If the definition of a successful negotiation is that both sides feel they gave too much, then Governor Malloy has indeed pulled off a breakthrough in state finance.
The top line is impressive — savings of more than $21.5 billion realized over a 20-year period. With the stroke of a pen — and a lot of arm-twisting — Malloy may have undone some of the damage wrought by years of inept governance. Certainly all of the state’s budget issues haven’t been solved. But the specter of imminent financial debacle has been pushed back some years, although it’s not clear how many years.
Still, as the details emerged, it has become clear that what we have here is a deal that spares a future generation of taxpayers, who are now in diapers, from some of the burden of overpaying for the retirement of a future generation of state workers, who are now entering puberty.
That’s a little abstract for most taxpayers who wanted something more immediate done about what is widely seen as outrageous benefits for the governing class. That didn’t happen and examining the fine detail of the agreement is enough to raise blood pressure among taxpayers:
• The deal imposes a two-year wage freeze and skips one round of the silly longevity bonuses but makes no structural change in either system. It also ends the furlough program, providing an effective raise roughly equal to the hard cash that will be skipped. And there are 3 percent raises in the out years. How many in the private sector have fared that well during the Great Recession?
• There’s a four-year job guarantee. Anybody in the private sector — including the owner — feel that secure?
• A creative health care strategy imposes higher premiums on those who don’t follow the doctor’s orders. That could be good. But the increase in the co-pay to the employee is laughable — up to $5 for a generic drug and $35 for a visit to the emergency room, appreciably less than most of us are paying.
• The defined benefit retirement carousel keeps turning with only the vague ‘availability’ of a voluntary hybrid 401 (k)-style defined contribution system. And the minimum guaranteed cost-of-living increase in retirement benefits has been shaved a half-percentage point to 2 percent while the maximum has gone up from 6 to 7.5 percent.
The appalling comparisons could go on — don’t get us started on the long-term risks of locking in benefits until 2022 — but the point is clear. Even after giving back $21.5 billion, state employees have a set of benefits that virtually anybody working in the private sector would trade for in a heartbeat.
And therein lies the rub. As taxpayers, we can thank Governor Malloy for prying loose $21.5 billion. That’s a good start. But it certainly appears there’s another $21.5 billion available before these benefits even approach ‘above average.’
From the union side, the web comments and blogs are sizzling. The idea of skipping a raise and paying 3 percent of salary for a maximum of 10 years to assure retiree health benefits, for example, is horrifying. So too is the state’s efforts to contain rising healthcare costs by installing penalties for those who don’t embrace healthier living.
The deal requires approval by 14 of the 15 unions covered by the bargaining coalition and an overall 80 percent approval. Whoa. When was the last time 80 percent of any group in this country agreed on anything? Union leaders have a big sales job ahead of them.
As much as the Malloy camp wants to take a victory lap, a little restraint is in order.
Even in the best case scenario, this deal isn’t a win-win. It may well be the best deal we can get. Think of it as achieving something akin to the Cold War’s equilibrium of ‘assured mutual destruction.’
But if it isn’t ratified by the unions, it isn’t even that. It becomes Alice’s rabbit hole, a point of entry into a budgetary morass the likes of which this state — and perhaps the country — has never seen.
