The Connecticut Conference of Municipalities asked Gov. Dannel P. Malloy last week to set aside his demand that municipalities begin contributing this year to the cost of teacher pensions, a fast-growing liability that is now wholly the responsibility of the state. Instead, CCM proposed a study that prompted eye-rolling by the governor.
Joe DeLong, the former West Virginia legislative leader who took over as executive director of CCM in 2015, said the pitch for a Pension and Retirement Benefits Reform Commission is no delaying action, although his board did ask that no decisions be made about municipal contributions until the study is compete in February, before the start of the legislature’s 2018 session.
It is meant to be a catalyst for change, said DeLong, who wants CCM to become a think tank, not just an advocacy group. And change, when it comes to pensions and other benefits, means a conflict with labor unions over collective bargaining rules, something Republicans embraced in the budget they unexpectedly managed to pass with the help of a handful of Democrats.
It was vetoed by Malloy for a variety of issues. He called it balanced by gimmicks, including deferring contributions to the pension fund. DeLong says CCM did not endorse the budget in its totality, but appreciated the inclusion of collective bargaining reforms. He says they should be only a beginning.
Why this study and why now?
I think the governor and to some degree the state are starting to get a recognition that the teachers retirement and other retirement systems and a lot of the post-employment benefits are a huge drain on the state budget and will only continue to grow. The solution that was put forth so far this session on the teachers retirement has just been to shift the cost into the property tax. We think that’s absolutely the worst place to put it.
The cities and towns should have skin in the game, but the bigger question becomes: If it’s an unsustainable system, why are we trying to fix it by just raising property taxes? Why aren’t we looking at how we reform these systems and maybe make them more sustainable going forward? That’s the ask. It’s a partnership ask. It’s not a, ‘We don’t want to be any part of this and it’s your problem.’ We recognize this is a real issue and we’re all in it together.
The governor said the idea of a study is fine — not so delaying any municipal contribution. He mocked that. He talked about being an ostrich sticking your head in the sand. So, how do you convince people your study request just isn’t a way of ducking an expense the governor is trying to put on municipalities?
Right now, the proposal is to have cities and towns pick up a portion of the cost, and I don’t think that is anything more than an attempt to dump costs on the towns and the cities. What’s troubling about that is you’re dumping it in the the property tax (municipalities’ only source of tax revenue), which is the worst place economically for the state of Connecticut to have a tax increase. You’re picking the most overburdened tax we have. It really stymies economic growth and development and it disproportionatly punishes the poor and the elderly.
But Connecticut is such an outlier in that it bears the cost of a teacher retirement system when it plays no role in negotiating what those pensions will be. A taxpayer in a poor town shares in the costs for paying pensions based on higher salaries paid in wealthy towns. Does that make sense?
The salaries are negotiated by the boards of education, not by the general-government side of municipalities. The mayors and first selectmen have absolutely no say, no control in negotiating those salaries. Whatever gets negotiated then gets dumped into the town’s budget, and the mayors and first selectmen have to figure out how to pay for it. So that is a challenge in and of itself.
Beyond that, a lot of those salaries are set through the binding arbitration system that we believe needs to be reformed anyway. Not only has the state set up this pension system, it also has set up this binding arbitration system that precludes municipalities from really controlling those salaries in a way that many of them would like to do.
So more municipal control over education finances and binding arbitration should be part of the study you just proposed?
I think all of this stuff is related. I think anything that impacts these pensions and the sustainability of these pensions needs to be looked at. Certainly how the salaries are set and how the binding arbitration system impacts those salaries are set and the strain that it puts on the budgets and the pension system is a critical component to the financial aspects of these pensions.
So, yeah, anything that impacts these pensions and the sustainability of these pensions really needs to be looked at and explored so we’re not continuing to grow these liabilities to the point they completely smother us for years to come.
You are talking about a shift in power in the relationship between municipalities and labor unions, which a General Assembly dominated by Democrats has been loathe to address. Realistically, do you think the legislature is ready for that debate?
Our organization is not opposed to collective bargaining, has never come out against collective bargaining. We’ve asked for reforms that the state already has given itself. A lot of the changes we’ve asked for ourselves are not broad, sweeping changes. We think there are common-sense changes.
But here’s the reality, whether it’s teachers or municipal employees or a regular taxpayer, we’re all citizens of Connecticut. It’s in all our interests to make sure that these systems are affordable and sustainable. And, right now, what we’re seeing is they are not. It would be really unfortunate if somewhere the state got down the road in 20 years where people who are actually retired and the benefits they’ve been promised somehow don’t come because the money is not there.
Are you really suggesting these benefits, now backed by the state, are in jeopardy?
One of the things we’re proposing here is to make sure the people who are promised these benefits can count on the benefits being delivered. And, right now, I’m not sure that’s the case. If these issues are not addressed, I wouldn’t tell any municipal employee there are absolute guarantees you are going to see a payout on your pension in the years ahead.
The reality is this is burying the state. The state is not going to be able to pay for them and the municipalities aren’t going to be able to pay for them. At some point, that’s going to put a strain on some retiree out there. It’s in all of our interests as citizens of Connecticut to get this resolved. We have to address these liabilities. We can’t just shift the costs around. That’s like rearranging the deck chairs on the Titanic.
Some of these teacher pension issues were flagged in a study 26 years ago. Why do we keep having the same conversation?
Well, that’s a very difficult question to answer. I think there are a whole lot of dynamics at play. It is a difficult issue. There are a lot of politics at play. My belief it’s the type of issue, a standalone issue, that needs to be addressed in a special session at some point. These pension issues are something that the General Assembly really should be called into a special session to address without any other distractions. It’s that important. You talk about having special sessions for budgets, but this is the single biggest issue that’s really hampering the ability to get budgets done.
What is CCM’s role in all this, its influence at the Capitol? You seemed to promise a more aggressive approach when you took over in 2015.
I don’t know that I would term it as aggressive. Some people probably would term it as aggressive, and that’s fair if they do. I think it’s transparent. I look at our organization in many ways as a think tank for these kinds of ideas. CCM has probably received some criticism in the past that was warranted. We are just trying to preserve municipal aid.
Yes, there was a time the joke at the Capitol was that CCM actually stood for the Conference of Crying Mayors. You held a press conference in August with the governor where you said hold harmless — the demand that no town ever lose aid — was no longer the goal, that you were looking for greater control over your budgets.
What I meant was we want to be a part of broad solutions. We want to come to the table. We have a much broader agenda than just saying, ‘Don’t take money from us.’ Our organization and our members, when we bring them together, realize we are partners in governing with the state. It’s not the towns and cities against the state. We all represent the same taxpayer.
That press conference in August raised the question of a conflict with labor. You asked for greater flexibility to control costs, which usually means changes in collective bargaining. Anything come from that?
Well, the first thing I would say is the budget that passed and was vetoed had a lot of those reforms in it for the first time in years. We’re very supportive, not in support of that whole budget. It came out we endorsed that budget. We didn’t endorse that budget, we endorsed the municipal reforms process that were included in that budget. The ones that are most important to us are not new concepts.
One of the things that was in that budget was that an arbitration award at the municipal level could be rejected by a two-thirds vote and start over again. The state can already do that. But if a municipal government rejects an arbitration award, it goes back to the last best offer.
That’s one reasonable reform that can be done. Another one is the state always talks about regionalism and towns doing services together, but if there is more than one bargaining (or union) unit is involved, it is complicated. We’d like to see one bargaining unit in regionalism talks be assigned to represent everyone. It’s not that we’d get rid of collective bargaining, but that you have one bargaining unit representing everybody when you are bargaining with the cities and towns on these issues. Again, I don’t think that’s tearing away labor’s rights. It’s just making sure we have a streamlined process where we can get things done.