It is a genuine law of economics, because it is a central law of human nature: if you tax something, you get less of it. A necessary corollary: most taxes bring in less revenue than predicted because people modify their behavior to avoid the tax. Connecticut’s elected officials have been ...
Unions approve contract extension and call for more taxes on the wealthy; Republicans hit back
On the same day that state employee unions announced the ratification of Gov. Dannel Malloy’s concessions deal by union rank and file, House Republican Leader Themis Klarides, R-Derby, held a press conference saying the concessions deal is “tying the hands of the Connecticut taxpayers for the next ten years.”
The concessions package negotiated behind closed doors between Malloy and union leaders is projected to save $1.5 billion over the next two years but will extend the employee benefits contract until 2027, making the contract a 30-year deal.
Under the terms of the agreement, state employees will have a wage freeze for three years followed by two years of 3.5 percent raises plus step increases. Individual unions that accept the wage terms will get four years of layoff protection.
State employees will also have to contribute 2 percent more toward their pensions.
The extension of current union benefits contract until 2027 will make it nearly impossible for future governors or lawmakers to change the way state employee benefits are set for another ten years.
House Republicans called for setting state employee benefits in statute beginning in 2022 as part of their budget presented to a packed room on July 11. The extension of the SEBAC contract until 2027 could throw a wrench in those plans.
“We are still holding strong and feel very passionately that we can achieve those savings and more and still protect the needs of state employee unions while moving the state forward in a structural change way,” Klarides said.
Klarides added that Connecticut should follow the lead of “over 40 states” and set employee benefits in statute. Connecticut is one of only four states that set retiree benefits through collective bargaining rather than through state statute.
Darnell Ford, an employee at the Department of Children and Families, officially announced the ratification of the agreement at a press conference held at CSEA union hall on Capitol Avenue earlier in the day.
Ford said that state employees had come to the table to save the state $1.57 billion over the next two years and called for tax increases on the wealthy. In particular, Ford called on lawmakers to increase taxes on hedge funds.
Union leadership has consistently called on lawmakers to raise the taxes on corporations, businesses and the wealthy, going so far as to stage demonstrations outside financial executives’ homes in Greenwich.
Lawmakers have been hesitant since the last two tax increases have resulted in lower than projected revenue and higher deficits.
During a nearly simultaneous press conference, Senate Republican president Len Fasano, R-North Haven, called for a “stand-alone vote” on the concessions deal on July 24, saying the vote should not be tied to the budget.
Senate Republicans are also rejecting the extension of the SEBAC contract and called for employee benefits to be set in state statute.
“We’re saying that after 2022 we control our own destiny as a state, kind of like what Rhode Island did in some cases,” Fasano said.
During a normal legislative session, a union contract must be voted on within 30 days, otherwise it passes automatically. This has occurred 124 times since 1991, according to a report by the Office of Legislative Management.
However, the 30-day rule does not apply during special session, meaning lawmakers will either have to hold a vote on the concessions deal or wait until the start of session in February of 2018.
Democrats in the House still hold a slight majority and House Speaker Joe Aresimowicz, D-Berlin, is a union employee. The Senate is tied between Republicans and Democrats with Lt Gov. Nancy Wyman the deciding vote.
The increasing costs of state government combined with declining income tax revenue, particularly from the state’s top earners, may have union leaders as nervous as lawmakers.
In letters sent union rank and file, union leaders sought to secure a positive vote on the concessions deal by praising the current benefits contract as “the best and longest” in the country and warning of future budget deficits “in the billions.”
The concessions package secures their jobs and retirement benefits if and when Connecticut faces another budget deficit.
Klarides said that similar protections are not available anywhere else but in state government and argued that the state has be able to make changes in order to secure its future.
“There is an alternative way to do this,” Klarides said at the press conference, “where state employees are still being protected, they are more in line with the private sector and the state of Connecticut can move forward.”
A state employee pension fact sheet released by the Office of Fiscal Analysis on Monday showed that, despite efforts to fully fund Connecticut’s state employee retirement system, the funding ratio has dropped from 48 to 38 percent since 2011. Connecticut’s unfunded pension liabilities for state employees totaled $21.2 billion as ...