Hartford - Gov. Dannel P. Malloy Thursday all but conceded defeat of his labor agreement with state employee unions, calling for a special legislative session next week to take up an alternative plan for balancing the budget that will likely include mass layoffs and some municipal aid cuts.

"It was always my hope that the [union] agreement would be ratified and we could move forward with the process of getting our state's fiscal house in order and creating new jobs," Malloy said in a statement late Thursday afternoon. "But that looks increasingly unlikely."

The governor's announcement of the June 30 special session came on the next-to-last day of ratification voting on the labor savings and concessions deal between his administration and union leaders. The deal, projected to save state government $1.6 billion over two years, was not expected to have enough members' votes to pass.

Senate President Donald Williams, D-Brooklyn, expressed disappointment with the unions in an email telling his Senate colleagues to clear their calendars for next week. The special session is set for the day before the new fiscal year begins.

"The failure to ratify by state employees does more harm to them and the cause of labor than anything their enemies could possibly achieve," Williams wrote. "It's unbelievable that they don't understand that."

At a news conference Thursday afternoon, leaders of the coalition seeking ratification said they were waiting for all votes to be cast. Two bargaining units are not scheduled to vote until Friday.

"I would tell Gov. Malloy to let the elections process work itself out," said Matt O'Connor, a spokesman for the State Employees Bargaining Agent Coalition. The coalition represents the roughly 45,000 members of the 15 state employees' unions. "To quote Yogi Berra, it ain't over till it's over."

But nearly everyone else at the Capitol considered the labor deal dead. Its failed ratification would be the largest setback to date for the first-term Democratic governor, who entered office in January. Malloy's labor support in the fall election was seen as crucial to his narrow victory over a Republican opponent.

Few officials expressed concern that union members may vote down ratification when the labor agreement was reached May 13. The governor's negotiators initially sought $2 billion in savings and givebacks from workers over two years but settled for $400 million less than that.

On Thursday, Malloy revealed some new details of his Plan B for filling the $1.6 billion budget hole that would appear in the next biennial budget should the agreement fall through.

He did not give a precise number of employee layoffs - he previously estimated up to 7,500 - yet said that most of those layoffs would be in effect by Sept. 1.

"We're talking a large-scale position reduction fairly quickly," Malloy said.

Aid to towns

On the topic of potential cuts to municipal aid, the governor said he would try to limit the reductions in the first fiscal year of the two-year budget, but the second year "is a different issue," as cities and towns would have had time to prepare for cutbacks.

Malloy said later that "all options are on the table" for closing the expected budget hole, except for additional new tax increases and the use of "surplus" funds.

The deal's expected unraveling may already be having an effect on government spending. Malloy opted to postpone today's meeting of the State Bond Commission "due to the attention that needs to be paid to the budget at this present time," his spokeswoman said.

Results of the ratification effort are to be announced today. The final tally will include the outcome of Thursday's correction officers' Local 391 vote, which would determine whether AFSCME Council 4, the largest state union with 15,600 workers, would be for or against the agreement.

As of Thursday night, 11 of the 15 state unions had voted to ratify the agreement.

Larry Dorman, a spokesman for the unions' bargaining coalition, said he wished that more correction workers supported the labor deal, but understands that they have many legitimate gripes, such as understaffing, workplace safety concerns and a "top-heavy management" with too many deputy wardens.

"Prison employees walk the toughest beat in Connecticut," Dorman said. "It's a dangerous, thankless job."

Coalition officials said correction workers were among the groups most targeted by misinformation and deceptive emails about the concessions agreement.

Blames union leaders

Senate Minority Leader John McKinney, R-Fairfield, blamed union leadership for the expected defeat.

"They're looking for a scapegoat," McKinney said. "The union leaders are not connected with rank-and-file union members, that's what this rejection shows."

McKinney said he doubts that Malloy will enact as high a number of layoffs as 7,500, which would be about 15 percent of the total state work force. He also said the agreement was too generous to state employee unions because it did not adequately address the state's long-term costs, such as pension liabilities and the practice of longevity pay.

The Republican suggested that when fellow lawmakers return next week, they should pass a bill to force more meaningful concessions from the unions, outside of collective-bargaining agreements.

j.reindl@theday.com