cap Commission.

Despite approving a new deal to restructure pension costs, state employee unions remain the focal point in what’s shaping up to be a painful struggle to balance Connecticut’s next budget.

With Gov. Dannel P. Malloy’s proposal less than seven weeks away, his budget director warned that, unless unions grant further concessions, avoiding major tax hikes probably would require significant cuts to municipal aid, social services and higher education — and more layoffs.

And even with concessions, officials cannot avoid these other sensitive areas entirely, Office of Policy and Management Secretary Ben Barnes told The Mirror last week.

But labor leaders reject that argument. The way to preserve local aid, state jobs and vital services, they say, is to ask more from the wealthy and to slash robust subsidies and breaks for businesses.

“I worry about being cold-hearted when I speak to the arithmetic of budgets,” Barnes said during an interview in his Capitol Avenue office. “But at the end of the day, in our form of government, we — the Executive Branch — have to do the best with the resources we are given.”

Those resources are being strained as never before as state officials tackle retirement benefit costs surging now to make up for more than seven decades of inadequate funding.

“We are paying a lot more” to save for benefits than past governors and legislatures did, Barnes said. “We’re making big sacrifices at a time when the economy has not produced big revenue growth to make that easy.”

  • The $1.56 billion payment owed to the state employees’ pension fund next fiscal year is roughly double what Connecticut paid in 2010 — the year before Malloy became governor.
  • The $1.29 billion payment owed to the teachers’ pension next fiscal year is up 28 percent from this year, and also is more than double the 2010 contribution.
  • And the $797 million projected cost for retiree health care includes a new $120 million component to help save for future retirees’ care. The total cost next fiscal year is 51 percent higher than it was in 2010.

Each of the two pension contributions was projected to spike — possibly beyond $6 billion per year — in the early 2030s. And even with the extra $120 million contribution, Connecticut is saving less than half the funds it should to cover the retirement health care costs of current employees.

Malloy and unions reached a deal earlier this month that limits the growth in state employee pension costs over the next decade and a half by shifting at least $13.8 billion in expenses owed between now and 2032 onto a future generation.

Malloy seeking further concessions

Barnes said the administration also is pressing for more traditional union concessions.

Connecticut no longer can afford its “extraordinarily generous retiree health benefits, and if our employees wish to maintain them at that level, they are going to have to pay more, or we’re going to have to reduce the generosity of those benefits,” he said.

Senate Minority Leader Len Fasano, R-North Haven.

Kyle Constable :: CTMirror.org

Senate Minority Leader Len Fasano, R-North Haven.

“We need to come to a new agreement on how valuable the pensions are,” Barnes continued. “We need to look at COLAs (cost of living adjustments); we need to look at cost share. … We have done a lot, but we have not gone far enough on restructuring our fixed costs.”

Senate Minority Leader Len Fasano, R-North Haven, said the state employees pension restructuring was “incomplete,” and the administration should have insisted on worker sacrifices as part of that deal.

Had Malloy done so, he might have been denied the ability to restructure pensions. Any deal affecting workers’ benefits or contributions would require approval from rank-and-file union members, and not just from union leaders.

But by agreeing to an initial deal that included no sacrifice, Malloy “just lost an edge,” Fasano said, making it harder to get more from unions in a second round of talks.

Further compounding matters, nonpartisan analysts say state finances, unless adjusted, are on pace to run $1.5 billion in deficit next fiscal year, and $1.6 billion in the red in 2018-19. Both shortfalls represent about 8 percent of the General Fund.

Is there ‘low-hanging fruit’ left in the budget ?

The restructuring deal trims pension costs about $90 million next fiscal year. But, Barnes said, unless unions help lower benefit costs significantly more, areas cut deeply in the last few budgets — social services and higher education — will be back on the chopping block.

And municipal aid, which largely has been spared from the budget axe under Malloy, can be shielded no longer, Barnes said, adding that any easy-to-achieve and relatively painless budget cuts of significant value were used up years ago.

While the administration always is seeking new ways to improve efficiency, “We really cut out that low-hanging fruit,” Barnes said.

Major statutory grants to communities total about $3 billion and represent about one-sixth of the General Fund. Factor in state payments for municipal school construction and to cover teachers’ pensions, and the assistance is  roughly $5 billion this year.

Lori J. Pelletier, president of the AFL-CIO

ctmirror.org

Lori J. Pelletier, president of the AFL-CIO

A pot of money that big is impossible to ignore when the choices are severely limited by fixed costs, Barnes said. “I think we’re going to have to make some of those difficult choices,” he added, “and it’s not either or — we’re going to have to look at a lot of these things.”

S&P Global Ratings, a Wall Street credit rating agency, warned in late October that any major shift in state aid to cities and towns could harm municipalities’ ability to get affordable credit.

“S&P’s warning only serves to reinforce the importance of maintaining the state’s funding commitments to towns and cities and especially the distressed urban centers,” Kevin Maloney, spokesman for the Connecticut Conference of Municipalities, said at that time.

But labor leaders say it’s unfair to punish today’s workers because Connecticut failed to save adequately in decades past. And the state does have choices other than slashing local aid.

While part of the budget solution involves higher taxes on the wealthy, said Lori Pelletier, head of the Connecticut AFL-CIO, state officials haven’t come close to eliminating all wasteful and unnecessary spending.

“There are ways of cutting without cutting jobs, without cutting services, without hurting state employees,” she said.

Pelletier cited the millions of dollars in tax breaks and subsidies provided annually. And while many of those have value, such as the sales tax exemption on groceries, others are exemptions for businesses that are never tested or reviewed to determine if they return any economic value, she said. For example, Connecticut will waive $2.5 million in sales tax receipts to exempt winter storage of non-commercial boats.

Labor leaders also said it is difficult for state workers to be told they must sacrifice when Connecticut has provided more than $85 million in bonding and tax incentives combined to two major hedge funds this year.

And while Malloy, Barnes and many Republican legislators caution against raising taxes further on high-income households, arguing it could prompt them to flee the state, union leaders disagree.

‘Punishing labor’ instead of wealth

“The paradigm of ‘let’s not punish wealth’ — well, you didn’t,” said Sal Luciano, executive director of one of the largest unions representing state workers, Council 4 of the American Federation of State, County and Municipal Employees. “You punished labor. Connecticut is probably one of the worst states in the country when it comes to income inequality and tax fairness.”

While Connecticut boasts some of the highest per capita income in the nation, the top marginal rate on its income tax is 6.99 percent, compared with rates closer to 9 percent for New York and New Jersey.

Union leader Salvatore Luciano

Union leader Salvatore Luciano

And since 2011, Connecticut has whittled a $500 state income tax credit that helps the middle class offset property tax costs down to $200, and has eliminated a popular sales tax exemption on clothing and footwear costing less than $50.

Labor leaders also have noted neither layoffs nor concessions would be likely to provide enough savings to preserve local aid, and that further state tax hikes are unavoidable.

The 2011 concessions deal union workers negotiated with Malloy – which featured a two-year wage freeze, new restrictions on health care and retirement benefits, and an employee wellness program – produced annual savings of about $650 million, according to nonpartisan analysts. They also project the savings from about 2,000 layoffs are just over $130 million per year.

“I think we have to raise revenue at some point,” Luciano said. “I said it from the beginning.”

Defenders of Connecticut’s tax system note that New York and New Jersey’s income tax allows more deductions than Connecticut’s does. More important, Barnes said, is that Connecticut achieved prosperity in decades’ past because of the attractiveness of its tax code.

We became this Mecca for affluent people and well-educated people … partly because we were a tax haven,” he said. “People came to Greenwich because it was cheaper than living in New York (City) or in Rye, and we may have lost some of that. It’s hard to argue that that didn’t serve us very well, and I’m a liberal Democrat.”

More layoffs in the works?

So what happens if the standoff between Malloy and labor unions remains when the governor’s budget proposal is due to lawmakers on Feb. 8?

Barnes declined to disclose specifics, but warned the administration has not ruled out accelerating worker layoffs, even though it has struggled to hit downsizing targets the governor set last April.

State government has laid off nearly 1,100 workers so far this fiscal year, less than the 2,000 layoffs Malloy originally anticipated.

In part that’s because the administration has slimmed considerably through attrition since 2011. The Executive Branch, excluding higher education, employs 9.4 percent fewer workers than it did before Malloy took office.

Still, Barnes said even more labor savings — achieved one way or another — need to be part of the next biennial budget.

“That probably means elimination of some significant functions of government, and downsizing of some significant functions of government,” he said. “If we were to make widespread layoffs, it would be very disruptive,” he said. “But we may have to be very disruptive because we have to live within the means that we have.”

Sign up for CT Mirror's free daily news summary.

Free to Read. Not Free to Produce.

The Connecticut Mirror is a nonprofit newsroom. 90% of our revenue comes from people like you. If you value our reporting please consider making a donation. You'll enjoy reading CT Mirror even more knowing you helped make it happen.

YES, I'LL DONATE TODAY

ABOUT THE AUTHOR

Keith M. Phaneuf A winner of numerous journalism awards, Keith Phaneuf has been CT Mirror’s state finances reporter since it launched in 2010. The former State Capitol bureau chief for The Journal Inquirer of Manchester, Keith has spent most of 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. A former contributing writer to The New York Times, Keith is a graduate of and a former journalism instructor at the University of Connecticut.

SEE WHAT READERS SAID

RELATED STORIES
As the push to reopen schools intensifies, Miguel Cardona and first lady Jill Biden travel to Meriden to show how this town did it
by Jacqueline Rabe Thomas and Adria Watson

Cardona said getting the nation's schools reopened is priority No. 1.

How does the public option bill differ from Gov. Ned Lamont’s health care plan? Here’s a look at the two proposals.
by Jenna Carlesso

With the rising cost of care a central issue this legislative session, lawmakers and Gov. Ned Lamont’s administration have each moved ahead with their own plans aimed at driving down prices.

Rep. Patricia Billie Miller wins vacant Senate seat
by Mark Pazniokas

Rep. Patricia Billie Miller, D-Stamford, won a special election to the state Senate.

CT hasn’t started collecting new payroll tax from state workers
by Keith M. Phaneuf

Connecticut established a new payroll tax surcharge on Jan. 1 but still isn't deducting it from state workers' paychecks.

Lamont’s budget offers another round of tax amnesty
by Keith M. Phaneuf

Gov. Ned Lamont’s proposal waives penalties and caps interest at 3% over each of the next two fiscal years.

Support Our Work

Show your love for great stories and outstanding journalism.

$
Select One
  • Monthly
  • Yearly
  • Once
Artpoint painter
CT ViewpointsCT Artpoints
Opinion How do we show that we value teachers? By listening to them.
by Sana Shaikh

When I was graduating college, my friends’ futures were brimming with impressive labels: Google, Facebook, McKinsey, Bain, PhD, MD, Fulbrights – the list of professional excellence was seemingly never-ending. When I said that I was becoming a teacher, I got puzzled looks – “Why would you be a teacher?” “If you can’t do, teach,” I heard. The nonchalance about my professional trajectory was unsettling. What’s more? Nothing has changed in the last ten years.

Opinion Sports betting in Connecticut: Can’t all the brands just get along?
by Bill Field

When it comes to legalized sports betting in Connecticut, it’s time that all of the parties gathered in a room and hammered out an agreement that works for everyone. The adage of everyone benefiting from a rising tide hasn’t resonated in the past two and half years. 

Opinion COVID-19 will push nursing home design forward
by Myles R. Brown

Over 40 percent of American deaths attributed to COVID-19 have been nursing home residents. Outdated nursing home designs contributed to the scale of this tragedy in Connecticut. Many design changes that could have prevented the spread of COVID-19 were already needed to improve the well-being of nursing home residents. The pandemic has made these issues impossible to ignore.

Opinion Let gig economy workers pursue options
by Nicole Petruzzi

In response to your February 22 story, “In an evolving economy, lawmakers take roles once played by unions:” Like many Connecticut workers, I struggle to make ends meet for my family, even when working full time. This last year has been a particularly hard time. I started looking for a part-time job to supplement my income, but I was worried that even something part-time would take away precious and needed time with my family.

Artwork Grand guidance
by Anne:Gogh

In a world of systemic oppression aimed towards those of darker skintones – representation matters. We are more than our equity elusive environments, more than numbers in a prison and much more than victims of societal dispositions. This piece depicts a melanated young man draped in a cape ascending high above multiple forms of oppression. […]

Artwork Shea
by Anthony Valentine

Shea is a story about race and social inequalities that plague America. It is a narrative that prompts the question, “Do you know what it’s like to wake up in new skin?”

Artwork The Declaration of Human Rights
by Andres Chaparro

Through my artwork I strive to create an example of ideas that reflect my desire to raise social consciousness, and cultural awareness. Jazz music is the catalyst to all my work, and plays a major influence in each piece of work.”

Artwork ‘A thing of beauty. Destroy it forever’
by Richard DiCarlo | Derby

During times like these it’s often fun to revisit something familiar and approach things with a different slant. I have been taking some Pop culture and Art masterpieces and applying the vintage 1960’s and 70’s classic figures (Fisher Price, little people) to the make an amusing pieces. Here is my homage to Fisher -Price, Yellow […]

Twitter Feed
A Twitter List by CTMirror

Engage

  • Reflections Tickets & Sponsorships
  • Events
  • Donate
  • Newsletter Sign-Up
  • Submit to Viewpoints
  • Submit to ArtPoints
  • Economic Indicator Dashboard
  • Speaking Engagements
  • Commenting Guidelines
  • Legal Notices
  • Contact Us

About

  • About CT Mirror
  • Announcements
  • Board
  • Staff
  • Sponsors and Funders
  • Donors
  • Friends of CT Mirror
  • History
  • Financial
  • Policies
  • Strategic Plan

Opportunity

  • Advertising and Sponsorship
  • Speaking Engagements
  • Use of Photography
  • Work for Us

Go Deeper

  • Steady Habits Podcast
  • Economic Indicator Dashboard
  • Five Things

The Connecticut News Project, Inc. 1049 Asylum Avenue, Hartford, CT 06105. Phone: 860-218-6380

© Copyright 2021, The Connecticut News Project. All Rights Reserved. Website by Web Publisher PRO