The $5 billion deficit that had opened up for the biennial fiscal year starting July 1 continues to haunt the state government and the people of Connecticut. Republicans proposed to close the budget gap largely on the basis of a restructuring of bloated public sector pay and benefits. Gov. Dannel Malloy wanted none of this. He also did not accept the contention that most of the “concessions” the state received from its unions did not require any “deal” and could have been achieved unilaterally. Significant adjustments to the catalog of the outsized benefits of our government employees are set in statute and could have been addressed legislatively.
The unions and Malloy had other ideas. Their model was to book some money upfront and not to worry about what happens after the first two years. They arrived at advertised “concessions” of $1.5 billion. In exchange state unions asked for and received a commitment for no layoffs; substantial pay increases later; and, most importantly, an extension of the current contract expiration date from 2022 to 2027.
This was modeled after the 2011 contracts, early in the Malloy administration, when the labor agreements were extended from 2017 to 2022. Incredible: Under a different governor, these contracts which exceed anything available to state workers elsewhere or in the private sector anywhere — would be maturing now!
The rank and file union members happily approved a new contract on July 17. The Assembly, a lame duck awaiting the union vote since June 30, did the same in late July, although less happily and with a tie-breaking vote by the lieutenant governor in the senate when Republicans wanted nothing to do with the scheme. The union leadership cheered and celebrated the assembly’s surrender and left on vacation.
With union “concessions” limited to $1.5 billion, the state remains without a budget. This is where matters now stand in the Constitution State: the legislative calendar and budget priorities are set by the unions. Their current assignment for Malloy and the Assembly: Go find service cuts and tax increases for a staggering $3.5 billion elsewhere.
Connecticut’s unfunded commitments include pension benefits which for fortunate retirees may add another 40 years to the 10-year benefit lock-ups just secured. The untenable has now become untouchable. Soon nobody will remember the small “concessions” of the first two of those 50 years.
During the Renaissance, when the Italians invented financial accounting, they came up with a new term for an exchange of small early gains for large later liabilities: la bancarotta. If it turns out that the “concessions” were in fact only worth $500 million (as some have pointed out) and not the advertised $1.5 billion, then the correct term is bancarotta fraudolenta.