Partisan battle heats up over whether new CT budget is balanced

The partisan battle over the new state budget heated up Thursday.

Minority Republicans continued to argue the $43.4 billion, two-year budget is unbalanced and unconstitutional, relying on nearly $460 million in labor savings that unions still haven’t endorsed. The budget also makes no alternative provision to balance the books if a saving deal isn’t reached.

But Democratic Gov. Ned Lamont said he’s prepared to sign the budget into law and charged GOP leaders with political grandstanding. And Lamont’s budget director, Office of Policy and Management Secretary Melissa McCaw, said Republicans overstated the amount of savings that needs union approval, adding she nonetheless expects a deal to be finalized in the next 30 to 45 days.

“The budget is out of balance and unconstitutional, period,” Senate Minority Leader Len Fasano, R-North Haven, said during a late morning press conference in the Legislative Office Building. The governor “should veto it and have us back and have a legitimate conversation on how we’re going to balance the budget.”

At issue are two major savings targets built into the new, two-year budget.

One involves restructuring Connecticut’s contributions to the state employees’ pension fund. Contributions would rise — but not as quickly as originally planned, through 2032. Taxpayers between 2033 and 2047 would pick up those burdens, plus an effective interest charge.

The second change involves reducing employee health care costs without reducing benefits. This involves creating incentives for workers to select less costly providers. It also could mean negotiating discounts when purchasing health care services and pharmaceuticals.

The budget assumes $181.5 million in savings from these two labor areas in the fiscal year that begins July 1. It also assumes $276 million in savings for 2020-21.

Building savings targets into the state budget is nothing new, including savings that rely on labor negotiations.

But Fasano noted that past legislatures and governors built alternatives into their budgets.

For example, when Gov. Dannel P. Malloy had reached a tentative concessions deal with unions in 2011, that package still hadn’t been ratified when lawmakers adopted the budget in May of that year.

But while they used the savings from the tentative deal to balance the plan, they also instructed Malloy to hold back spending in other areas and to develop further cost-cutting measures in the event unions voted the agreement down.

Why did the 2011 legislature have a back-up plan?

Article 28 in the Connecticut Constitution, an amendment adopted by voters in 1992 following institution of the state income tax, requires the legislature to approve a balanced budget each year.

So while it’s acceptable for the state to borrow money to close an unexpected deficit at the end of a fiscal year, it’s an entirely different thing to concede before the year even begins that the budget is unbalanced — and that funds must be borrowed.

And Fasano argued that, effectively, is what the latest state budget does. The Democrat-controlled legislature adopted that plan in the final days before the regular legislative session ended on June 5.

“Show us the money, Governor Lamont,” Fasano said. “We have repeatedly asked for details on exactly how this nearly half a billion dollars is saved. We have heard crickets in response.”

The governor does have limited authority to rescind spending and otherwise compel departments to save money.

Lamont is particularly limited, given that a 2017 union concessions deal negotiated by Malloy restricts the governor’s ability to lay off workers through June 30, 2021.

But Fasano said he believes there is no way, mathematically, for the Lamont administration to rack up almost $460 million in savings with the tools at its disposal — should unions not go along with the changes he’s seeking now.

But Lamont countered there is no problem — legal or fiscal.

“I would think they would be saying congratulations for getting significant labor savings through a constructive collaboration with our state employees,” he said. “Usually Republicans are saying ‘Why aren’t you getting more savings?’”

The governor said the State Employees Bargaining Agent Coalition has shown nothing but a willingness to cooperate with his administration.

‘Reforms, not concessions’

“These are not concessions,” he said. “These are reforms.”

Hartford attorney Daniel Livingston, chief negotiator for SEBAC, has not commented on talks with the administration.

But he wrote in a June 4 statement, as the new budget was receiving final approval in the Senate, that the unions remain willing “to consider ‘win-win’ changes, including the pension funding proposal included in the budget. We don’t consider it unreasonable for the budget to assume the parties will agree to this change.”

It also might not take long to secure labor ratification once an understanding is reached with the Lamont administration.

Changes to the pension contribution schedule could be approved by SEBAC’s governing board, and would not require a referendum of all rank-and-file unionized employees.

And McCaw said existing contract language already empowers negotiators for the administration and the union to regularly review and modify health care programs to achieve many of the efficiencies already under discussion.

Fasano also questioned whether having a budget adopted with labor savings still pending would leave the state over a barrel and at the mercy of union leaders demands.

“As a  business guy I can’t believe the gov would have boxed himself in,” Fasano said. “The leverage clearly is in the union’s corner.”

But the governor said he would not grant any extension of the existing restrictions on layoffs. Nor would he agree to extend the current benefits contract that guarantees unionized workers pensions and retirement health benefits. That deal runs through June 30, 2027.

“Nobody has asked for that and that’s not what we’re going to do,” he said.