The apparent rejection of a concessions deal by state employees leaves Gov. Dannel P. Malloy and the General Assembly with a sizable hole in the budget for the year that begins in just over a week. The question is, how much do they have to make up?
It's not the $700 million that the labor deal was supposed to save in fiscal 2011-2012; some recent good economic news, including a bump in revenues announced this week, has seen to that. But the size of the gap depends partly on how Malloy decides to use the surplus now anticipated in the current year budget and partly on whether favorable economic trends continue.
"There has been strong growth, but it has been very recent," Malloy's budget director, Office of Policy and Management Secretary Benjamin Barnes, cautioned Tuesday. "I appreciate what we see now but I don't have any ability to be certain it will continue."
OPM reported Tuesday that this fiscal year's General Fund now is on pace to finish $85.5 million in the black. And that's despite Malloy and lawmakers dedicating $646 million from the fund to cover current expenses, thereby scrapping a plan to finance a portion of the budget with eight years of utility bill surcharges.
The administration also reported that General Fund revenues for this fiscal year alone are up $53.4 million from the past month, with $40 million of that growth tied to the income tax.
The $20.14 billion budget adopted for the fiscal year that starts July 1 was designed with an $89 million surplus cushion - assuming the concession deal was ratified. With rejection of the tentative agreement by a major AFSCME unit Tuesday, that appears unlikely.
But if the past month's revenue growth can be counted on again in 2011-12, he will start with more than $142 million to plug into the $700 million gap. Combined with the $85.5 million left over from this year, Malloy could have nearly $230 million extra at his disposal in 2011-12.
The governor has said that if the labor deal is rejected, he would order as many as 7,500 layoffs over the next two fiscal years to keep the budget in balance. He's also warned that $2.9 billion in aid to cities and towns, left largely untouched in this year's budget deliberations, could also be cut. Malloy has ruled out adding to the $1.5 billion in tax increases passed by the legislature.
Barnes cautioned Tuesday before the AFSCME vote was tallied that while the current surplus forecast is new, it is unlikely the governor would use that one-time bonus to help fund ongoing programs in the next budget if concessions are rejected, as now appears likely. "I think that would be at odds with many of the statements he has made," he said.
The administration reacted cautiously today to the AFSCME vote, which was first reported late Tuesday night by The Mirror.
"We are aware of what's being reported, but want to let the state employee unions finish their voting process in its entirety," said Roy Occhiogrosso, the governor's senior adviser. "As the governor has said all along, he hopes the agreement is ratified; if it's not, then an alternative budget will be put in place - one that does not increase taxes beyond what has already been agreed to."
The governor and his fellow Democrats in the legislature have taken heat from minority Republicans who charge the next state budget has a much larger fiscal cushion than the administration has acknowledged.
Deputy House Minority Leader Vincent J. Candelora, R-North Branford, said Malloy and his allies built excessively conservative revenue assumptions into the new budget and the administration's latest numbers reinforce that argument.
With the latest growth factored in, this year's General Fund tax revenues are projected at $11.96 billion, $1.04 billion over the level originally budgeted for 2010-11.
But Malloy and the legislature assumed this growth will slow considerably next year when they adopted the next state budget on May 4. The two branches used a joint revenue forecast projecting a further increase of $411 million, or 3.5 percent, based on economic growth alone - before new tax rates are applied.
And now based on the administration's latest revenue numbers, next year's growth would be just $286 million, or 2.4 percent.
"What's sort of disconcerting is that nobody seems to want to talk about this," Candelora said. "The Republicans have always felt that we've underestimated revenues and we created these surpluses while raising taxes."
The new budget raises more than $1.5 billion next fiscal year from tax increases, including higher levies on income, sales, corporate earnings, estates, insurance companies, real estate conveyances, electricity generation and cigarettes.
Despite the recent growth, Barnes said the revenue forecast built into the new budget last month was and is the responsible move.
"I sincerely hope that personal income, employment and economic activity rebound more quickly than we projected," he said. "But it's not prudent to bank on a robust recovery when that is still at odds with many other economic indices."
The University of Connecticut's quarterly economic journal issued a similar warning last week.
While personal income rose nearly 5 percent between January and March, unemployment remained "stubbornly high" at 9.1 percent, gas prices rose and both home prices and new housing permits plunged compared with the first quarter of 2010.
We are witnessing the beginning of the end of collective bargaining in Connecticut. So foolish and shortsighted.
Should have been open and honest from the beginning with your members.
Congrats guys! But now once the newer workers get canned, you footdraggers may actually have to do some work...enjoy!
No one in the state workforce will
Get laid off. Mark this post.
There is no chance. Motivated no voters high fiving each other as they voted this morning. This deal is negated by brave correction staff. Akll of mally's new spending is greater then our concession package. He is just going to have to stop his spending spree and live with in his means. The union was for our concessions because thousands of new dues payers would be created and their dream of single payer health care would be started. The sustinet thing is partially true, the left wing extremists like the union and governor practice incremntalism. Their agenda is so warped
Read MoreGov Malloy over reached.
Sacrifice was not shared.
Union rank and file were underestimated by their leadership
The p2 vote shows that workers accepted the wage freezes but
found the pension and healthcare changes too much.
The Gov. left himself no escape route.
He is too arrogant and too stubborn.
I agree with Helenisannoying. Malloy doesn't have the balls to lay anyone off. He bluffed, and the Union called his bluff. Now he is going to slither away and try some other stupid stunt, probably aimed at people who cannot fight back. However, I also agree with Paul and SMH. You are now witnessing the end of collective bargaining in Connecticut. There will be such a backlash among the non-Union citizens of Connecticut that no Democrat will ever again be elected in this state. This is truly cause for celebration!
Paul and Dave Z. are right. We are seeing the end of collective bargaining in our State; though it is far from foolish and sad. It is about time. Unions have controlled the Democratic Party since the 20s and they will now face the wrath of the taxpayer. Yeah, I know all of you Public Employees insist that you are taxpayers too. BUT, you’re not really. You use OUR tax money to pay YOUR taxes. 100% of your pay is from the taxes paid by non-public employee and you graciously give back a few pennies of that money to redistribute.
Read MoreThis is a sad catastrophe for Connecticut.
Malloy is not going to let AFSCME beat him down. If the concession deal fails, let it be so. Who cares? It is the hands of some nay-sayers that are soiled.
Malloy has now a golden opportunity - a god sent one. He is now going to dust off and unfold, with big fanfare, the Early Retirement Incentive Program (ERIP) to ease out no less than 10,000 senior state workers, and then claim grand victory that he has saved the state from its fiscal crisis; saved the jobs of thousands of junior state workers; and stood by his promise of
Read MoreAn advocate....You have it wrong my friend.
This is not a catastrophe at all. This is a BIG day in the history of collective bargaining for CT.
Union brothers and sisters who stood up to a BULLY and their out of touch Union Leaders and of course SECRAP, a group whose leadership has their own private agendas and NOT yours or my best interests in mind.
Brave members who stood up and took a stand and didn't roll over to threats.
It's a new beginning, a GREAT time to be a state employee!!!
I think the legislature should declare a state of emergency and reduce wages accross the board. This woulod give time to figure out what needs to be done. Sales tax on clothing under $50 starts july 1. Shop now to save money.
It's hard to argue that there's ever a bad time to be a state employee. You get to play in your own fantasy land where economic realities never intrude and you can half-ass your way through a 25-year career and retire in your 50s with guaranteed benefits, if you so choose. Why be productive, assertive and entrepreneurial when you can just coast along with no worries?
Someone actually wrote that state workers do not pay taxes....this is actually insane thinking. Come on you can come up with something better than that. No one wants to point the finger at state workers until there job comes under fire and i understand that. BUT, this effects the newer line workers such as state police and corrections officers. So the thought on this is to layoff these workers. I promise you this if you layoff these employees with the retirements looming and with the current vacant positions most if not all will be called back
Read MoreI voted no and I content with the outcome of the vote. The SEBAC deal needs to go back to the drawing board. I think that people would have been more likely to approve an increase in health insurance than to approve the whole "Value Based Healthcare" thing. I am glad that for now, I will be able to keep my same health insurance. Because if this SEBAC thing went through I would go over to my spouse's health insurance.
The union leaders are seeing the result of deceiving their members and aligning themselves
Read More>>Malloy has ruled out adding to the $1.5 billion in tax increases passed by the legislature.
He's doing the CT taxpayers a real favor! What a guy! [/sarcasm]
To I voted no i could not have said it any better that Value Based HC turned a lot of people off the gov. is so good at running things like SS, Medicaide, Medicare, USPS everything they got their hands on they make a mess of it imagine them running or RUINING our HC. that is what turned me off of this deal. I would be willing to pay more to keep my ins. give up raises but the vaule based HC was just too much for me.
The union should have discussed the givebacks with their members to see what and how much we would be willing to give up what we would accept and not accept when i heard they reached i deal i was like WHAT DEAL they never discussed anything with us they just felt we would vote for this garbage well they got fooled most were outraged that they just went ahead without our consent. The discussions could have been handled a lot better. They would have had a different outcome they just wanted way too much.
just in...ceui/seiu also voted no. sebac to have a 2p.m. press conference to announce a do over revote.
Re-Vote?
It's been done before.....and it worked: http://articles.baltimoresun.com/2010-11-17/news/bs-md-ci-teacher-contra...
Why is so cut and dry? Why do I have to vote yes to a contract that I disagree with to avoid layoffs? Why can't the Malloy Administration come up with some actual "spending cuts" instead of trying to threaten us with "massive layoff" propaganda? Why were there no guarantees in the contract that stated something like, "hey, if the economy rebounds over the course of the next year or two, then we'll give you back some of your cuts"?
Again too, why is it 7500 layoffs, especially considering:
"But if the past month's revenue growth can be counted
Exactly, Vera!
The healthcare portion of this agreement is a thinly-veiled attempt to shove Obamacare down our throats via labor agreement.
Sorry Dannel, no Obamacare testbed on our coin.
Vote no!!
reply to whiskeytangofoxtrot! A Big day in the history of collective bargaining for CT??? Tell that to the 7500 loyal union members that will be laid off. I am sure they will politely tell you what you can do with that thought! A new beginning?? yes it will be because collective bargaining & binding arbitraion will probably be taken away! And to say its a great time to be state employee?? Well in 10 years when 1/3 or more of the state departments have been privatized (including prisons) &with union authority at a mininum (if they exist at all)I
Read Moreif lay offs do come, i feel for the junior staff employed by the state. however, im proud i voted NO to this absolutely ridiculous deal!! the state workers should NOT have to balance the state budget every 2 years by giving back concessions.
id much rather see the state raise the sales tax to 7 even 8% this way all the welfare collecting people that are out buying new bmw's and mercedes because we pay for their housing, food and heat, can contribute that extra money via sales tax. have you driven by a low income housing project lately???
Read MoreYour new agenda:
Remove collective bargaining for pension and health care
Increase premium co-shares from 14% to 30% for employees (can be phased in over the two year budget)
Increase co-payments and co-insurance requirements
Increase pension contributions for everyone (can be phased in over the two year budget)
Increase retirement age for pension including hazardous duty pension to 25 Years
No overtime or other income included in pension calculation
Phase in 401k's by switching staff pensions to a cash balance.
Layoff by closing programs/ facilities that encompass a large number of senior staff (by cost) (let them retire or substantially
It's real sad that many of you are only blaming the corrections dept. I know many of them and would like to see some of you walk in their shoes, some of you seem to think that they work 7-3 or 8-4 and they get to go home when there shift is over WRONG. Or they are sitting at a desk flipping papers WRONG. You go work for them if you think it's so easy, when your in the middle of a riot risking your life surrounded by criminals. They have giving up so much more than you can imagine,
Read MoreMalloy enacted 77 tax increases but the public unions want more "shared sacrifice"? these people are delusional. One of the worlds largest hotel companies moves it's headquarters to Stamford just in time for Malloy to hammer the hotel business by raising the hotel occupancy tax 36%! Brilliant. But the new low was the fee increase for health care providers for the mentally retarded. You really can't go much lower than that. Malloy would rather stick to retarded citizens then enact meaningful reductions in state government.
VOTING IS NOT OVER!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1
CONTINUE TO VOTE NO AND REJECT THIS POS AGREEMENT CONCOCTED BY SECRAP AND OUR OUT OF TOUCH UNION LEADERS!!!
LET THEM KNOW THEY CAN'T BULLY US INTO WATERING DOWN OUR BENEFITS. WE HAVE GIVEN BACK ENOUGH AND THE TIME HAS COME TO TAKE A STAND!!!!
VOTE NO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1
The unions had a choice - vote yes or risk layoffs. It appears that the no votes will win out. Now comes the pain of layoffs.
I am 100% against possible cuts to municiapal aid. The people in municipalities had nothing to do with the vote - why should their taxes go up because of cuts to aid to towns and cities?
I fully expect to see state employees laid off.
Yup, it is time for the Unions to grow up. Nobody loves you any more. You are as hated in this state as Malloy is. Why? Well, Malloy is a liar, and a devious politician in the worst sense of the term, and you are spoiled brats who have been living on the backs of other working people all your careers, and are too greedy to give back what you owe to the people of Connecticut. Malloy was actually right about the need for shared sacrifice. The Unions have it way too good, and it is time to either
Read More"If the state does not change its demographic trajectory, it faces a bleak future."
A Connecticut Center for Economic Analysis report, "Recovery Stirring, But Will Connecticut be Too Old to Compete?"
Get the latest headlines right to your mobile
Visit m.ctmirror.org on your mobile device
FOLLOW US ON: 
CT Mirror is now well into its 3rd year. Since our launch on Jan. 25, 2010, we've published more than 4,000 stories and had 3.5 million web visits.
From the start, our goal has been to offer readers information on Connecticut policies and politics - and the personalities behind both - to help residents make the best decisions possible about their lives and those of their families.
PROUD SPONSOR
CT JOBLESS RATE
January 2011: 9.3%
February 2011: 9.2%
March 2011: 9.1%
April 2011: 9.0%
May 2011: 8.9%
June 2011: 8.9%
July 2011: 8.9%
August 2011: 8.8%
September 2011: 8.6%
October 2011: 8.5%
November 2011: 8.3%
December 2011: 8.1%
January 2012: 8.0%
February 2012: 7.8%
March 2012: 7.7%
April 2012: 7.7%
PROUD SPONSOR
Printer-friendly version
Send to a friend