This story has been updated.

The General Assembly approved contracts Wednesday that would grant 2.5% annual cost-of-living raises for most state employees through 2028 while ordering yearly step hikes for many workers not at top experience levels.

The Democratic-controlled Senate voted 26-10 late in the afternoon to approve raises for roughly 42,000 state employees. The House of Representatives, where Democrats also hold the majority, voted 107-42 to approve the wage hikes shortly after 7:30 p.m. Both tallies were largely along party lines.

The pay hikes, which are retroactive to last July 1, will cost the state more than $200 million in the first year, according to the legislature’s nonpartisan Office of Fiscal Analysis. By 2028, compensation and related costs would be roughly $675 million greater than current levels. The contracts technically run for a fourth year, but labor and management agreed to negotiate wages for the 2028-29 budget cycle just prior to its start. Analysts say that if similar raises are granted again in the fourth year, compensation costs by that point would be $722 million above current levels.

Legislative approval marks a key political victory for Gov. Ned Lamont, whose administration negotiated most of the raises, and for his fellow Democrats in the legislature’s majority. The governor and most legislators are seeking reelection this fall, and unionized state employees are a key element of their base.

“Every day, I see the commitment our state employees have to their jobs and our state, and I could not be prouder of all they do,” Lamont said following the House vote. “This agreement will allow the state to remain competitive in attracting the best and brightest. They are the steady foundation that keeps our state running, often behind the scenes and without recognition.”

The raises are “bringing our state workforce to a level of professional pay that we should see,” said Sen. Cathy Osten, D-Sprague, co-chairwoman of the Appropriations Committee and a former leader of the state correction officer supervisors’ union.

But Republican legislators countered that state employee compensation in general has been outstripping that in the private sector for many years — and continues to do so.

A step increase typically adds 2 percentage points to the value of a raise, meaning many workers will be getting an effective 4.5% annual pay hike. And GOP lawmakers noted most workers have been getting a 4.5% annual bump since the 2021-22 fiscal year.

House Minority Leader Vincent J. Candelora, R-North Branford, said during a late morning press conference Wednesday that the raises particularly are unacceptable given the tentative state budget Lamont and leaders of the legislature’s Democratic majority recently negotiated for next fiscal year includes no major state tax cuts.

“I think we’re prioritizing our state workers over our taxpayers,” the House GOP leader said. That’s issue number one. We haven’t gone far enough in addressing the affordability issue in the state of Connecticut.”

Sen. Ryan Fazio, R-Greenwich, added during his chamber’s debate, “Remember, everyone in this circle is supposed to be on the side of the taxpayer.”

But many union leaders, legislators and some state agency heads say government is struggling to attract and retain employees.

State workers faced several years of wage freezes and cutbacks in benefits prior to 2020. Unions agreed to three concessions packages between 2009 and 2017 to help close budget deficits.

“It is imperative that fair and honorable contracts attract and retain this top talent in order to make sure our state systems are well-maintained and improved with industry best practices,” Jan Lawrence, president of the state’s engineering, scientific and technical worker bargaining unit.

Connecticut also shrank its Executive Branch workforce by about 10% to solve budget woes between 2011 and 2018, and many unions complain that has led to excessive mandatory overtime requirements. State spending on overtime hit a record-high $316.3 million last fiscal year, up 5% from the prior budget cycle, according to nonpartisan analysts.

State employees “are our constituents. They serve out constituents. It is our duty and I believe it’s our obligation to treat them fairly,” Rep. Josh Elliott of Hamden, who is challenging Lamont for the Democratic gubernatorial nomination, said during the House debate. “When you give less, you sometimes end up paying more. … And when we leave vacancies, and we have more overtime, that’s when we pay more.”

But Republican legislators said Connecticut has over-corrected and needs to focus more sources on other programs such as aid to cities and towns.

“Every dollar that we commit here is a dollar that cannot be used elsewhere,” said Sen. Heather Somers of Groton, ranking Senate Republican on the Appropriations Committee, who opposed the raises. “Connecticut state employees are already among the best compensated in the country. … We need to keep our perspective here.”

The Senate also approved a new four-year contract Wednesday granting annual 2.5% cost-of-living raises and step hikes for roughly 2,300 graduate teaching and research assistants at the University of Connecticut.

That deal begins July 1 and runs through June 30, 2030. It would cost the state about $3.2 million next fiscal year, according to nonpartisan analysts. And by the 2029-30 budget cycle, compensation and related costs would be roughly $12.7 million greater than current levels.