Connecticut has to stabilize its fiscal situation. While partisans will continue to debate how much a factor recent corporate tax increases played in GE’s decision to relocate from its Fairfield campus to Boston, there is no doubt the constant specter of higher taxes and fees discourages businesses from locating, expanding and staying in the state.

The state faces projected deficits years into the future. It is like Groundhog Day. The General Assembly convenes, there is a mad scramble to find ways to trim various line items, money is shifted around, and often fees and taxes are increased. There are seldom substantive changes in policy to bend the spending curve, however, and so the deficits return and the following session the process repeats.

To slow spending growth and provide the desired fiscal stability, Connecticut has to trim labor costs and figure out a way to address its grossly underfunded pension plan for state workers. Both are difficult challenges. Pay and benefits to state workers account for more than one-third of the state’s $20 billion budget.

Gov. Dannel P. Malloy has sought to trim labor costs through attrition. This largely accounts for the Malloy administration cutting the state workforce by about 1,000 jobs. In 2010, the state labor force was 46,691. In 2015, it was 45,644,

Attrition is not the most efficient way to trim a workforce, however. An oversized department that could use some trimming could retain jobs, simply because few people are leaving, while a critical department may find itself understaffed. With the need to repair and improve Connecticut’s transportation infrastructure, for example, more jobs will be needed in the state Department of Transportation.

What will be necessary is for the legislature to make hard choices about what services Connecticut can live without.

The other way to trim labor costs is through contract negotiations. With labor contracts for 12 of the 13 Connecticut state employee unions expiring at the end of June, the current negotiations would appear to provide that opportunity. But appearances can be deceiving.

The general perception is that state workers are overpaid. So should state employees be asked in negotiations to take a pay cut? That’s not going to happen. And in any event, the facts don’t support the perception. The Yankee Institute for Public Policy, a conservative think tank, took a hard look at the numbers in a report released last September.

“Connecticut state employees receive state salaries that are 0.2 percent lower than those of similarly-qualified private sector workers,” concluded the report.

In other words, on average, state employees receive about the same salaries as their counterparts in the private sector.

Where state workers do much better, the Yankee Institute documents, is in “health coverage, retiree health plans, and pension benefits.”

While the private sector has largely converted to 401(k) retirement savings plans, state workers remain in traditional defined benefit pensions, meaning they are assured a specific pension payment, with the state left to figure out how to pay for it. The state has not done a very good job, with funding available to only meet about 43 percent of its pension obligations.

Meanwhile, the Yankee Institute found, “Connecticut state government employees receive a health coverage package that is approximately 30 percent more generous than is offered to private sector employees …”

Add it all up and these public employees “receive total compensation packages that are 25 percent to 46 percent higher than private employees with comparable skills and experience,” concludes the report.

The state could make the argument in negotiations, one would think, that new employees should move to a 401(k)-type pension plans and that state health insurance plans should be adjusted to better align with the private sector. The unions will argue that they should not accept diminished benefits because private sector workers have failed to organize and demand fair compensation.

More significant, however, is that health and benefit pensions are locked in until 2022, due to an outrageous agreement negotiated by Republican Gov. John G. Rowland 20 years ago and approved by the Democratic legislature. So salaries, which are not the problem, are on the table, but benefits are not.

The only option may be hardball. If the unions will not open up the benefits for negotiation, the state will have to turn to layoffs to find savings. Will a Democratic governor and legislature do that? They may have to.

Paul Choiniere is the editorial page editor.

Twitter: @Paul_Choiniere

p.choiniere@theday.com