Saturday, July 09, 2011

A Matterhorn Of Woe

Budget negotiations – and they ARE budget negotiations --between the administration of Governor Dannel Malloy and unions having broken down, fatally it now appears, some commentators are suggesting that Mr. Malloy should take the opportunity re-negotiate.
Mr. Malloy, managing Editor of the Journal Inquirer Chris Powell writes in a recent column, should reload and only then re-negotiate a revised package with state unions. Any revised package should strengthen the governor’s hand in this and future negotiations. Mr. Malloy, for instance, should consider dropping the preventative care features of Plan A so offensive to some state workers, while “asking a lot in return.”

Dump longevity pay, Mr. Powell advises; freeze salaries in the new administrative plan for more than two years; shorten the expiration of benefits provisions from 2017 to the end of the current administration in 2015, thus assuring that a future governor, possibly Mr. Malloy, will have a stronger hand in contract negotiations; reduce the no-layoff guarantee from four years to one; and enroll new employees in a 401-k retirement savings plan so that the state's defined-benefit plan, fatally under-funded and an extravagance, gradually withers away.

Why, after all, should politicians in Connecticut allow the present crisis to go to waste?

If one has an opportunity to arrange matters in such a way that the union tail no longer wags the legislative and gubernatorial dog, is it not a form of negligence for a governor whose poll numbers are dipping to stand aside and decline to readjust the negotiation universe in such a way that it will in the future favor the general good rather than narrow political interests? A good part of the problem is that Connecticut governors and union bought state legislators have for years crafted their programs and budgets to benefit the lesser rather than the greater good.

Take but one example among many: Connecticut’s real unfunded liability obligation is, according to a report by the Yankee Institute, a burr under the saddle of union bigwigs, between $51-$81 billion, a Matterhorn of woe. Now, it matters who has been responsible for this crippling debt obligation. Certainly there is enough blame to go around; and if political justice ever alights in Connecticut, those responsible certainly ought to loose their seats. But in the meantime, the house is engulfed in flames, and Connecticut finds itself searching for firemen who will pour water rather than political indignation on the blaze. Worse even, present and future debt payers are looking frantically about for decision makers in state government who acknowledge that there IS a fire. The first indispensable step in solving a problem is to own the problem – to say, without equivocation, “This is MY problem.”

A debt obligation so immense devours future tax payments, which consequently will no longer be available to increase teachers saleries, to provide for union cost of living (COLA) increases, to sustain necessary programs for the deserving poor in Connecticut, who must depend on the kindness of taxpayers when a majority of them find it nearly impossible to meet their own financial obligations, the prospect of a debt free future having been compromised by job losses, business flight and a brain drain that forces Connecticut’s young people to migrate to states whose governors and legislators have owned their problems.


Even some prudent judges are beginning to sense the necessity of structural reform. When three states -- Colorado, Minnesota and South Dakota – last year cut the cost-of-living allowances (COLAs) in their pension formula last year, it was expected that the reform effort would come to grief in the courts. Instead, the judges ruled in favor of the cuts, one judge finding that that saving the state’s pension system from spiraling out of control “is a legitimate governmental interest.” Before these rulings public pensions were considered “bulletproof ,” The New York Times noted, but now “the legal tide may be changing for public pensioners.”


Do Connecticut state union workers sense a change in the tide? Do they realize that the kitty is empty? They do not. Do the budget hawks in the General Assembly who approved spending nearly $1 billion of disappearing tax money on a proven failure, the UConn Health Center, realize that they are eating the economic seed corn upon which a recovery from a malingering recession depends? They do not.
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