Connecticut faces significant fiscal challenges as lawmakers work to craft a biennial budget amid a projected two-year budget deficit of $3.6 billion.

At a time when essential state services from education to transportation and healthcare are under increasing strain, state legislators must find a way to create a spending plan that is stable, affordable, and sustainable.

Connecticut budget deficits
Connecticut faces a projected $3.6 billion budget deficit over the next two fiscal years.

The state is still struggling to recover all jobs lost during the 2008 recession, making a predictable budget essential to Connecticut employers as they work to generate good, well-paying jobs.

It’s a tall order, CBIA Senior Vice President Brian Flaherty told members of the legislature’s Appropriations Committee March 24 as they heard testimony on nearly 100 bills reforming collective-bargaining agreements the state has with employee unions.

“Making Connecticut government more efficient is essential to building and sustaining a healthy economy and an improved quality of life,” Flaherty said.

“That discussion can’t happen without addressing the proposals before you today.”

Emotionally, Politically Charged

Flaherty said CBIA and its thousands of members, who support a workforce of hundreds of thousands of Connecticut residents, understand the issue of state employee wages and benefits can be emotional and politically charged.

“To be sure, there is no way to address these bills—or any part of the state budget—as a matter of mere arithmetic," he said.

"They involve the livelihood of the men and women who serve this state the thousands of families they serve and protect, and every citizen of our state.”

We're all in this together. We all want to make Connecticut a better place to live, work, learn, and thrive.
Flaherty noted that $8 out of every $10 put into the state retirement fund today covers payments not made in the past or investment earnings not realized.

“This is not the fault of Connecticut taxpayers, this legislature, this governor, and certainly not the fault of the men and women who work or have retired from state service,” Flaherty said.

“But the solution is for all of us to find.”

Flaherty said the 96 bills before the committee “reflect the urgency that we all face, and embody reforms large and small that we believe merit your consideration.”

CBIA supports four specific concepts contained in the bills:

1. Requiring the legislature to vote on collective bargaining agreements and stipulations.

The executive branch has the mandate to negotiate with the state employee bargaining units, and the legislative branch holds the “power of the purse.”

Agreements reached by the executive branch are placed before the legislature, and if not acted upon within 30 days, are automatically approved.

These agreements should receive an up-or-down vote of the General Assembly.

2. Ending the calculation of overtime, longevity payments and mileage payments in pensions.

Overtime, longevity payments, and/or mileage reimbursements are non-salary compensation, and should not be used to inflate pension benefits over what they would otherwise be.

3. Converting the defined benefit retirement plan into a defined contribution plan.

Connecticut’s not-for-profit and for-profit employers, other states, and an increasing number of cities and towns have converted from defined benefit pension plans to defined contribution plans.

It’s time that state government does the same.

4. Limiting the length of collective bargaining agreements.

Collective bargaining agreements that are years—or decades long—outlive their ability to reflect changes that occur during the times they span.

2017 was the year that an agreement on retirement and health insurance benefits forged 20 years ago was supposed to expire.

Over the course of the last 20 years, we have heard many comments from our members regarding the length of that contract.

Although we do not have a specific recommendation on length, limiting future contracts is the only way to start with a blank slate.

Bipartisan Commitment Key

CBIA has also supported legislation to increasing medical co-pays, raise the retirement age, and raise the age and service requirements for retirement benefits.

“We collaborated with this committee and others to enact long-term structural reforms to the state budget," Flaherty said.

"These four principles must be the pillars of reforming the way Connecticut provides for the compensation and retirement of the state’s public sector workforce."

He urged lawmakers to look at a case study the State Legislative Leaders Foundation did on Rhode Island’s 2011 pension reform.

“They key was a bipartisan commitment to the open airing of controversial proposals in front of what the study as ‘a wary public, threatened constituency, and a reluctant legislature.'”

Flaherty said CBIA understands the state’s enormous potential and is confident Connecticut can leverage its strengths—our workforce, education system, colleges and universities, quality of life, and our advanced manufacturing and financial-services sector—to reach full economic capacity.

“Uncertainty and instability at the Capitol, however, makes it harder to keep and to grow good jobs in Connecticut’s public and private sectors, harder for our children to find those jobs and afford to stay here and harder for retirees to make their homes here,” he said.

“CBIA, therefore, urges a bipartisan effort to enact policies that will stabilize the state budget, boost confidence in our economy, and put Connecticut on the pathway to growth.

“We are all in this together. We may be affected in different ways by these bills, but we live in the same communities, drive the same roads, our kids attend the same schools, and we all rely on the need to make Connecticut a better place to live, work, learn, and thrive.”


For more information about the budget and state spending, contact CBIA’s Pete Gioia (860.244.1945) | @CTEconomist

For more information about state tax policy, contact CBIA’s Louise DiCocco (203.589.6515) | @LouiseDiCocco