After months of pointing at the problem, Gov. M. Jodi Rell and the state legislature now have to solve it. The magnitude of the state’s budget imbalance is so large there will be no way to avoid politically unpopular solutions. There is no painless way out.
If the final solution comes in June, the scheduled end of this year’s session, or much later, it will probably be a mix of spending reductions, tax increases and long-term borrowing. In 1991, when the state income tax was the solution to an out-sized deficit, the state borrowed under what were termed Economic Recovery Notes. Whether that is part of this year’s solution is not certain, but it seems a good bet it will be viewed as one of the least offensive options.
A key component of any plan to reduce spending is personnel costs. The Rell administration is talking with union leadership about making contract concessions, but if recent history is any guide, the chance of union leadership and Democratic majorities in the House and Senate going along is unlikely.
Unions do not give up wages and benefits unless they get something in return — and the state is in no position to give anything, except a promise to avoid layoffs. It’s a high stakes game union leadership is more than willing to play, in fact, union leaders seem to relish it. They think about and plan for this level of negotiating long before their government counterparts ever even consider it a necessity.
Flawed Argument
The leaders of Connecticut state employee unions have a strong ally on their side; the Democratic Party. It’s an alliance that is symbolized this session in the person of House Speaker Christopher Donovan, who worked as a union organizer before becoming speaker, who has hired a high-level union operative as his policy director and who has made it clear he does not think union concessions are among the first options to be considered when balancing the budget.
His mantra is: union workers are not responsible for our economic (budget) problems, so I’m not looking to them to pay the price. This argument is obviously flawed. Relatively speaking, there are very few people directly responsible for the current economic downturn, but we are all paying for it. Taxpayers will receive fewer services and pay more for the rest. If they work in the private sector, they may face cuts in pay and benefits, or even lose their jobs. The idea that unionized state workers should be immune from this kind of belt tightening is wrong from a fairness perspective. When your chief ally however, is the Speaker of the House and his entire political party, you have some leverage the average resident of Connecticut does not have.
Layoff Threats
In concession negotiations, the leverage Gov. Rell has is the threat of layoffs. You would think any union leader would happily swap benefit reductions, or delays in raise schedules to avoid job loss among union membership. But in fact, union leaders have been more than willing to sacrifice a few thousand members as part of the negotiating process. For union negotiators, the game hasn’t really begun until there are some casualties. The rest is posturing.
The size of our projected budget deficits will make it difficult for any special interest to argue they have no role in finding a solution. Although the unions will use every tactic available to protect previously won gains, they must consider the long-term impact of the perception that they are the root cause of government over-spending. Such a perception could cost them even more in future negotiations.
Dean Pagani is a former gubernatorial advisor. He is V.P. of Public Affairs for Cashman and Katz Integrated Communications in Glastonbury.