HARTFORD, CT — Gov. Dannel P. Malloy told reporters Tuesday that no matter what happens in the next few weeks he’s going to need state employees to step up to the plate “sooner rather than later.“
The closed-door labor negotiations to extract “at a minimum” $700 million from state employees in 2018 need to be completed “relatively soon,” Malloy said. If the governor’s administration is unable to reach a deal with the State Employees Bargaining Agent Coalition, Malloy is planning to lay off about 4,200 state employees, according to the budget document he released in February.
He said he’s loathe to continue budget discussions without an indication that the labor savings will materialize.
“We need to get the real savings from labor of the target number at a minimum and it needs to be sooner rather than later,” Malloy said.
Malloy declined to characterize the discussions between his administration and SEBAC.
Larry Dorman, a spokesman for the American Federation of State, County and Municipal Employees Council 4, one of the largest state employee unions, said Tuesday in a phone interview that they are actively engaged in discussions with the administration and are trying to find solutions. However, those solutions can’t included balancing the state budget on the backs of hardworking, middle class state employees who are also taxpayers, Dorman said.
But the clock is ticking.
“We’re not there and a lot of time has passed,” Malloy said.
The two sides have been informally discussing the situation since November.
“We have to affect that $700 million in savings one way or another,” Malloy said.
Two weeks ago, Malloy warned that he will reduce the state workforce by over 1,100 employees in May “as a first step toward resolving the budget shortfall.”
Since that time the shortfall has grown to about $5.1 billion over the next two years throwing all the various budget proposals out of balance.
Following a more than hour long meeting with legislative leaders Tuesday, Malloy said he planned to present them with a balanced budget by next Friday.
The budget Malloy presented in February is out of balance due to new lower than expected revenue projections. Revenue dropped about $1.5 billion — that’s in addition to the $3.6 billion deficit that already existed for the next two years and the over $400 million deficit it opened up this fiscal year which ends June 30.
Connecticut only has $235 million in its rainy day fund to help close the current year’s budget deficit.
Malloy said they will schedule a marathon session in about a week to continue the discussion they started.
Meanwhile, House Speaker Joe Aresimowicz, D-Berlin, said everything has to be on the table during those negotiations, including increases to the income tax.
“I still refuse to enter the negotiations taking anything off the table,” Aresimowicz said.
Still, economists like Don Klepper-Smith of DataCore Partners, who advised former Gov. M. Jodi Rell, warned that Connecticut is at a point where it’s cannibalizing its tax base.
He said if 575 people per week are leaving Connecticut for other states, then the Laffer Curve seems to indicate “we are now starting to cannibalize our state and local tax base, and that further tax hikes will be counterproductive in the long run.”
But after having cut spending by more than $850 million last year and not raising taxes, lawmakers are still struggling with finding the right mix to balance the budget.
In addition to Malloy, legislative leaders said they would also revise their proposals to reflect the new revenue numbers.