HARTFORD, CT — (Updated 3 p.m.) It’s one of the largest pieces of the two-year, $40 billion state budget and it was easily ratified by the rank-and-file members of the 15 unions who are part of a bargaining coalition.
“When we asked labor to come to the table and be part of the solution, our state workers answered the call,” Gov. Dannel P. Malloy said in a press release announcing the ratification a half-hour before the unions’ announcement.
Eighty-three percent voted in favor of the health and pension portion of the deal and 85 percent voted in favor of their various wage agreements. All except for two bargaining units voted on new wage contracts and working conditions.
The five-year deal includes job protection for four years for bargaining groups that agreed to accept a three-year wage freeze, three furlough days, and a 3.5 percent pay increase in the final two years. In addition the deal increases employee contributions to their health and pension benefits and is expected to save the state $1.57 billion over the next two years, $5 billion over the next five years, and $24 billion over the next 20 years, according to an actuarial report.
The deal extends the health and pension benefits portion another five years until 2027, and it took more than six months to negotiate.
Sal Luciano, Executive Director of AFSCME Council 4, which is one of the largest state employee unions, said they were able to get out ahead of the deal and explain it to their members before any misinformation was conveyed.
That’s the difference between this year and 2011 when the deal failed to win enough support and was put out to a second vote after the unions changed their bylaws.
The analysis by Cavanaugh MacDonald Consulting and Segal Consulting found the plan provides $700.9 million in savings in the first year and $868.6 million in the second year for a cumulative savings of $1.569 billion over the next two fiscal years.
“The materials affirm that the proposed structural reforms to pension and benefit costs will result in billions in savings to the state, obtaining significant annual savings for taxpayers over each of the next 20 years,” Malloy has said.
Republican lawmakers and conservative groups disagree.
“This deal guarantees unsustainable benefits for state unions for the next decade,” said Yankee Institute President Carol Platt Liebau. “For the rest of us, it guarantees budget deficits and — by limiting future options — virtually guarantees future tax increases.”
House Minority Leader Themis Klarides, R-Derby, said she believes the General Assembly should reject the agreement and allow changes to these contracts to be made by the legislature.
She said the deal the unions ratified “ties the hands of the taxpayers for the next 10 years.” She said it guarantees employment to those who voted in favor of it, which was all 15 unions, and extends the current deal another five years to 2027.
She said if the Democrats continue to control the governor’s office and the legislature, they’re going to go back to the unions and ask them for more concessions before the expiration of the contract.
Klarides said she understands she wouldn’t achieve the $700 million in savings in the first year if the legislature rejects the agreement. Most of the savings are in the health and pension part of the agreement, which wouldn’t expire until 2022.
However, Klarides insists the state would save more money over the long run by making the changes her caucus proposed in their budget.
“Their proposal is nothing more than a political document that shreds state employees’ rights and eviscerates benefits, contains dubious savings, and sweeps the Special Transportation Fund just so their members can be all things to their constituents without having to make difficult choices or make, in fact, any structural changes,” Chris McClure, a spokesman for Malloy, said. “Connecticut’s budget situation requires leadership and vision and the facile populism and pusillanimity espoused by the House Republicans today will set us back a generation.”
Senate Republican Leader Len Fasano, R-North Haven, said regardless of what happens there should be an up-or-down vote on the SEBAC agreement.
House Speaker Joe Aresimowicz, D-Berlin, has expressed a desire for lawmakers to ratify the deal even though they don’t have to in order for it to be adopted.
Aresimowicz said Tuesday that they will vote to ratify the SEBAC agreement when they come in to vote on a two-year budget, which could be as early as next week.
Asked if he had the votes for the SEBAC agreement, “I wouldn’t put it up on the board unless I do,” Aresimowicz said.
He said the fact that the unions ratified the deal does help move them closer to a budget deal.
Lawmakers have been asked to hold open on their calendars next Monday, July 24, for the veto session and Thursday, July 27, for a caucus or possible session day.
Luciano said the Republican opposition may have helped the package win union ratification because no one wants to see their collective bargaining rights trampled.
Darnell Ford, a Department of Children and Families employee with SEIU 1199, said state workers will save the state money and now it’s time for millionaires and wealthy corporations to step up and do their share.
He said they’re not certain what the General Assembly is going to do, but what he does know is that “this is a good agreement.” He said it’s good for Connecticut residents.
Ford said “no one else is being asked” to sacrifice that much for the state of Connecticut.
“What we’re saying now is that you should be asking the wealthy who can afford it and the corporations to do their part. We cannot be the only part of the solution,” Ford added.
The contract for health and pension benefits would be extended another five years from 2022 to 2027.
The workers’ agreement provides for wage freezes that save $716.4 million over the biennium and nearly $500 million per year thereafter, according to the analysis.
The analysis sought by Malloy also showed that proposed pension changes will save the state $210 million in fiscal year 2018 and $238 million in fiscal year 2019.
It determined over the course of the deal the amount the state would have to contribute would decline by $400 to $500 million per year.
Proposed health insurance changes will save $136 million in the first two years, but both the premium cost sharing and formulary changes increase those savings to well over $100 million per year into the late 2020s and early 2030s, according to the analysis.
Retirement savings, according to the analysis, will eclipse $200 million per year in the 2020s as retirees move to the Medicare Advantage program.
Malloy said an added benefit of the deal is that at least a quarter of the state workforce is likely going to retire before the existing State Employee Bargaining Agent Coalition agreement ends, allowing the state to change the benefits structure five years sooner. In effect this means there will be more than 10,000 employees with the new Tier IV pensions on July 1, 2022.
This attrition will save the state almost $77 million in the first two years, with the savings increasing to $97 million annually by 2037, according to Malloy.