Honestly, Lamont better find those labor savings

In his budget address to the General Assembly at the start of the 2019 session, newly elected Gov. Ned Lamont promised to work with lawmakers to develop “an honest budget, on time.”

Negotiating with the Democratic governor in the final days of the session, the Democratic majorities in the House and Senate did produce a budget on time, which was a positive departure from recent times.

But can a budget that relies on $458 million in labor savings − savings that have yet to be agreed upon by the state unions − be considered an honest budget?

Much as 1930s-era St. Louis Cardinal pitcher Dizzy Dean observed, “It ain't bragging if you can do it,” how honest this budget is ultimately viewed will depend on whether Lamont can do it — find the $458 million, that is.

Even in the context of a $43.4 billion, two-year budget, the $458 million in relied-on savings is significant. If the governor does not find those savings, a budget that is projected to increase 2.8 percent over the two years would actually be increasing 3.8 percent.

Most fundamentally, the legislature will have produced a budget that did not balance. This is a point the Senate minority leader, Len Fasano of North Haven, has been making frequently to anyone who will listen. Fasano makes the case that the budget does not adhere to the constitutional requirement that the “general budget expenditures authorized for any fiscal year shall not exceed the estimated amount of revenue.” Indeed, the labor and pension expenditures now projected by the state exceed the estimated amount of revenue, which is why the governor must find $458 million — projected at $182 million in the fiscal year that begins July 1 and $276 million in 2020-2021.

Any challenge taken to the courts would probably not get very far, however, in that the courts give broad deference to the legislature and governor when it comes to the state purse. And it is not like this kind of wishful projecting has not been done before.

The easier savings would come through restructuring the state contributions to the underfunded state employees’ pension fund, akin to refinancing your mortgage to extend it out several years, increasing the cost but lowering the monthly payments. Under restructuring, contributions by the state would continue to increase through 2032, but not as quickly as now projected, producing short-term savings but boosting costs in the long term through mid-century. The legislature also employed this approach during the administration of Gov. Dannel P. Malloy.

Union leaders could sign off on such an arrangement without having to seek a vote of the rank-and-file.

More problematic is Lamont’s long-stated goal of reducing employee health care costs without labor having to make concessions on benefits. Possibilities include finding discounts by negotiating cost limits on health care services and on pharmaceuticals purchased by the workforce. That would mean, it seems, placing restrictions on where state workers get their medical care and on drug purchasing, which are concessions.

What might the unions ask in return? Lamont has said he would not grant any extension of the protections against layoffs that Malloy negotiated in return for cost-saving concessions in his second term. Those protections expire in a couple of years. The governor has also said he would not extend the contract providing retirement health and pension benefits beyond the existing June 30, 2027 expiration date.

With the fiscal year beginning in less than two weeks, the Lamont administration cannot wait too long to strike a deal, otherwise it won’t have time to find the "honest" savings that the budget counts on.

 

The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Tim Cotter, Staff Writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.

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