Connecticut, still in a recession and plagued by crippling
deficits and job losses -- 14,900 positions over the last four
months, according to Department
of Labor figures -- cannot recover its economic
standing among neighboring states without enacting major reforms that entail
permanent long term cuts in spending.
Any reform that reduces state employee salaries and benefits
in Connecticut is a tall hill to climb, because the state of Connecticut and
unions are bound by contract law and not, as is the case in Rhode Island, by
statutory law. To put it another way, union and state disputes in Rhode Island are
settled by the legislature; in Connecticut, such disputes are settled by the
courts. Unlike Connecticut, the Rhode Island legislature controls the destiny
of the state through democratic rather than judicial means. Bound by contract
law, Connecticut has surrendered to its courts final decisions that should rest
with the General Assembly.
Managing Editor of the Journal Inquirer Chris Powell has for
years been suggesting an end to binding arbitration, which occurs whenever the
state and state unions dispute what has become an inevitable increase in state
employee salaries and benefits. Binding arbitration has been a labor cost
growth engine that favors union demands over requests – we cannot call them
orders by the administrative state – that state unions accept modest reductions
in salaries or highly inflated benefits. No one will dispute that the arc of
binding arbitration bends upwards in favor of unions.
The arc of state-union contract negotiations also bends
upwards in favor of unions, so much so that Connecticut quite literally can no
longer lift the weight of its accumulative pension liabilities. The state has
been winking at its obligations for decades; for as many years, the state has
moved money from dedicated pension funds to general funds to avoid raising
taxes or cutting spending. When, taking seriously the notion of dedicated
funds, Governor Dannel Malloy began to shuttle tax money into the pension fund,
he soon found that he had fewer resources left for, say, Connecticut’s
disabled. The crunch finally arrived shortly after Mr. Malloy had raised taxes
twice. Facing repeated deficits caused by, among other things, state employee
salaries and pension obligations, Mr. Malloy, with apologies to the state’s
halt and lame, was forced to cut spending across the board, which ultimately
affected services to the truly needy in our state.
Finally, we have all arrived at a sort of equity of misery
-- all, however deserving or undeserving, are to suffer a diminution of state
services. Our Capitol City, Hartford, is teetering on bankruptcy; it has become
politically dangerous to raise taxes again to adjust to what has become a ritualistic
anticipation of deficits; and state government finds itself enclosed in what
the French use to call “the little ease,” a prison cell craftily constructed in
such a way that the prisoner can neither stand up straight, sit comfortably or
lie down.
In Rhode Island, the little ease has been eased by pension
reforms undertaken – not without fierce opposition – by Democratic Governor Gina
Raimondo, who has instituted remarkable changes that will over time reposition
her state among competing states in New England. The reforms, championed by Ms.
Raimondo in 2011 when she was General Treasurer of Rhode Island, include
shifting current and future state workers to hybrid plans with a
defined-contribution component, suspending cost of living adjustments, increasing
the retirement age of state workers and slashing nearly in half unfunded
liabilities. Such reforms, the Wall Street Journal (WSJ) proclaims, “are
revolutionary” here in the northeast, where most politicians have for decades
tended to operate at the beck and call of state employee unions.
In the WSJ story, “An
Island of Rationality in Blue State New England,” Ms. Raimondo asserts
that “the reforms were key to giving businesses certainty so they can invest.
‘I’m not going to raise your taxes, and you can believe me,’ she says. That’s
something her Connecticut counterpart Dannel Malloy can’t say.”
Ms. Raimondo reformed the way Rhode Island did business with
its unions by persuading the legislature to change the statutes that govern
what we call in Connecticut collective bargaining. Here in Connecticut, Mr.
Malloy is the state’s chief contract negotiator, and any affirmed contract in
place can only be changed through collective bargaining, an embarrassing
process in which the governor begs unions to accept reforms he and the General
Assembly believe will advance the general good. Reforming a previously agreed
upon contract is a bit like undoing the Gordion knot, which is why some
commentators have called SEBAC, the union conglomerate representing state
workers in union-state negotiations, Connecticut’s fourth branch of government.
If it had the spine for it, Connecticut’s cringing state government might make whatever changes are necessary to copy Rhode Island’s union-government model by abandoning binding arbitration and switching from a contract to a statutory bargaining posture. Failing that and facing mounting revenue depreciation, Connecticut can only continue to cut needed services in response to union obduracy.
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