A new complication: moderate Democrats’ doubts on concessions

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Labor leaders Lori Pelletier and Sal Luciano in 2011. Pelletier says the moderate Democrats want to derail the concessions deal.

Several moderate Democrats in the General Assembly have told their leadership they agree with Republicans that labor concessions negotiated by Gov. Dannel P. Malloy are insufficient, a potential complication in the intertwined efforts to pass a budget and win ratification by state employees.

Sources say a majority of Democrats in the House and Senate back the tentative deal, but strong Republican opposition in the closely divided legislature means the budget debate could be prolonged by even a small number of Democrats questioning whether the concessions are a sufficient step toward addressing Connecticut’s massive retirement benefits debt.

The concerns about the concessions deal, whose savings are a pivotal piece of every budget proposal under consideration, were confirmed in a series of interviews with CT Mirror.

Kelly Donnelly, a spokeswoman for the Malloy administration, said lawmakers who undermine the concessions deal will bear a heavy responsibility: “Any legislator, who believes that this agreement doesn’t achieve enough savings, should be prepared to lay out their ideas for getting to balance. Simply stating ‘it’s not enough’ is not going to cut it at this stage.”

The potential challenge to the concessions comes just two weeks before union members are expected to begin voting. Union officials have said tentative plans call for balloting to take several days and be completed by July 17.

“There are [Democratic] legislators, if push came to shove, who would prefer not to vote for that agreement,” said Rep. Jonathan Steinberg of Westport, one of six House Democrats who met Tuesday with Speaker Joe Aresimowicz, D-Berlin, to express their concerns about the deal.

“For me, it is probably insufficient, and we gave up a good deal as well,” Steinberg added.

The administration projects the package would save $1.57 billion over the next two fiscal years, and $24.1 billion over the next 20 years. Workers would agree to wage freezes, furlough days, and higher pension contributions and healthcare costs. It also would create a hybrid pension/defined-contribution plan for future employees.

“Facing a significant revenue shortfall for the next two fiscal years, we asked Connecticut state employees to come to the table, open up their contract, and to help address our fiscal challenges,” Donnelly said. “And they answered the call and achieved the (targeted) savings we set last February — agreeing to concessions that will deliver $1.5 billion in immediate short-term savings and to over $20 billion in long-term savings to the state.”

She suggested the Democratic dissents could leave the the state open to claims of bargaining in bad faith.

“Historic agreements such as this are not possible where there is not trust and mutual respect,” Donnelly said. “Trust that both parties are negotiating in good faith and treat one another fairly. That means that we don’t try to pull a fast one and ‘move the goal post’ at the very end.”

The deal would provide benefits to employees, primarily by prohibiting most layoffs for four years and extending a benefits program currently set to expire in 2022 until 2027. One of the objections by GOP lawmakers and others: Even with these concessions, Connecticut still wouldn’t save enough to cover all benefits promised to present-day workers, requiring future generations of taxpayers to cover some of that cost.

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Sen. Paul Formica, a Republican, and Democratic Rep. Lonnie Reed and Sen. Paul Doyle last year.

“Where are we going as a state? We really need a plan — a five- or 10-year plan,” said Rep. Lonnie Reed, D-Branford, who also met with Aresimowicz and questions if the proposed labor deal is the right step. “I don’t feel we have one yet.”

Reed, Steinberg and a handful of other moderate Democrats — including Sens. Paul Doyle of Wethersfield, Gayle Slossberg of Milford and Joan Hartley of Waterbury — met Monday with executives from Millstein and Co., a Manhattan-based financial services firm specializing in financial restructuring and long-term strategy.

Millstein and Co. has advised Puerto Rico on debt restructuring and other fiscal matters. It also assisted the U.S. Treasury in 2008 with the restructuring of the Federal National Mortgage Association, commonly known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac.

“We’re just trying to find the best budget crisis solutions,” Reed said. “But serious questions need to be answered and serious concerns addressed. There is so much missing information and overly optimistic and massaged data in all of the budget and contract proposals that are being presented.”

Reed added that she is “not seeing any innovative thinking” to address retirement benefit and other debt cost “that’s choking us to death. … Several colleagues who share my concerns attended the meeting to ask their own questions about creating the kind of fiscal foundation we have to have to build a solid future.”

And in an email urging Democratic legislators to join him in Tuesday’s meeting with the speaker, Steinberg wrote that Democrats concerned about the concessions package — and the overall direction of state finances — aren’t limited to the House.

mark pazniokas / ctmirror.org file photo

House Speaker Joe Aresimowicz

Aresimowicz said the meeting Tuesday was cordial, and while moderates said “they weren’t sure it (concessions deal) went far enough, they didn’t draw any lines in the sand.”

But both the speaker and Senate President Pro Tem Martin M. Looney, D-New Haven, have said they believe legislators should ratify the concessions deal Malloy negotiated.

Those concessions, they say, would go a long way toward closing a huge projected deficit in the next two-year state budget. Analysts say finances, unless adjusted, would run $5.1 billion in the red over the coming biennium.

The new fiscal year begins July 1, and the legislature and Malloy have been gridlocked for months over how to close that massive potential shortfall.

Further complicating matters, Democrats hold a slim 79-72 edge in the House. And while the Senate is deadlocked 18-18, Lt. Gov. Nancy Wyman, a Democrat and Senate President, can cast a tie-breaking vote.

The top Republicans in the Senate and House, Len Fasano of North Haven and Themis Klarides of Derby, have said they believe Connecticut can achieve greater savings — over the next two years and long term — by rejecting the concessions package and instead legislating changes to collective bargaining rules and benefits.

Steinberg said he believes it is not too late for the governor to go back to the unions and ask for more.

“I’m not averse to the idea of continuing conversations with them,” the Westport lawmaker said.

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Rep. Jonathan Steinberg, D-Westport.

But Connecticut AFL-CIO President Lori Pelletier said any push among Democrats to reject the concessions deal now really is a maneuver to cut labor costs using the GOP’s approach.

“These conservatives, that call themselves Democrats, they hope workers will lash out with a ‘no’ vote on this agreement,” she said. “Then they will have what they really want.”

“Right now we are incredibly busy meeting with members, explaining both the … agreements to thousands of state employees who have stepped up and are willing to consider making considerable sacrifices,” said Larry Dorman, spokesman for Council 4 of the American Federation of State, County and Municipal Employees, the single-largest state worker union.

“If our members ratify this agreement, worth more than $1.5 billion, we would hope and urge legislators to accept and acknowledge this sacrifice,” Doman added, “and move on.”

Capitol Bureau Chief Mark Pazniokas contributed to this report.

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