A new report from Fitch Ratings placed Connecticut second only to Illinois in the amount of state debt compared to personal income. The 2020 State Liability Report looked at direct debt and net pension liabilities as a percentage of personal income and found Connecticut’s debt accounted for roughly 26 percent ...
Union leader seeks to secure costly union benefits by warning of coming budget deficits
Connecticut’s top union official wrote a letter to state employees asking them to approve a concessions deal negotiated with Gov. Dannel Malloy and warned of “projected budget deficits in the billions.”
In a letter to state union members, AFL-CIO President Lori Pelletier told union members they could secure their benefits until 2027 and gain four years of layoff protections under the concessions agreement.
“A new agreement will help deter anti-union legislators from successfully eliminating your collective bargaining rights,” Pelletier wrote. “We don’t want you or any state employee to lose your voice in the workplace and the opportunity for better wages and benefits.”
Under the terms of the $1.5 billion concession deal, the existing SEBAC contract would be extended until 2027 making it difficult for lawmakers to make substantive reforms to state employee pensions and benefits for the next decade.
Included in the concessions deal are four years of layoff protections for state employees and a three-year pay freeze. After the three-year pay freeze, employees would begin to receive their raises with step increases beginning in 2020.
The current benefit contract was signed in 1997 by Gov. John Rowland and was set to expire this year. However, a 2011 concession agreement extended the contract until 2022. Another extension would stretch the labor contract out to 30 years.
But lawmakers worry that the contract extension and layoff protections could impact their ability to deal with budget deficits in the future.
Union leaders have been pushing for rank and file to approve the concessions package, which will likely face a fight in the House and Senate.
In a separate letter, president of the Connecticut Employees Union Independent, SEIU Local 511, Ron McLellan, told union members “we have an opportunity to come out of a crisis with the best and longest public sector pension & healthcare contract in the country.”
Fixed costs, including pensions and retiree healthcare, are the fastest growing cost in state government. Connecticut State Employee Retirement System is underfunded by $21 billion and the yearly costs for maintaining that system is expected to grow from $1.3 billion to $2.2 billion by 2032.
Similarly, healthcare costs for retired state employees a growing at a considerable rate and are projected to surpass the costs for current employees.
Connecticut’s retirement benefits recently made headlines when it was revealed that several politicians, including U.S. Sen. Richard Blumenthal, have eschewed federal medical benefits for Connecticut’s retiree health plan.
Due to the rising costs, state deficits will likely continue, as Pelletier pointed out. Union leaders have rejected any substantive changes to the way state employee benefits are set. Pelletier and others have called for increasing taxes on the wealthy but the governor has largely rejected their calls for raising taxes a third time.
Connecticut is one of only four states that sets employee benefits through collective bargaining and it does so in closed door meetings between the governor’s staff and union leaders. Most other states allow collective bargaining for wages but set benefits such as pensions and healthcare in statute, requiring a vote by the legislature.
Connecticut law also allows union contracts to pass without a legislative vote. A contract or arbitration award passes automatically in 30 days if the legislature has not taken a vote. This has occurred 124 times since 1991, meaning lawmakers only voted on one-third of union contracts since then.
Numerous bills presented during the 2017 session sought to either require a legislative vote on collective bargaining agreements or set state employee benefits in statute. Those bills were met with stiff opposition from labor groups and ultimately did not pass out of committee.
Lawmakers have thus far not held a vote on a budget. This has led to cuts to nonprofits and other state services as the fiscal year began on July 1 and has drawn consternation from the governor.
Democratic leadership is relying on union members to pass the concessions deal in order to make their budget work.
House Speaker Joe Aresimowicz, D-Berlin, has said the House will vote on a budget on July 18th the day after union members are expected to vote on the concessions deal.
Aresimowicz is an employee of the American Federation of State, County and Municipal Employees, one of the state employee unions involved in the concessions agreement.
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