The House of Representatives on Monday narrowly approved the state employees’ concessions deal that is expected to save as much as $1.57 billion this fiscal year and next combined.
The Democrat-controlled House voted 78-72 almost entirely along party lines to endorse the deal.
The concessions package, which workers ratified earlier this month, tentatively is scheduled to go before the Senate on July 31.
Meanwhile, House and Senate Republican leaders objected to Monday’s vote. They argued that nonpartisan analysts — who hadn’t received all documentation from Gov. Dannel P. Malloy’s administration until last Friday — were unable to conduct a full review.
And a national public policy think-tank weighed in on the concessions. The Pew Charitable Trusts urged Connecticut officials to complement the package with new policies to measure public-sector benefits here against those in other states, and to safeguard against future fiscal crises in these programs.
‘This is structural change’
“You wanted structural change? This is structural change,” Rep. Mike D’Agostino, D-Hamden, said during the debate, echoing a term GOP lawmakers have invoked repeatedly in recent years when discussing the need to cut labor costs. “This deal saves billions.”
D’Agostino, who introduced the concessions deal on the House floor, added he believes this plan is the only way to achieve major labor costs savings this fiscal year and next.
You cannot make those changes unilaterally,” he said, adding that any attempt to do so would come to a bad end. “We are sued … and we lose.”
D’Agostino also said the concessions deal is the linchpin to any plan that could break the gridlock that has carried state government more than three weeks into the new fiscal year without an approved budget.
“This domino falls, I have no doubt we’re going to have a budget soon,” he said.
“We commend the House on making an important vote to protect critical public services and move our state forward by approving the SEBAC 2017 agreement,” the State Employees Bargaining Agent Coalition wrote in a statement. “This agreement saves $24 billion over the next twenty years, eliminates 30 percent of our budget deficit and is the largest savings agreement in our state’s history. Through collective bargaining, we achieved every penny of savings originally sought by the governor. We urge the Senate to vote quickly to preserve the full value of the agreement.”
Malloy also praised House members who backed the concessions plan, calling the vote “a major step forward in creating the foundation for a responsible, balanced budget that will help put our state on a more stable and sustainable path. These lawmakers made the right decision.”
Legislators and Malloy have been grappling since February over how to close massive projected deficits.
Analysts say state finances, unless adjusted, would run as much as $2.3 billion or 12 percent in the red this fiscal year and $2.8 billion or 14 percent in deficit in 2018-19.
But Rep. Chris Davis, R-Ellington, argued that the agreement maintains an expensive benefits system that state government no longer can afford — even after the concessions — through 2027. And it greatly restricts the state’s ability to lay off workers mid-2021.
“We’re taking what was done in the past and pushing if off into the future,” Davis said. “That’s crazy. That is crazy.”
“This is tying the hands of every taxpayer in the state of Connecticut,” said House Minority Leader Themis Klarides, R-Derby.
Rep. Laura Devlin, R-Fairfield, said the deal still leaves state employees’ benefits and compensation far better than that offered in the private sector.
And the new pension contribution rate for employees, equal to 4 percent of payroll, is below the national average of 6 percent for state workers.
“I don’t know how we can stand up and be proud and say this is the agreement that is going to solve our problems going forward,” Devlin said. “We need serious reform, and this agreement doesn’t do it.”
Malloy, whose administration negotiated the deal, projects it would save the state $701 million this fiscal year, $869 million in 2018-19, and $24 billion over the next 20 years.
Nearly half of the immediate savings would come from most workers’ acceptance of a three-year pay freeze and three furlough days. The bargaining units for state police troopers and assistant attorneys general are not part of the agreement.
The concessions package also would double pension contributions for most workers, create a hybrid pension/defined-contribution plan for future employees, increase health care co-payments and premiums and move retirees into a more cost-efficient Medicare Advantage program for health care.
Rep. John Hampton of Simsbury was the lone Democrat to oppose the package.
But some moderate Democrats who warned House leadership last month they might not be able to back the concessions deal said Monday that, while the package is far from perfect, they were ready to support it.
“If we do not accept this agreement, we will not see a budget for a long time, and my towns and its social services and programs will not be able to operate,” said Rep. Daniel Rovero, D-Killingly.
“I suppose I will be supporting this agreement no matter how reluctantly,” said Rep. Jonathan Steinberg, D-Westport, who added he’s skeptical that Republican proposals to change collective bargaining rules unilaterally through legislation could survive a court challenge.
“I kind of feel as if I don’t have good choices,” Steinberg said, adding he would choose “some progress” offered by the concessions package over “gigantic risks” under the GOP approach.
House Majority Leader Matt Ritter, D-Hartford, said the blame for Connecticut’s poorly funded retirement benefit programs — which are a major force behind the projected deficits and the push for more concessions — stems from poor funding decisions by both parties for decades.
The key questions now are “How do you deal with it and what kind of state are we?” Ritter said, adding that Democrats’ problem with the Republican solution went beyond concerns that it wasn’t legally defensible. “It was essentially taking away collective bargaining in the state of Connecticut. … This was a very fair deal for everybody in the state of Connecticut.”
Nonpartisan analysis: Limited or incomplete?
But some critics remained skeptical about the projected savings, especially after reading the attached fiscal note, which assesses the financial impact of the deal.
The legislature’s nonpartisan Office of Fiscal Analysis largely confirmed the savings projections of the Malloy administration when it came to benefits-related concessions.
Nonpartisan staff also did not contest the administration’s savings projections for the wage freeze, which represents $301 million this fiscal year and $468 million in 2018-19.
But while the benefits changes affecting all workers are spelled out in one umbrella contract, the wage concessions are carved out through numerous contracts covering 33 different bargaining units. In addition, those unit contracts also address a myriad of working condition provisions that could have cost impacts for the state.
Klarides and Senate Republican leader Len Fasano of North Haven noted that the fiscal note did not address these wage agreements in depth.
Both GOP leaders also were quick to defend the nonpartisan office, noting that staff didn’t receive all concessions documentation from the administration until Friday.
OFA’s policy is to work within whatever time frame the legislature sets. In other words, if it has one weekend before a major vote to analyze dozens of contracts, it will produce the best analysis possible within that period.
Klarides and Fasano said that isn’t sufficient given the stakes. This agreement also eliminates the state’s ability to impose layoffs under most circumstances over the next four years while adding five years — from 2022 to 2027 — to the current benefits contract.
“People deserve to have that information,” Klarides said. “There is no legal reason to do this today. There is no factual reason.”
“There is no detail whatsoever,” Fasano said, adding that a review of just one bargaining unit’s wage agreement found it provides thousands of dollars in bonuses for workers after the next fiscal year. “Why are we voting in the House on contracts when we have no idea on the fiscal impact on the state of Connecticut?”
The Office of Fiscal Analysis traditionally does not comment beyond its written reports to the General Assembly.
Pew: Compare CT pensions to other states’ benefits
The concessions deal attracted the attention of The Pew Charitable Trusts, a Philadelphia-based, nonpartisan policy research group.
Pew reported its analysis was provided “at the request of policymakers in the state” and was neither an endorsement nor a veto of the plan.
But Pew did recommend that legislators consider additional policy measures to complement the deal.
It noted that Connecticut is one of just four states nationally that address public-sector retirement benefits through collective bargaining.
Most other states only offer them through statute, meaning they can be modified or repealed later, with or without labor’s consent, by legislatures.
Pew recommended that Connecticut commission a “50-state comparative study of retirement benefits and policies” and an independent actuarial assessment “to help ensure Connecticut is in line with peer states.”
The think-tank also said Connecticut should require a regular “stress-test analysis” of all retirement plans “to determine how the plan would perform during a financial crisis.”
Connecticut has some of the worst-funded public-sector retirement benefit programs of any state, a problem created by more than eight decades of inadequate savings affecting pensions and retiree health care programs.
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