Connecticut state workers are slated to receive more than $350 million in raises on July 1, without a layoff in sight, as over 100,000 private sector workers have lost their jobs in the state due to the coronavirus crisis.
The Yankee Institute for Public Policy noted the state pay increase includes a 3.5 percent wage increase plus an annual step increase that amounts to about two percent. It is also the second pay raise since the 2017 State Employee Bargaining Agent Coalition (SEBAC) agreement negotiated under former Democrat Gov. Dannel Malloy, who now serves as Chancellor of the University of Maine System.
As a result of the SEBAC agreement, most Connecticut state employees are also protected from layoffs until June 2021.
The Yankee Institute, which advances free-market, limited-government solutions in Connecticut, has recommended Democrat Gov. Ned Lamont suspend the scheduled pay raises for state workers:
It would be irresponsible for our elected leaders to force the closure of countless businesses throughout Connecticut — jeopardizing the livelihoods of hundreds of thousands of people — while increasing the salaries of state employees, as hard-working and important as some of them are during this difficult time.
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The unprecedented public health and economic crisis posed by Covid-19 has imposed an enormous financial and social strain on families and businesses. It will result in the state of Connecticut confronting multiple challenges, including much lower tax revenue coupled with increased unemployment and Medicaid costs to help those who have been put out of work and those in need.
These extensive costs will inevitably fall upon the taxpayers of Connecticut in the future.
In an op-ed at the Journal Inquirer on April 6, Red Jahncke, president of the Townsend Group Intl, LLC in Greenwich, noted that Connecticut state workers also received three 3 percent annual pay raises following the Great Recession.
“That’s unfair — almost cruelly so — in face of the unfolding economic ravages of COVID-19,” he asserted. “Union leader talk about ‘sacrifices’ by state workers is shameless disinformation.”
Jahncke also called upon Lamont to demand state workers relinquish their upcoming scheduled pay raise, and that retired state workers forgo cost of living increases “for the next decade at least.”
He observed:
In 2019, AEI’s [American Enterprise Institute] Andrew Biggs compared private sector compensation to public compensation at all levels of government in all 50 states. From 1998 to 2017, private sector worker compensation grew only 38 percent, lagging compensation for federal workers, state and local workers, and teachers which grew 67, 44, and 40 percent, respectively.
Biggs found that Connecticut state and municipal workers’ compensation grew 77 percent in this period, compared to 6 percent in the state’s private sector. In 2017, Connecticut public sector workers enjoyed a 51 percent compensation premium over the state’s private sector workers.
“This is a gross social injustice, but it is more than that,” Jahncke wrote. “Public sector compensation has overwhelmed the state budget and economy.”
The Connecticut state pay raises are scheduled to go into effect even as other Democrat-led states have halted pay boosts for their state employees and frozen hiring in light of the sudden and devastating impact on private sector employment due to the infection caused by the coronavirus that originated in China.
New York Gov. Andrew Cuomo (D) used his emergency powers to freeze a two percent pay increase for state workers last week, reported the Post-Journal, allowing a savings of nearly $360 million for the next fiscal year:
Freeman Klopott, a spokesman for the state Division of Budget, said in an email to New York Newsday that the delay is caused by the combination of decreasing state revenues and lack of federal bailout money to the state. The state is delaying the raises by at least 90 days, when the state will reassess its finances to see if the raises can be paid.
This month, Pennsylvania Gov. Tom Wolf (D) also froze pay for 9,000 state workers because of the crisis, reported Phillyvoice.com.
“Wolf said paychecks for these employees are to be suspended indefinitely and at least until April 30,” the report noted. “The pay freeze comes from statewide shutdowns of government offices due to the coronavirus.”
In Virginia, Gov. Ralph Northam (D) enacted a hiring freeze of state workers and directed agencies to cut budgets due to the pandemic.
According to the Associated Press, Clark Mercer, Northam chief of staff, informed agency directors the state will be undergoing a recession and revenues will be worse than “even our most pessimistic forecast” from last year.
Along with the costs of medical supplies and crisis efforts due to the coronavirus, Mercer said, “All of this will cost the commonwealth extraordinary sums.”
The Journal Inquirer reported Connecticut Comptroller Kevin Lembo projects a general fund deficit of $170 million at the end of this fiscal year, primarily due to the closure of businesses and loss of sales tax revenues. Lembo acknowledges, however, that amount could change depending on the impact of the coronavirus.
Lamont, however, has emphasized the state needs more federal assistance and said Connecticut would be drawing upon $500 million from its Rainy Day Fund.
“This is what it’s there for,” the governor said.
Nevertheless, the Yankee Institute observed that “suspending the scheduled pay increase … is a reasonable sacrifice by state government at a time when the private sector workers of Connecticut have been forced to sacrifice much, much more.”
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