Gov. Dannel P. Malloy and state employee unions stand on the cusp of a concessions deal worth close to $1.6 billion over the next two fiscal years, sources close to the talks said.
The agreement features a three-year wage freeze retroactive to the 2016-17 fiscal year. It also would boost pension and health insurance costs for workers, would include fewer than five furlough days and would limit the state’s ability to impose layoffs.
But it also would extend the controversial state benefits contract with its employees through 2027 — a provision expected to draw criticism from many Republican legislators and some business groups. That provision also largely would remove a contentious issue from the 2022 gubernatorial debate.
Technically, the unions and administration have been engaged in informal talks. Union leaders are expected to meet Monday afternoon to talk about authorizing negotiators as soon as Tuesday to strike a tentative agreement that could be submitted to the rank and file for a ratification vote.
“We do not yet have a deal,” Malloy spokeswoman Kelly Donnelly said Monday. She did not offer further comments not on the talks.
Malloy, his fellow Democrats in the General Assembly, and Republican legislators all relied on concessions savings to help balance their respective plans for the next two-year state budget.
The governor and Democratic lawmakers both seek savings worth about $700 million in the first year of the coming biennium and $870 million in the second. Sources say the potential deal Malloy and unions are closing in on would be worth close to those amounts.
But separate plans produced by the House and Senate Republicans each count on annual savings closer to $1.1 billion.
State would extend benefits commitment until 2027
The duration of the benefits package offered to state workers has been a point of contention since 1997, when Gov. John G. Rowland and unions struck a 20-year deal.
Many critics have argued the pension and retirement health care components of that deal are too generous, and that it must be allowed to expire so the state can offer alternatives, such as a 401(k)-style, defined contribution plan.
Malloy’s 2011 deal with unions extended the benefits contract through 2022 in exchange for a two-year wage freeze, new restrictions on retirement benefits, increased worker cost-sharing, and an employee wellness plan.
But as surging retirement benefit costs place even more pressure on state finances, some groups came forward recently to urge that any new concessions deal not extend the benefits contract further.
The contract’s existing expiration date of June 30, 2022 would fall in year four of the next gubernatorial term, and candidates for the office would be expected to take a position in the coming months on whether to extend it further.
But if the unions and the state push the expiration date back to 2027, it could not be changed without labor’s permission for another nine years — removing the issue from the next two gubernatorial terms.
Malloy and the unions also have made it clear that state government cannot expect major concessions without extending the benefits deal.
“We are not starting from scratch when we revisit the SEBAC (State Employees Bargaining Agent Coalition) contract,” Malloy told legislators on Feb. 8 in his annual budget address. “While it is fair for us to ask for savings, it’s equally fair for our employees to also ask for changes as long as the end result is a more affordable and more sustainable labor agreement.”
Council 4 of the American Federation of State, County and Municipal Employees — one of the largest state employee unions — wrote in a recent post on its website that extending the benefits deal was a key priority.
“As a union we are working our hardest to avoid layoffs, service cuts and reductions to our pay, pensions and health care. We certainly have not been dragging our feet,” the statement reads. “Throughout the process, we have been guided by several important principles, including the need to secure protections against layoffs and contracting out, to offset the impact of wage freezes, and to extend the current health care and pension agreement.
“Our goal is not simply to protect our members’ jobs and services, but also to prevent an economic disaster that would inevitably result from layoffs, wage and benefit cuts and the loss of bargaining rights.”