Some very interesting info re: Your CT Tax Dollars

February 13, 2018

Balancing State Budget Is About Pay, Benefits

By Red Jahncke

Front and center in the current legislative session will be the half-billion dollar deficit in the two-year, $41 billion budget Gov. Dannel P. Malloy signed only three months ago on Halloween.

The trick, though, was played four months earlier when the Democratically-controlled General Assembly ratified the governor’s super-sweetheart deal with state employee unions: the SEBAC 2017 agreement.

Once SEBAC 2017 was inked, there was no way to balance the budget.

Connecticut’s budget will never balance until state employee pay and benefits are scaled back dramatically.

SEBAC 2017 encompasses a four-year wage agreement and a 10-year benefits agreement — yes, for 10 years, employee benefits are to be untouchable.

Let’s focus on the four-year part of the deal that will hit active employees’ paychecks: wage provisions and deductions for employee contributions to fund their own benefits.

To begin, a recent study by the American Enterprise Institute found that Connecticut is the only state where public employees have higher wages than private sector employees.

Malloy claims his deal achieves billions in wage savings from painful sacrifices made by state employees.

Analysis prepared by state Sen. Len Suzio, R-Meriden, and reviewed and validated by the nonpartisan Office of Fiscal Analysis, or OFA, shows the exact opposite.

Malloy marketed his deal pointing to three unpaid furlough days in the first year (worth $850 for the average employee) and a wage freeze for the first two years, followed by 3.5 percent wage increases in each of the next two years.

The governor stopped there, but there’s more.

Malloy failed to mention something called “step increases,” which are regular annual wage increases for every full-time employee.

Steps average 3 percent, according to OFA.

While they are suspended during the first two years of SEBAC 2017, they will recommence thereafter.

So, wages will increase 6.5 percent in each of the final two years of the deal, or 13.6 percent compounded by the end of the fourth year.

According to OFA, the average state employee made $74,000 immediately before the 2017 SEBAC agreement.

Four years later, the average pay will be more than $84,000.

Where’s sacrifice?

Where are the savings?

Malloy skipped some other things as well, namely cash payments.

First, to soften the “pain” of the wage freeze, SEBAC 2017 pays every employee a “one-time payment” of between $2,000 to $2,850 in the second year.

In effect, that cancels one year of the wage freeze.

Then, there are annual “longevity payments” paid to longer serving employees every year, including the two years of the wage freeze.

Employees with 10 to 15 years of service receive $1,000 and those with more than 15 get $2,000.

Most employees have served more than 10 years, so, conservatively, half of employees will receive $4,000, bringing their cash receipts over the four years to more than $5,000, including the minimum $2,000 “one-time payment” and deducting $850 for the unpaid furlough days.

No “pain” here, and no savings.

Now, how about employee contributions to fund their own benefit programs.

There’s a two-stage increase in their contribution to their pensions (1.5 percent of salary this year, plus another 0.5 percent next year).

So, current employees’ total contributions will range from 2 percent to 4 percent in the third year and thereafter — paltry amounts compared to the 13.6 percent salary increase.

There are three, 1 percent increases in employees’ share of their health care premiums, taking them from 12 percent to 15 percent of the premium.

Not much pain here.

Not much savings either, with the state share declining only from 88 percent to 85 percent.

That’s it.

There will be no other material adjustments to state employees’ paychecks.

But, Malloy thinks he extracted sacrifice, so he must have traded something for it, right?

Union negotiators don’t give something for nothing.

Malloy gave the unions a four-year no-layoff guarantee.

So, the workforce cannot be downsized to save money.

According to OFA, when SEBAC 2017 took effect, there were about 52,000 full-time state employees (and 16,000 part-timers, who receive retirement benefits).

With about the same number in four years, and wages increasing, simple math tells us that there are no wage savings in the agreement.

Just the average $10,000 salary increase for full-timers will add roughly a half-billion dollars to the state payroll — just for their wages, excluding benefit costs and not counting the increased cost of part-time employees.

Malloy, the Democrats and union leaders have played a cruel trick on citizens.