The concessions deal Gov. Dannel P. Malloy and union leaders are closing in on has drawn mixed reviews from legislative leaders.
Top Democrats in the House and Senate praised the deal and said trying to close a $5.1 billion deficit in the next budget without the $1.5 billion in potential savings from concessions would be the worst-case scenario.
But their GOP counterparts had a very different perspective.
House Minority Leader Themis Klarides of Derby says the concessions would come at too high of a price: locking Connecticut until 2027 into a system that already pushes some of the costs of benefits promised to present-day workers onto future taxpayers.
Senate Republican leader Len Fasano of North Haven said he’ll reserve final judgment until he sees a full analysis, but added he has “serious doubts” the concessions would be worth sacrificing the legal flexibility Connecticut otherwise would have to cut labor costs dramatically in the next gubernatorial term.
Democrats say the potential deal has big value
It seems like it will work,” House Speaker Joe Aresimowicz, D-Berlin, told reporters during a late-morning briefing in his Capitol office. “We’re still going through the details but there’s a lot of positive things in there, things that folks have been asking for for some time.”
The concessions proposals have some painful aspects but overall it’s “better than the alternative” for state government, its workers, and taxpayers, Aresimowicz said.
“It is quite encouraging,” said Senate President Pro Tem Martin M. Looney, D-New Haven, who said the proposals not only hit the savings targets the governor set, but do so with real structural changes to wages and benefits, with impacts on workers and on retirees. “I believe there would be substantial savings in this and substantial structural changes going forward.
Malloy’s office said Monday only that there is no tentative deal at this time, but that talks are continuing with employee unions.
But sources said that both sides are on the cusp of a tentative agreement — which still would have to be voted upon by rank-and-file workers — and disclosed a wide array of details.
The plan would reportedly save $708 million next fiscal year and $845 million in 2018-19 — nearly matching the $1.57 billion, two-year savings target Malloy set in February.
Workers would forfeit any raises this fiscal year as well as each of the next two. The plan also would: double pension contributions for most workers, create a hybrid pension/defined-contribution plan for future workers, and curtail health care benefits for existing retirees.
“Those were all important issues that legislators in both parties had raised and hoped would be addressed in the negotiations, and apparently they have been,” Looney said.
In return for these concessions, the state would extend its worker benefits contract — which otherwise would expire in 2022 — until 2027.
Savings now vs. potentially more later
“I appreciate the hard work on both sides and the compromise on both sides,” Aresimowicz said, urging all critics to remember “it truly is better than the alternative.”
The “alternative,” he added, is trying to solve a projected deficit that tops $5.1 billion over the next two fiscal years without any labor savings.
But Fasano and Klarides say Democrats said the question is larger than whether this represents the most labor savings Connecticut can achieve in the next two years.
The larger issue is how that savings compares with other cost-cutting measures state government could employ when the existing benefits contract expires in 2022.
Would the state save more in the long run by further restricting or eliminating retirement health care and pensions for new workers five years from now?
Or is securing the savings offered now more important?
“I have serious doubts on that issue, but I want to look at the numbers before I firm up and say one way or the other what I feel,” Fasano said. “You don’t make a deal just because it’s convenient, you make a deal because it’s a good deal. The deal must rise or fall on its own merits.”
Klarides said the potential concessions aren’t large enough to warrant extending the benefits contract for five years.
“Committing taxpayers, future governors and the next five legislatures to paying for fringe benefits that are unseen anywhere else but in state government — and a pension system that is collapsing around us as we speak — is unfathomable, ’’ Klarides said. “After months of negotiations, this proposed deal falls short of where we need to be.’’
Connecticut has one of the worst-funded public-sector retirement benefit programs in the nation, and some have argued the state should allow the contract to expire and then dramatically curtail benefits after that.
And this deal doesn’t correct all of the problems with that system.
For example, Connecticut currently saves less than one-quarter of the funds it should each year to cover the retirement health care benefit it promises present-day workers. In other words, future taxpayers must find most of the money to pay for that health care when current workers eventually retire.
Even with the new concessions proposal, the state and employees together would set aside a little more than half of the money necessary.
But Looney said that “everything is a negotiation, and I think this is a reasonable negotiation. Obviously the state employees bargaining unit had interests to protect.
“Some consideration to their priorities had to be given in order for them to agree to reopen the contract and do anything at all. This is not something where one side could just dictate terms.”
And Aresimowicz said this potential deal would provide structural change that state officials, businesses and other taxpayers can count on through the next decade.
“One of the things they (business leaders) keep saying is the state of Connecticut needs to be predictable, that we need to be able to plan” five and 10 years into the future. “It looks as though a 10-year plan has just landed in their lap.”
Aresimowicz also said for any state officials to seek greater concessions now than the amount Malloy has sought since February “just makes me a little suspect if there’s ever going to be enough, or if they’re always going to find a reason to walk away from what’s on the table.”
In a reference to Republican legislative leaders, Aresimowicz added that, “People begged for the opportunity to be at this (budget negotiating) table. They’re here. Let’s get the work done.”
Klarides responded that a condition of negotiations cannot be to automatically accept every proposal recommended by the governor, Democratic legislative leaders or labor unions.
The minority leader also noted that Republican legislators called for a larger concessions savings target, about $2.2 billion over two years, only after a May 1 report showing massive erosion of state income tax receipts.
“We did not move the ball,” she said. “Things were moved, through no fault of anybody.”
Speaker wants full analysis, vote on any deal
Aresimowicz also said if the governor and unions submit a concessions deal in the near future, it will proceed on a different procedural path than the 2011 concessions package.
Traditionally, the House has ratified contracts, amendments and arbitration awards using a rule that spares members from voting. Such agreements are deemed ratified as long as neither the House nor Senate votes to reject them within 30 days of their submission — a practice Republican lawmakers frequently criticize.
Aresimowicz said Tuesday he expects the House will decide any concessions package with an actual vote.
He also said he expects the chamber will have access to much more detail about this plan than members had six years ago.
The administration is expected to provide an actuarial analysis of the savings assumptions prepared by outside consultants.
Aresimowicz also said it is important that the legislature’s nonpartisan Office of Fiscal Analysis have access to all calculations and assumptions behind any concessions plan.
“I think that will clear up a lot of the issues,” he said.
In 2011, OFA notified legislators it could vouch for less than 40 percent of the $1.6 billion in labor savings the administration claimed that plan was worth because of unanswered questions or insufficient data provided by the Malloy administration.