Connecticut’s public sector unions have voted to reject a $1.6 billion concession package that was previously agreed to by both their union leaders and Governor Dannel Malloy, the first Democratic governor the state has had in 20 years. Just one year ago, as union leaders worked tirelessly on Mr. Malloy’s campaign, one union president, Catherine Osten, issued a statement calling his candidacy a “once-in-a-lifetime opportunity to elect a governor who will be a true partner.” The governor nurtured the relationship between himself and the unions, while he criticized other governors who were confronting the continued demands of union leaders in order to balance their state budgets.
The concession package, that seemed to pale in comparison to the concession plans agreed to by unions in other liberal states, guaranteed no layoffs for four years and no furloughs. Wages would have been frozen for two years, then followed by three annual 3 percent raises. Though cost-of-living increases for pensions would have been eliminated, the retirement age would have been raised by only two years, and not until after 2022. Changes in health benefits included mandatory annual physician visits and mail-order prescription plans, a detail that seemed to hurt local pharmacies more than union members.
As a result of the rejection of the agreement by the unions, Governor Malloy says he will now have to lay off 7,500 state employees in order to balance the state budget. In addition to the direct loss of jobs, in a state in which the unemployment rate is already at 9.1%, citizens will undoubtedly be dealing with the closing of state offices, elimination of services, and cuts to municipal aid.
The governor’s Democrat-controlled legislature already passed a budget, in advance of the unions’ vote on the concessions plan, that included the highest tax increase in the history of the state, scheduled to go into effect on July 1st. Also initiated in the budget was an earned income tax credit of about $1700 for those who do not pay taxes.
According to the Connecticut Economic Resource Center, the layoffs could cause a “ripple effect” throughout the state’s already ailing economy, leading to the potential of an additional 3,000 or more lost jobs.
There are several issues which are of immediate concern here. First, how could both union leaders and the governor they worked hard to elect underestimate the level of dissatisfaction of some of the rank and file state union workers? Although over 60 percent of state workers approved the package, Connecticut’s collective bargaining rules require approval by 14 of 15 of the public sector unions. Two of the state unions, including its largest, the American Federation of State, County and Municipal Employees (AFSCME), voted against the concessions. It would appear that Governor Malloy, the public sector union leaders, and the Democrats in the legislature are just as out of touch with union members, whose dues help to fund Democrats’ re-elections, as they are with the taxpayers of the state. The latter are standing by, bearing the burden, as the conflicted relationship between Mr. Malloy and the unions disintegrates.
Or, will it disintegrate after all? Did the unions who rejected the concessions believe they are powerful enough to hold out for something better? It is really unlikely that Governor Malloy can lay off 7,500 state employees without causing an economic disaster. He originally had asked for $2 billion in concessions from the unions, but claimed he could fill a $4 million hole with projected “surplus” funds, a practice that contributed to the argument from Republicans that the budget was nothing but smoke and mirrors. Will the governor find additional “surplus” monies to balance his budget, reinforcing the fantasy that unions are too big to fail?
Right now, there are no concrete plans to address changing the collective bargaining laws, a la Wisconsin, to allow the state to take action to get government costs under control. Instead, what seems to be on Governor Malloy’s mind, a la Barack Obama, is calling the legislature back for a special session so that he can ask for an expansion of his authority to unilaterally cut the budget. It appears that even Democrats in the legislature are suspicious of this request, as well they should be. After all, Connecticut taxpayers have already seen Governor Malloy shrug his shoulders at a huge tax increase during a difficult economy and misjudge his supposed “close” relationship with the state unions. Why should their representatives give him even more authority to cut a budget that he insisted would work?