Sunday, May 15, 2011

The Real Budget Deal

Fresh from the Democratic Party’s web site, here is Democratic Party chieftain Nancy DiNardo’s reaction to the budget deal that Gov. Dannel Malloy wrested from union representatives:

“Thank you to Governor Malloy, Lt. Governor Wyman, the state employees, and the Democratic leadership in the Assembly for this major accomplishment. This is a critical first step, and there is more work to do, but this is definitely a good day for Connecticut taxpayers. This is what shared sacrifice and real leadership looks like.” - Chairwoman Nancy DiNardo
Though particulars of the deal were not revealed during the weeks of closed door negotiations, a broad outline of the Malloy administration-union deal, according to news reports, involved a union give back of $1.6 billion, $400 million short of Mr. Malloy’s earlier stated goal of $2 billion in the biennium budget. The savings shortfall is to be recovered from resources other than tax increases, according to the governor’s office.

Tucked into the present budget is a surplus of $1 billion that may be deposited in the state’s depleted “rainy day” fund or spent to finance a $900 million improvement of the state’s newest dollar-swallowing White Elephant, the University of Connecticut Health Center, or some other state financial “need” that will arise in the near future. Political columnist George Will defines a “need” as “a want that’s more than 24 hours old.” Needs of this kind have driven Connecticut to the brink of bankruptcy, and the state’s new one party infrastructure will not lessen its neediness.

Mr. Malloy intends to liquidate the greater part of Connecticut’s red ink, the largest per capita deficit in the nation, through a $ 1.4 billion tax increase that Mrs. DiNardo feels is “good for taxpayers.” The Democratic budget – no Republicans in the General Assembly were permitted to adjust it, or even breathe upon it – is the first entirely partisan budget that has seen the light of day in decades. This fiscal term, the Democrats control both the governor’s office and the General Assembly by a margin that renders collegiality among different Party members unnecessary.

Deferring to unions, the governor approved a four year “no lay off” clause that would be irrevocable even if, in future days, the red ink were to rise to cover Mrs. DiNardo’s ankles. The governor also extended the union agreement an additional five years. Unions leaders agreed to forgo raises for two years, after which salaries will increase at 3 percent for three years. Dreaded lay offs were removed from the bargaining table, and the governor considerably narrowed union give backs when, even before serious negotiations had begun, he steadfastly resolved to maintain the state’s obligations to municipalities, effectively removing the need for “shared sacrifice” at the town level -- all in all not a bad deal for the unions.

Before the doors were bolted shut on negotiations, Mr. Malloy suggested that union leaders and Democratic members of the General Assembly should quickly accept his proposal and lay on him the expected political blame arising from taxpayer and union dissatisfaction.

The Democratic budget raised taxes at a time when the governors of contiguous states had forwarded budgets that raised no taxes. Connecticut’s Democratic budget doubles the corporate surcharge during the nation’s deepest and most prolonged recession in many years, when many businesses – as opposed to the unsinkable CEOs of some of “too large to fail” businesses – are suffering rising costs and business slowdowns.

In Massachusetts, once derided in Connecticut as Taxachussetts, the Democratic legislature attacked collective bargaining, one of the more aggressive escalators of governmental costs. Republican leader John McKinney referred obliquely to the Massachusetts miracle in his senate response to the partisan Democratic budget when he said that Connecticut’s sister state had done things that “would be unthinkable” in the Democratic dominated General Assembly.

In a story in CTMirror, Mark Pazniokas was one of the few reporters in the state who noted that Mr. Malloy this year had an infrequent opportunity to drive down the costs of union contracts that would not occur again until 2017, “three years after the next gubernatorial election,’ when current union contracts on pension and health benefits expired.

Gubernatorial leverage in union negotiations, in other words, is limited by the date of expiration on union contracts, an arrangement that gives unions an inestimable edge in negotiations with elected representatives in the state that unions would doubtless prefer to maintain, for it prevents governors and legislators from pressuring unions to make deals that Mrs. DiNardo, the head of the Democratic Party, amusingly considers a boon to taxpayers. There is no movement afoot in Connecticut’s new one party state to redress this costly imbalance; neither will union reliant Democrats challenge binding arbitration
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