Lawmakers this week passed legislation to implement the new $40.1 billion state budget, but state employee unions have yet to approve proposed changes to their wages and benefits -- and now there are questions about how much the labor concessions actually yield.
The governor and Democratic lawmakers packaged nearly $2 billion per year in tax increases and the assumption of $2 billion in union concessions over the next two years in the state budget beginning on July 1.
Negotiations with union leadership apparently produced about $1.6 billion of the needed $2 billion in spending cuts and Gov. Malloy last week said that higher-than-anticipated state revenues would be used to close the gap.
But the nonpartisan Office of Fiscal Analysis reported to lawmakers that it was having a hard time identifying much of the $1.6 billion in savings from concessions.
Among the most significant aspects of the concessions negotiated by the administration and union leadership are a two-year wage freeze, changes to state employee retirement benefits and the introduction of a wellness-based healthcare plan.
In exchange, state employees receive regular wage increases after the two-year freeze, no furlough days and job security until at least 2015. The state employee healthcare and retirement benefits agreement set to expire in 2017 will be extended to 2022.
However, “we are unable to determine or verify the levels that are contained in these estimates in many cases,” OFA wrote in a memo to Republican legislative leadership.
For example, the concessions package assumes $180 million in spending-cut ideas that would come from state employees as well as $90 million in savings from greater use of technology in state government.
OFA said it’s hard to pinpoint how those savings, and others, would actually be realized.
Over the next two weeks, meetings between union leadership and rank-and-file will take place to discuss negotiated package. Union members are expected to vote on the package during the last week of June.