Gov. Ned Lamont conceded Tuesday that he won’t secure one of the most controversial concessions he’s seeking from employee unions — new limits on cost-of-living adjustments to pensions —this spring.
The Democratic governor said he still hopes to secure this giveback at some point, but added it’s unlikely to happen before legislators adopt the next, two-year state budget. Lawmakers are striving to adopt a new plan before the session ends on June 5.
Lamont, who spoke with reporters following a business visit and press conference Tuesday morning in East Windsor, said he is optimistic that labor talks will bear other fruit. The governor wants to reduce labor-related health care costs by $185 million over the coming biennium. He also wants labor’s permission to shift billions of dollars of surging pension costs onto a new generation of taxpayers between 2033 and 2047.
“What can I do now, in time for this budget, on a reasonable basis?” he said. “I think I can take the cliffs out of our pension obligations … and I think we’re going to get some real savings on health care.”
But what about restricting the cost-of-living adjustments that increase the value of some state pensions each year?
“I think that’ll take a little longer,” he said.
According to the governor’s budget office, the COLA changes Lamont seeks would save $26 million in the General Fund and Special Transportation Fund combined next fiscal year, and $28.6 million in 2020-21.
The State Employees Bargaining Agent Coalition, which is comprised of most major state worker unions, drew a line of opposition in the sand when it came to the COLA changes back on Feb. 19, one day before Lamont unveiled his first budget proposal.
“To be clear: we will not be part of asking for still more sacrifices from state employees, who have already given so much for the people they serve,” SEBAC wrote in a statement.
Unionized state employees granted concessions in 2009, 2011 and 2017. The latter agreement, which extends for four years, remains in effect.
Union leaders have argued increasingly in recent years for legislators to consider raising taxes on wealthy households and major corporations as an alternative means to cover Connecticut’s surging pension and other debt costs.
Lamont has said the COLA issue must be addressed eventually to mitigate Connecticut’s huge, funded pension liabilities, and added Tuesday he has not abandoned his goal of reform in this area.
“We’re having good, constructive talks with labor,” the governor added. “This is the way you get things done in my world. You keep the door open. (If) you run into a roadblock, you come up with another idea.”
“We share the governor’s optimism that these win-win discussions are going to continue yielding savings for the taxpayers, now and into the future,” Larry Dorman, spokesman for Council 4 of the American Federation of State, County and Municipal Employees, the largest state employees’ union, said Tuesday.
“We are simply talking about these win-win scenarios,” Dorman added, “ and we will continue to work with the governor and the General Assembly to achieve efficiencies and savings that will benefit everyone.”
So, some Union Members think its acceptable there’s some Tier 1 State Pensioners, with annual pensions greater than $250,000.00 per year that are receiving 3% Cost of Living Annual Increases. Even worse, they are doing it off the backs of many elderly taxpayers living on fixed incomes of less than $30,000 per year. Not only is it wrong, it is immoral.
What is immoral is the State not funding State employee and Teachers pensions the last 50 freaking years. People earned pension benefits, no matter how large or small, through years of service to the State or municipalities.
You expect people who are entitled to a pension to give some of it up? You’re dreaming! Why am I paying so much for social security to pay people who never worked or earned low income levels. Maybe those people should take a cut?
I May not like the level of pension certain people are receiving, but they earned it fair and square.
The State has the legal responsibility to fund those benefits. If it takes a doubling of all State taxes for the next ten years too damn bad.
Please don’t use profanity. Next time we will not approve your comment if it contains profanity.
Well said, despite the language. You’ve outlined why we will be moving to NC or TN shortly after my wife retires. We have no interest in being party to the epic fiscal mismanagement of this state any longer than we have to.
My sentiments as well. The continued fiscal mismanagement is indeed epic, but not just limited to the chronic underfunding of retirement benefits. The benefits themselves are unsustainable- who gets healthcare for life at a time in your life where healthcare costs will explode? Who gets high 6 figure retirement income in your fifties for working for the state? The party with the incestuous relationship with labor will never budge on concessions. Instead, this party cooks up another deal to protect union workers from layoffs for several years. What company in its right mind would do that and survive in an economic downturn? How about the explosion in debt and debt service that will get much worse when interest rates return to something more akin to normal?
I’m thinking the end game will be a total meltdown of exploding state budget deficits, debt, and taxes, combined with a mass exodus of taxpayers who, like me, are disgusted in what this state has become. It might result in pension haircuts to keep the state afloat, but I don’t plan to be party to this mess any longer than I have to.
What I question about your premise is that those pensions were “earned.” Labor agreements are negotiated by the Governor, who is chosen and elected by the unions that he negotiates with. Then they are approved simply by the legislature not voting within a specified time period.
FDR didn’t believe that government employees should be allowed to unionize.
Certainly some of the fault lies with the taxpayers who have failed to hold their elected representatives accountable – but the original sin is the corrupt bargain between the politicians and the government employee unions.
People are waking up – I doubt another union stooge will ever be elected.
My hope is that bankruptcy judge invalidates these contracts and pensions. Comments like this demonstrate that there is no middle ground.
States cannot declare bankruptcy. It doesn’t exist. Can’t happen.
The Union Representatives at tme of negotiation agreed to a Target Discount Rate for Pension Funds, that was inflated and unrealistic at that time. This misrepresentation, and act of malfeasance, allowed and enabled underfunding and the ability to hide the level of underfunding that existed. So, you are wrong The unions had a very strong hand in creatng the underfunding problem that exists today.
“If it takes a doubling of all State taxes for the next ten years too damn bad.”
But you see the inherent dilemma here right? Such a punitive tax policy would trigger a massive exodus of workers and families, worse than we’ve already seen.
“…from state employees, who have already given so much for the people they serve,” SEBAC wrote in a statement.”
If any private sector company was in the fiscal condition of the state, 25-30% of its employees would have been walked out the door five years ago. 1 week severance for every year of service. “Givebacks”??
The private sector pays for every cent of public sector spending.
What solution do you propose, within existing constraints / legally binding agreements with public sector employees?
I am objecting to the Union’s continued rhetoric of suffering when they exhibit no gratitude for compensation, benefits and pensions that are completely out of market. And further the lack of realization that all of those are paid by private sector employees whose employment and earnings can (and may have in the past 10 years) been negatively altered while the state employees remain immune.
A little gratitude would be useful to display even if inauthentic.
Is a 10 year contract with the unions a violation of sovereign immunity and therefore illegal? If this “legal” contract is driving the state into a fiscal catastrophe where voters have lost all control over their tax payments, is this legal under the Connecticut constitution? What is the Mirrors understanding of this possibility?
We are not attorneys nor have we done the reporting on this question to have or communicate an understanding of this answer to this question.
Thank you for your response.
Today you are right .There really is not much you can do. But. Here are some ideas .None will happen but you asked so I’m going to try
1. CGA could change law making this a right to work state
2. In 2021. Lay off all union employees and either hire new right to work or bring back those folks under right to work laws
3. With the 5-4 conservative majority on the supreme court. Start a lawsuit now deming the sbac agreement illegal .Yes i get this may take years to resolve but it’s possible the supreme court may land in the tax payers favor .But we do have years to do
In Texas they have a saying “All hat and no cattle.”
Lamont is all taxes and no cost savings.
With 30% of the budget being fixed debt costs and with a contract and no layoff agreement in place with state employees, what costs do you propose reducing? And how much will that save compared to the size of the deficit?
This indeed is a huge constraint. One that will certainly lead to significantly higher taxes and reduced services. So far I’ve seen nothing from the Lamont administration outlining a path forward.
The only solution is to reopen the SEBAC agreement.
Since the existing agreement tied future legislatures – it is of questionable constitutionality.
Are you suggesting that the legislature can’t enter into contracts of more than two years?
You should do an interview with James Spiotto of Chapman Strategic Advisors. He is a lawyer and made a very long presentation at the Pension Academy back on January 11th. A few take-aways from my notes:
The pension benefits are not constitutionally protected.
Already earned benefits are property right but prospective benefits are up to the legislature. So If you need 30 years of service and have served 24 there is no legal guarantee of the full package if you work 6 more years – because it is not yet “earned.”
COLA is a target for modification.
The Supreme Court ruled that states cannot abdicate power to provide essential government services. If unsustainable public pension benefits are unaffordable and crowd out funding of essential services (public safety, education, transportation, water and waste services etc.) the state and local government must adjust such benefits for the health, safety, and welfare of all. To do otherwise would frustrate the very purpose of governments.
Legislation that changes pension benefits that is passed before the employee is eligible for the benefits, does not adversely affect the rights of the employee.
http://ctstatefinance.org/assets/uploads/files/Pension-Academy-Presentations.pdf Scroll down to p. 76 for Chapman’s presentation
A key question is what does “sustainable public pension benefits” mean? If states could declare bankruptcy (which they can’t), would a bankruptcy judge conclude that the richest state in the richest county in the world doesn’t have the capacity to abide by commitments it has made VIA CONTRACT? As one of our reporters says, no one ever promised Connecticut we would never be Michigan (or Arkansas, or wherever).
CT Mirror, some suggestions for specific cost reductions.
1. Do not attempt to reopen any Union Contracts, this is self-defeating and the Unions have the upper hand until their contracts expire (7/1/2021) and the budget busting SEBAC 2017 expires in 2027.
2. Eliminate all Deputy Commissioner positions (Layoff now).
3. Review all politically appointed positions by an independent outside efficiency expert.
4. Push the legislature to eliminate its pension completely and certainly end the practice of “Supercharging” (long term part time legislator get full time high paid state job for 3 years at the end of their carreer).
I am not sure of the exact savings on these suggestions but it would be a good start in the right direction. The next step would be to use another outside efficiency expert to review a single large State government department and advise their findings.
Voters should be more careful about electing state union employees to the legislature as they have compromised loyalties.
It may be a start, but in light of a close to $2 billion deficit there is a lot more cost savings (or revenue increases) to find. And that’s just to cover this biennium. There are more deficits of the same magnitude in the following biennium, and the one after that and after that.
The state unions, of course, will not take any concessions until the state budget blows up (and it will blow up). Then, the real fun begins.
This is right out of the Malloy playbook. Change the retirement cola knowing that many state workers will leave before it happens. That way the state will get workers to retire without offering an incentive.
Yesterday, Gov. Lamont stated he will not back away from his fight over forcing towns to cover portions of teacher pension costs. The percentages he specified were 25% from ‘non-distressed municipalities’ and 5% from ‘distressed municipalities.’ Whether this ends up in the budget remains to be seen.
“Towns have had no say in managing the teachers’ pension fund or in negotiating benefits or contribution levels,” Betsy Gara, executive director of the Council of Small Towns, said during (a) public hearing. “In addition, binding arbitration laws limit the ability of towns to negotiate teachers’ salaries, which contribute to benefit costs.”
While the plans are to shift the costs to the towns–more so towards those which actually live within their means–the State allows the pensioners to receive a portion of their pensions tax-free because they do not receive Social Security benefits (or pay into the system) . This is despite the fact teachers not paying into Social Security was a union-negotiated item. In other words, we will be forced to pay even more local taxes so that retired teachers can pay less State tax.
If some of the ‘leaders’ in the CGA get their way on other tax schemes, we will be sending even more local tax revenue to the State so that they can determine how to re-distribute it, which means ‘non-distressed municipalities’ property taxes will skyrocket even more.
If readers have opinions–either way–on these budgetary items and more, I urge you to contact your State Senators, Representatives, the Majority or Minority leaders, and the Governor’s Office and tell them how you feel they should vote. Better yet, if there’s a bill hearing for which you’d like to submit testimony, then do that. It’s an uphill battle for those of us who consider ourselves Conservatives (I’m officially ‘Unaffiliated’) but that only means it’s more important we do it. Submitting comments to a moderated site may make you feel better but it is not nearly good enough.
Thank you.
My Democrat senator and Democrat representative hear no evil, and see no evil. I get no response from them and it doesn’t matter. They are under the control of Democrat leaders and will NEVER EVER vote in a conservative direction. “Submiitting comments”, sending letters to newspaper editors are two methods of letting the public see another side. For me, that has value.
The Governor is likely to have more problems with teacher pensions than with state employee pensions.
As he mentioned, he is trying to spread out the funding so that costs don’t spike and then fall to very little. Despite language included in a past bond agreement which requires the state to make pension payments when due, no matter the size. Someone didn’t appreciate the impact of that language.
Then he is trying to move part of the payments onto the towns, which have objected that they will have to raise taxes to make their required contributions. That too will create difficulties.
Looking at state employee pensions must be easy by comparison. Especially after editorials in some newspapers advocating further sacrifices. He won’t obtain anything which costs union members and retirees, but he’s less subject to criticism.
I wonder if anyone is keeping track of the number of projected revenue increases in his budget which have become very unlikely, and how much out of balance his budget is now.