Attorney General says legislature can change union contracts but would face high hurdles

In a cautiously worded opinion issued Thursday, Attorney General George Jepsen said the state legislature does have the ability to change existing labor contracts but would need “substantial justification.”

The opinion was issued after House Speaker Joe Aresimowicz, D-Berlin, and Democrat leader Matthew Ritter, D-Hartford, requested the attorney general examine whether legislative changes to labor contracts would be constitutional. Aresimowicz works for the government union AFSCME.

Republican leaders have called for making legislative changes to state employee union contracts. Union leaders have repeatedly said such a move would be unconstitutional.

Jepsen said no state or federal law prohibits a state legislature from altering provisions in a labor contract, but did worry that such a change would violate the Contract Clause of the federal constitution and invite a constitutional legal challenge.

According to Jepsen’s legal opinion, “the Contract Clause limits the power of the states to modify their own contracts as well as to regulate those between private parties.”

However, Jepsen says that determining whether or not such changes are legal depends on the severity of the impairment to state workers, whether or not the changes have an “important and legitimate public purpose,” and whether the change is “reasonable and necessary to achieve that public purpose.”

Jepsen raises the specter of tax increases to achieve the state’s financial goals without modifying labor contracts. A tax increase could be deemed a “reasonable” alternative to changing contracts. Union leaders have also repeatedly called for tax increases in order meet the growing cost of state government.

However, Jepsen also cited the City of Buffalo, which faced a severe financial crisis and unilaterally froze employee wages in violation of the city’s labor contracts.

When confronted with a legal challenge, the court upheld Buffalo’s right to freeze wages and ruled that the Contract Clause does not require a legislature to raise taxes “especially when the government already has increased taxes and when further increases might exacerbate the problem.”

Connecticut has raised taxes in 2011 and 2015 in response to budget crises, but those tax increases have led to further deficits coupled with a declining population and slow job growth. Gov. Dannel Malloy and many state lawmakers have spoken out against raising taxes a third time.

However, with a $5.1 billion deficit and only $1.5 billion in union concessions, the legislature may face more hard questions as they try to pass a budget. The prospect of increasing the state sales tax has been raised by Democratic leaders.

House Republicans released a budget proposal which they say balances the budget without tax increases and relies heavily on “non-negotiated state employee savings.” Those savings could be made by enacting legislative changes to state employee benefits when the contract expires in 2022.

If the 2017 concessions agreement is approved by the Senate, however, the ability to reach those proposed savings through legislative action may be delayed until 2027.

Jepson’s opinion may open the door for a future legislature to make unilateral changes but acknowledges that such a move would likely face a legal challenge.

“It is difficult to predict with any certainty how a court would likely rule if presented with a constitutional challenge, given the need for a careful and detailed factual analysis of any specific proposal and the circumstances of its enactment,” Jepsen wrote.

Government union leaders have a litigious history in Connecticut. When Gov. John Rowland laid off a 2,799 union employees in 2003, union leaders sued resulting in a long and expensive case.

The state of Connecticut eventually gave up on defending the court case in 2015, resulting in Connecticut having to pay $100 million. The settlement has affected Connecticut’s deficit, including an $18 million deficit for the Attorney General’s Office.

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