YouTube video
(Updated 11:29 a.m.) They helped elect him by one of the smallest margins in recent history, but Gov. Dannel P. Malloy will ask the state employee unions for close to $2 billion in concessions and cost-savings over the next two years when he gives his budget address Wednesday.

It’s still unclear how much of those concessions and cost-savings will come in the form of wages, pension, or health benefits, but it’s likely Malloy will ask for $1 billion in each year of the two year budget. That leaves him with about $800 million in additional spending cuts in the first year of the budget to find.

What is clear is that the labor unions, who were careful not to talk about opening up the collective bargaining agreement which doesn’t end for another six years, will be crying foul.

“SEBAC [State Employees Bargaining Agent Coalition] has previously stressed that discussions so far have not included collective bargaining issues,” Larry Dorman, a spokesman for the labor unions, said Tuesday. 

“We have vowed to continue to work with the Malloy administration both in the short term and the long term to make the ideas of front-line public service workers part of the permanent process of transforming state government to better serve the families of this state.” Dorman added. “Whether the proposed budget had $1 of assumed savings in it, or $10 billion dollars, we will work hard to protect and enhance the public structures Connecticut needs for a better future.”

At a press conference Tuesday morning Malloy didn’t necessarily disagree with the unions statement on collective bargaining.

“When their statement says we’re not in collective bargaining it’s absolutely correct,” Malloy said.

He said collective bargaining carries with it a legal definition and neither side had been willing to go there just yet. The unions are protected by a no lay-off provision until June 30 of this year under the agreement inked by former Gov. M. Jodi Rell.

“It’s a significant ask, but there are things we will reference in tomorrow’s speech that are specific to that point,” Malloy said.

  In 2009 the State Employees Bargaining Agent Coalition was able to negotiate with Rell a package of wage and benefit concessions that amounted to about $750 million over two years. The wage concessions negotiated will expire on June 30 of this year.

It’s also unclear if Malloy will ask for lay-offs in order to achieve the close to $2 billion in concessions and cost-savings, but he has already said he won’t be offering an early retirement package and will fully fund the unfunded pension liability.

Earlier this month Malloy himself had hinted that he will be asking the labor unions for help balancing what he’s now estimating as a $3.2 billion budget deficit.

“For Connecticut to move beyond its current economic crisis, its budgetary crisis, we’re going to need to make headway with our employees on returning to a sustainable system of compensation and benefit allocation,” Malloy said on Feb. 2.

Malloy, who has been critical of the deal labor unions made with Rell, said on the campaign trail that he wants to hear the union’s cost-saving proposals before he even thinks about opening negotiations and formally asking for concessions.

In a “Face the State” interview which aired Sunday, Lt. Gov. Nancy Wyman, signaled that the administration will be asking employees to open up the collective bargaining agreement.

“We’re going to have to negotiate after this with the unions,” Wyman said.

In preliminary discussions the unions have presented the administration with cost-saving proposals, which are currently being calculated by the Office of Policy and Management.

It’s clear now that those cost-savings won’t be enough to avoid concessions.

Malloy refused to talk about the $800 million in spending cuts. “We’ll give you 15-minutes to go through it,” Malloy joked. He did hint that Medicaid, which accounts for about $4 billion of a $19 billion budget was a big driver in the budget.

Asked if he was worried about hurting the middle-class with his budget proposal, Malloy replied, “I worry about everything.”

“Nobody wants more taxes. I don’t want more taxes, but do you think that people of Connecticut believe we should borrow today to cover operating expenses and hand that over to somebody else. I don’t believe they believe that either. There is no easy decision in this.”

He said the heart of the matter is that “we’ve been on an unsustainable track for a very long period of time.”

“It’s not a question of how did we get there, but what’s the alternative?” Malloy said.

“Do we shred the safety net? Do we empty our nursing homes? Do we balance the budget as other administrations have sought to do on local communities—by jacking up property taxes which are more regressive than any other tax?”

He said after his full budget proposal is released tomorrow morning “everyone’s going to be upset. That is a certain reality.”

What he hopes they take away from the document is that “we are serious about solving our problems that put this state on a sustainable course.”

Late Monday afternoon Malloy officials unveiled a $1.5 billion tax package, which includes increases on everything from income to gasoline. Last week he said he will eliminate 30 percent of state agencies shrinking them down from 81 to 57, but that move will only save about $10 million, not counting the Higher Education consolidations.