July 17 – State unions ratified a deal Tuesday to extend their benefit contract through 2027 in return for small changes to their pension and healthcare benefits. The deal negotiated with Gov. Dannel Malloy also restricts layoffs for unions that accept three years without raises.
Taken together, the deal guarantees expensive benefits, albeit slightly less expensive than currently offered, for at least the next decade and limits the flexibility of state leaders in the case of future deficits.
“This deal guarantees unsustainable benefits for state unions for the next decade,” said Yankee Institute President Carol Platt Liebau. “For the rest of us, it guarantees budget deficits and -- by limiting future options -- virtually guarantees future tax increases.”
Official estimates expect deficits will continue. Meanwhile, tax revenue has proven disappointing relative to official estimates. Additional uncertainty comes out of Washington as it is unclear how President Donald Trump’s budgets will affect state funding. Union leaders themselves used the fear of future deficits to lobby for the extension deal, saying layoff protections will be critical at those times.
Rather than doubling down on the existing approach of rich benefits and perpetual deficits -- an approach largely responsible for Connecticut’s fiscal crisis -- lawmakers should take the steps appropriate for the budget emergency we currently face.
“There are times when we have to do things we don't want to do. From a legislative perspective, now is one of those times,” said Joe Horvath, Yankee Institute’s director of legislative outreach. “It's time to break the glass. It's a budget emergency and we need emergency solutions.”
According to Horvath, lawmakers should reject the union deal and consider the following solutions instead:
- Pass a law setting union benefits by statute starting in 2022. Connecticut already does this for teachers. “Connecticut government can be more affordable if we become more like Rhode Island or Massachusetts,” Horvath said.
- Reform pensions for future teachers to make them more flexible, portable and secure. “Nearly one half of Connecticut teachers don’t get a pension, yet teacher pensions are expensive and drastically underfunded. We could solve both problems at once by offering a more affordable benefit to all teachers, instead of a very expensive benefit just to a few, ” noted Horvath.
- Focus Medicaid on the truly needy. “Gov. Malloy has already made some improvements to Medicaid to focus state spending on the truly needy,” Horvath said. “More can be done to ensure Medicaid meets critical needs without added spending on healthy adults.”
- Relieve municipal mandates and reduce local aid accordingly. “Instead of driving the cost of local government up, lawmakers should increase the flexibility of local leaders and generate savings for state and local taxpayers,” Horvath suggested.
“The Yankee Institute stands ready to help lawmakers find a better way through this budget crisis,” said Liebau. “Tying the hands of future Connecticut leaders with a backroom union deal will not solve our state’s problems; it will enshrine them in law.”