Labor deal in place; now the budget

It was high drama in the Connecticut Senate Monday, with the Senate approving the concessions deal with state union workers on a 1918 straight party-line vote. A tie forced Lt. Gov. Nancy Wyman to cast the deciding vote.

United in opposition in both the House and Senate, Republicans have a ready-made issue for the 2018 campaign, given that aspects of the deal are unpopular with large segments of the public. Yet Democrats made the right choice. The agreement not only improves the prospects of finally getting a state budget passed, but also has long-term fiscal benefits. With new workers entering a hybrid pension system, with 401(k)-like contributions, the deal is forecast to save $24 billion over the next 20 years.

As expected, the region’s three Republican state senators voted in opposition, Paul Formica, R-East Lyme, Heather Somers, R-Groton, and Art Linares, R-Westbrook. Sen. Cathy Osten, D-Sprague, Senate co-chair of the Finance Committee with Formica, voted in favor.

In addition to the political implications in 2018, when all legislative seats and the governorship will be contested, Republicans had good reason to unite in opposition. In return for concessions, the deal extends the benefits contract with state union works to mid-2027, pushing back the scheduled 2022 expiration. And while for most state union workers it includes a pay freeze for three years, it also has a four-year prohibition against layoffs and 3.5 percent raises in 2020 and 2021.

Republicans have a legitimate beef in contending that if they take political control of the state after the 2018 election these provisions will limit their ability to manage the budget. Though as Gov. Dannel P. Malloy, who is not seeking re-election, has noted — and done twice — contracts can be reopened.

The problem for Republicans is they provided no clear path for achieving the savings of nearly $1.6 billion over the next two fiscal years that this now-ratified deal generates. In calling to reject the agreement, Republican leaders contended the better option would have been to reform labor-friendly laws and force larger savings from the unions in wages and benefits.

That approach had numerous problems. With a contract rejection, Democratic leaders would likely not have allowed legislation weakening labor to get to a vote. Even if such a move did win approval, it would have invited a legal fight.

As Sen. Paul Doyle of Wethersfield correctly observed, rejecting the concession deal would have invited “potential chaos.” Doyle was one of three fiscally moderate Democrats to vote in favor because they saw no better path.

Those three senators — moderates Joan Hartley of Waterbury and Gayle Slossberg of Milford also needed persuading by leadership to vote in favor — still have power to wield in that their votes will be needed if Democrats are to coalesce behind a budget solution. They should press for the structural changes they say are needed, including revising the arbitration process to better reflect the state’s ability to pay higher wages and benefits, and requiring the legislature to approve contracts, ending the practice of ratification by way of inaction.

These moderates have also called for a commission to suggest a plan for sustaining the grossly underfunded pension plan for teachers. It’s needed.

With the concession deal in place, attention turns to closing the $3.4 billion gap that remains. The fiscal year began July 1, meaning the budget is now a month overdue.

While some increases in state taxes and fees are likely unavoidable in closing a deficit that large (out of a roughly $40 billion two-year budget), Malloy needs to stick to his position that “leading with revenue is the wrong way to do this.” The governor says he instead wants to focus on spending reduction. He should insist the legislature do so or face a veto.

It is inevitable that state aid to municipalities will have to be reduced, a likelihood that has already led towns and cities to freeze spending, delay projects and halt discretionary spending, according to the Connecticut Conference of Municipalities.

In cutting municipal aid, the legislature should ask greater sacrifices of those towns with the healthier tax bases and surpluses and not overly burden already struggling urban centers.

This process could still drag on for weeks, leaving Malloy alone in the meantime to make the tough decisions in keeping spending in balance. But with Monday’s action, the Senate took a significant step forward.