Arms crossed, Rep. Michael D'Agostino, D-Hamden, listens to a question by Rep. Mike France, R-Ledyard, about the SEBAC deal. MARK PAZNIOKAS / CTMIRROR.ORG

The House of Representatives approved a four-year package of raises Thursday that includes $3,500 in bonuses later this spring and summer for about 46,000 unionized state employees.

The Democrat-controlled House voted 96-52 to approve the contracts, following a four-hour debate during which Republicans insisted the compensation far outstrips what private-sector workers are receiving, or what taxpayers can afford. 

The vote was almost entirely along party lines, with all Democrats casting ballots for the deal and only one Republican, Thomas Delnicki of South Windsor, supporting it.

The contracts, which Gov. Ned Lamont says are essential to help stem a surge in state employee retirements, are expected to be ratified Friday by the Senate, where Democrats also hold a majority. 

“The state of Connecticut is in the best financial condition that I can recall, being up here 10 years,” said Rep. Michael D’Agostino, D-Hamden, who led the debate in favor of the raises.

State government not only enjoys a $3.1 billion rainy day fund, equal to 15% of annual operating costs — the maximum allowed by law — but the current fiscal year is on pace to close an unprecedented $4 billion in the black.

The agreements, which unions ratified earlier this spring, are retroactive to the start of this fiscal year, which began last July 1. They also cover the next two fiscal years and potentially 2024-25 as well. 

Each year includes a 2.5% general wage increase, as well as a step hike for all but the most senior workers. In addition, full-time workers would receive a $2,500 bonus in mid-May and another $1,000 bonus in mid-July. Part-timers would be eligible for prorated bonuses.

The state and unions have the option of continuing the same level of raises for the fiscal year beginning July 1, 2024, or they can negotiate different compensation levels.

The agreement would cost the state nearly $1.9 billion over four fiscal years, according to nonpartisan fiscal analysts.

Lamont says the bonuses are crucial to retain state employees, who are retiring in larger-than-normal numbers this spring.

More than 3,400 state employees have either retired or filed their written intentions to do so between January and March 31 alone, and that total is expected to grow considerably between now and July 1. That’s when more stringent limits on state retirement benefits, negotiated as part of a 2017 concessions deal with unions, take effect.

“We’re hemorrhaging workers right now,” D’Agostino said.

And while some criticized the bonuses, the Hamden lawmaker and others say they would save the state money over the long haul.

An arbitrator had already awarded some unions a 3% general wage hike for 2021-22 before Lamont and labor negotiators settled on a smaller cost-of-living bump and bonuses.

And that was before surging state income and business tax receipts pushed this fiscal year’s surplus from $2.7 billion to $4 billion.

D’Agostino said he believes arbitrators would have awarded unions annual cost-of-living raises of 3% or 3.5% given the state government’s enhanced ability to pay.

Hartford lawyer Daniel Livingston, chief negotiator for the State Employees Bargaining Agent Coalition, or SEBAC, estimated that going with one-time bonuses and a smaller, 2.5% annual cost-of-living raise saves the state about $150 million over the next decade.

“Let us be clear. You cannot be supportive of state workers and the services they provide without being supportive of the necessary funding to ensure that these positions are properly staffed,” SEBAC wrote in a statement following the vote.

The coalition, which represents most state employee unions excluding the state police, added that “It is a critical step in resolving the current staffing crisis that is the consequence of decades of disinvestment and austerity.”

Lamont spokeswoman Lora Rae Anderson said, “We’re happy the House has passed the SEBAC agreement, and we are hopeful the Senate will do the same.”

But most House Republicans who spoke in Thursday’s debate predicted taxpayers wouldn’t be as happy as state employee unions are.

The bonuses, the GOP argued, are hardly the key to retaining workers, as Lamont has claimed. The contracts allow workers to accept the $2,500 extra payment and still retire before July 1.

“If you’re going to get a bonus, you’ve got to stick around with us for a while,” said Rep. Jay Case, R-Winsted.

“This deal was billed as a retention effort,” said Rep. Laura Devlin, R- Fairfield, who is campaigning for lieutenant governor as the running mate of GOP gubernatorial contender Bob Stefanowski of Madison. “It’s nothing more than a handout.”

Republicans also said they appreciate the hard work of state employees, particularly during the worst of the coronavirus pandemic, but the issue isn’t as simple as some believe.

“Deserve’s got nothing to do with it,” Rep. Thomas O’Dea, R-Ledyard, said, citing the famous dialogue Clint Eastwood’s Western outlaw uttered in “Unforgiven,” the 1992 Academy Award-winning film. “It’s a matter of whether we can afford it.”

The $3 billion in budget reserves and $4 billion in projected surplus pales in comparison with the $95.4 billion in long-term unfunded obligations Connecticut has, O’Dea said, referring to the combined pension, retirement health care and bonded debt the Lamont administration listed last November in its annual Fiscal Accountability Report.

Connecticut has more per capita debt than most other states, and those long-term obligations are expected to put considerable pressure on state finances for decades to come.

State government coffers have swelled since 2018, due in large part to a robust stock market that has bolstered income tax receipts tied to capital gains and other investment earnings.

But that surge followed a nearly decade-long stretch in which state tax receipts from the same source badly underperformed.

State finances also are being supported this fiscal year and next by about $3 billion in emergency federal pandemic relief. When that expires in 2024, the state’s fiscal position could turn, some lawmakers argue, particularly if the national inflation rate — which topped 7% last year and exceeds 8% early in 2022 — remains high.

The state’s robust, short-term fiscal position “is a sugar high that will pass when the federal stimulus money goes away,” O’Dea said.

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Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.