Dan Haar
May 12, 2016
How far can Gov. Dannel P. Malloy go in distancing himself from state employee unions, in favor of the ideas Republicans have been pushing for years?
Shockingly far. On Thursday, just before the state Senate approved a 2016-17 budget that would eliminate thousands of state workers' jobs, Malloy tightened the screws even further. He called for three permanent changes to control spending in the long haul — all of which could weaken the coalition of unionized public employees even beyond the mass layoffs now underway.
First, Malloy, a Democrat, wants an up-or-down vote on negotiated contracts. Democrats have traditionally resisted such votes in favor of letting the contracts go into effect after 30 days without a vote. Forcing lawmakers to vote on a contract that contains raises could make it harder for that contract to happen.
Second, Malloy is calling for "finally enacting the constitutional spending cap that voters approved decades ago." The cap requires that state spending increases align with growth in the state economy, but it is not generally followed because of loopholes, and it is not considered mandatory under recent interpretations of the law because it was never properly adopted. Adhering to a strict cap could require deep cuts in personnel and services, depending on how the economy is doing.
And third, Malloy wants to change the way the state forecasts budgets, by no longer automatically assuming annual increases in the parts of the budget that are controllable, including spending on state employees. Under his plan released Thursday, budget forecasters for the state would build in increases for such fixed costs as debt service, Medicaid, pensions, retiree health care and other entitlements, but not the day-to-day running of state government agencies.
This could make it politically harder for lawmakers to vote for budgets that maintained levels of service. New spending to account for raises and other rising costs would count as an "increase" even if it led to layoffs and reduced services.
Here's how it might work: Under the current system, let's say the $18 billion general fund budget in year 1 required a 4 percent increase in order to pay all the bills and maintain all the people and programs in year 2. The new baseline for year 2 would be $18.72 billion, reflecting the 4 percent rise in spending. If the state was only willing or able to spend, say, $18.4 billion, Malloy and lawmakers would need to "cut" $320 million.
Under Malloy's proposal, which he included in the budget language lawmakers are set to approve by Friday, here's how it might look: Let's say the $18 billion included $10 billion of fixed costs and entitlements, which required a 4 percent increase in order to pay the bills, and $8 billion of other spending that also needed 4 percent in order to remain whole. The new baseline of spending would be $18.4 billion, not $18.72 billion — because the $320 million extra that would be needed to keep day-to-day programs running would not be part of the baseline.
Under that scenario, if the state were spending $18.4 billion, meeting its fixed obligations, it would have a zero increase in spending on the day-to-day operations of state government. The state would still need to find savings of $320 million or cut people and programs, but it would not be called a cut, and the difference would not be called a shortfall in the budget.
This is called "zero-based budgeting," a goal that many organizations say they want, but which is extremely hard to carry out — and virtually impossible when prices are rising.
Unions, already pleading with lawmakers to reject the budget, responded immediately with anger.
"Legislators should know better than writing into law willful ignorance about the realities of inflation and cost increases which affect the budget process. Pretending they don't exist won't make cost increases for municipalities and local school districts go away," AFT Connecticut President Jan Hochadel, whose union includes six of the 35 state bargaining units, said in a written statement.
"By supporting this scheme they will support laying off thousands of teachers, first responders and road repair workers," Hochadel said. "That's on top of as many as 5,000 rape crisis counselors, probation and corrections officers, nurses and mental health workers and other state employees cut by this bad budget."
The three changes Malloy pushed don't necessarily mark a shift in his views. At one time or another, he has favored all three in some form. For example, he called for the legislature to reject a contract for UConn non-faculty employees earlier this year, saying the raises were too high. Lawmakers sent that agreement back to UConn for renegotiation.
And the changes are probably not specifically aimed at unions, only at spending. But by putting them together on the eve of Senate and House votes, with specific bill language for the zero-based budgeting plan, Malloy is dramatically upping the ante on what he has called a new economic reality. It happened on a day when a new national poll of 66,000 people showed Malloy is second to last in popularity in his own state, even behind Michigan Gov. Rick Snyder, whose handling of the Flint water crisis has brought widespread calls for him to resign, or worse.
And it happened on a day when former Gov. M. Jodi Rell told a reporter with Hearst Connecticut Newspapers that she had changed her legal residence to Florida in part because of Connecticut's poor tax and business climate. That disgraceful posturing, not befitting Rell, reflected badly on Malloy even though it was Rell who ran up spending, leaving Malloy with a $3.5 billion hole when he took office. Malloy has cut the rate of spending increases and the size of state agencies.
On Wednesday, I spoke with the top AFL-CIO leaders as they left a meeting with Senate President Pro-Tem Martin Looney at the Legislative Office Building, looking grim. That was before Malloy's latest bombshell. I asked about changes in how the budget was made.
"We would want Connecticut to be a more fact-based state, which it isn't," said Sal Luciano, executive director or AFSCME Council 4.
As he sees it, the facts are that cuts as deep as we are now seeing will backfire by hurting the state's economy. As Malloy and his budget chief, Ben Barnes, see it, the facts are the state can't afford to do what it has always done.
The danger is that they both might be right.
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