State budget do-over: The conversion of Dannel Malloy

In the waning hours of the 2015 legislative session, as the exhausted members of the General Assembly debated the budget during an all-night session, Democratic leadership pulled their rank-and-file members out one by one to promise, cajole, and threaten them into voting for the budget.

Several months earlier, Gov. Dannel Malloy had presented his version of the budget, which called for increases in spending and taxes, then essentially disappeared from view while the legislature tacked on hundreds of millions of dollars more in spending and new taxes.

Now, half a year later, we can see why so many Democratic legislators were reluctant to join their leadership in voting for the budget. All of the warnings came true – people and businesses are leaving the state at a faster pace than ever, revenues continue to lag behind expectations, and the state budget remains out of balance.

We also now see a much-changed Dannel Malloy. Not only has he had a conversion from a self-described ‘liberal’ big-spender into a responsible budget hawk, but he also claims to want to stay involved this year, having already announced that he will embark on a town hall tour to promote his version of the budget.

So far it looks like the deeply liberal leadership in the legislature has not undergone a similar conversion, so it remains to be seen whether they will follow through on his plans to cut the state workforce and other spending.

The cuts are deep in Malloy’s revised budget. He plans an across-the-board 5.75 percent cut of discretionary spending, and his budget chief Ben Barnes said that likely meant “thousands” of state positions would be eliminated.

Malloy also laid out five “principles” that would guide him in the building of this and future budgets. The first: “(W)e need to limit our spending to available resources.”

Somehow, this is radical in Hartford.

But does he mean it?

He sure seems to – for now. (At least until he asks them to vote on his tax increases for his transportation wish list next year.)

Barnes also seemed serious about the new state of affairs as he presented the budget on Wednesday to a room full of reporters and lobbyists. There were audible groans, and even a muttered “insane” as he described the cuts.

I’m sure they did sound insane to the people who’ve come to depend on the state taxpayers’ generosity. But those people are competing for money against an interest even more entrenched: the public sector unions.

Because here’s the problem – given the expected increase in spending on state employee benefits, not even the proposed deep cuts will be enough to put the state back in the black in future years.

In particular our pension and retiree health-care debt, which stands at $48 billion, will eat up more and more of the budget for the foreseeable future. And while Malloy likes to blame his predecessors for that debt, the blame also lies at the feet of union officials who agreed to underfund the pensions in exchange for better pay for state employees.

The results are clear. A Yankee Institute study published earlier this year showed that state employees earn an average of 25 to 46 percent more than their private sector counterparts with similar experience.

Unlike most states, where state employees earn less pay but more generous benefits, Connecticut’s state employees earn roughly the same pay as state residents in the private sector and more generous benefits.

Much more generous benefits.

The state spends 35 percent more on health care for its current employees than private sector workers receive, while pension benefits are five times, or 500 percent, more generous. On retiree healthcare, the numbers are even more staggering – state employees’ benefits are 33 times more generous. That’s 3,300 percent.

This holds true when you compare Connecticut to other states as well – our retiree health care benefits are the second most expensive in the country, and, according to a Pew study on public employee health care costs in 2014, we spend about 30 percent more than the national average on employee health care premiums.

Lawmakers should keep this in mind as the state negotiates new contracts with 12 collective bargaining units. All of these contracts should come in front of the full legislature for review and a vote.

These contracts only include pay and work rules, not benefits. Those can’t be touched – supposedly – until 2022.

Republicans are on the right track when they say the state should legislate these benefits instead. It’s how all our neighboring states set employee benefits.

But there is something else they can do right now. By law, state lawmakers currently get the same generous and expensive benefits as state employees.

Lawmakers could – this year – set an example by changing their own benefits.

Don’t laugh. It could happen.