As lawmakers attempt to reign in government spending to close a $68 million budget gap, they have few options. That’s because only 25 percent, or $4.4 billion, of the state’s $17.6 billion budget is discretionary. The balance is already spoken for — fixed costs driven by statutory, judicial, contractual and federal obligations.
To address the current deficit, Gov. M. Jodi Rell is tackling discretionary spending. Last month, she invoked a state law that allows her to cut up to 3 percent of any fund or 5 percent of any appropriation. Her belt-tightening strategies include a ban on out-of-state travel, a freeze on new hires, and a request to agency heads to trim their budgets.
But at best, by cutting discretionary portions, Rell could reduce the state’s operating costs by about $500 million, according to Jeffrey Beckham, undersecretary for the state Office of Policy and Management.
Contractual benefits, specifically health care benefits and state worker pay raises, cannot be reduced, Beckham added.
During the state’s 2002 budget deficit, Gov. John G. Rowland tried to sidestep those restrictions after failing to win labor concessions, according to union leaders.
Rowland maintained that the union’s refusal to freeze pay hikes forced him to lay off 3,000 workers and abolish several classified positions.
Only one union — comprised of state university faculty — agreed to the pay freeze.
The layoffs landed the state in federal court, where the unions charged that the layoffs were in retaliation for union affiliation. The lawsuit — State Employee Bargaining Agent Coalition v. Rowland — continues to wind its way through federal court and has yet to be heard by a jury.
“If we had a governor that we trusted, we wouldn’t have done this,” said Daniel Livingston, a labor attorney who served as the Connecticut State Employees Association’s chief negotiator.
Perhaps even more important than providing the state with a short-term wage freeze, Rowland also wanted to revisit the health care and pension agreement of 1997 that locked in benefits for 20 years.
“We were willing to do that,” said Livingston, who said talks halted when Rowland refused to promise no layoffs. I have no doubt that an agreement would have been possible, but Rowland turned it down.”
But Labor Relations Director Linda Yelmini remembers it differently. “As I recall it, the unions would not agree on a wage freeze in return for no layoffs,” she said.
In today’s mild recession, wage freezes and layoffs aren’t a wise course, according to Fred Carstensen, an economics professor who heads the Connecticut Center for Economic Analysis.
“In fact, I almost resent this kind of discussion,” said Carstensen, who pointed out that some agencies are so understaffed that they cannot do their job properly.
The situation will be compounded during times of economic stress when the demand for public services increases, he said.
Connecticut needs to think how it will improve its competitive position, not weaken it by cutting state services and workers, Carstensen said.
Peter Gioia, an economist for the Connecticut Business & Industry Association, agrees that the state needs to develop long-term solutions.
“The problem is that we go into these periods when we have these [deficit] problems, and everyone looks for short-term fixes,” Gioia said.
However, he believes much can be done to improve state services.
“The state needs to develop a culture of continuous improvement,” said Gioia, referring to lean manufacturing processes the private sector has developed to improve worker efficiency and productivity.
“There is nothing like that going on in state government,” he added. “When you see these bridge projects take 10 years, are they meeting [the general public’s] expectations? If I’m building in the private sector, I’m expected to complete that in a timely manner.”
But labor leaders say they have tried to collaborate on improving state service.
In 1995, Robert Rinker, executive director of the Connecticut State Employee Association, headed an “Innovations Committee,” which included of state workers who developed recommendations to improve public service. The reestablishment of the committee would be welcomed by the rank and file, he said.
State workers can help the state save money and cut costs, he said, adding that it requires open communication between the administration and the unions.
“Gov. Rell was open in the beginning,” Rinker said. “But there hasn’t been that openness and dialogue ever since.”
In 2004, Michael O’Brien, president of the CSEA, said Rell asked the unions to participate on a panel charged with developing recommendations on contracting reform. Today, the final report sits on a shelf collecting dust, he said.
Rell did not respond to requests for comment.
The administration of Gov. Lowell Weicker achieved some degree of cooperation with labor during the dire deficit situation of 1991.
“Gov. Weicker knew he had to have an agreement with the unions and vice versa. Something had to give from the unions,” Rinker said.
“There was respect between Weicker and the unions. Weicker proposed a state income tax to create a new source of revenue, and the unions were willing to concede $400 million to help bridge the budget gap,” he recalled.
And Livingston noted that when Weicker laid off workers in 1991, “we didn’t even consider [litigation].”