Gov. Ned Lamont will seek concessions that could reduce pension benefits to future retired state employees by more than $130 million per year — a move that was immediately met with resistance Tuesday from union officials.
Faced with skyrocketing teacher pension costs, Lamont also will revive a controversial proposal to share a portion of those costs with cities and towns — albeit a smaller share than his predecessor, Gov. Dannel P. Malloy, sought when he first proposed cost-sharing in 2017.
“While I love history and tradition, there is no reason to continue with bad or outdated policies that are no longer working for the people of this state,” Lamont said Tuesday.
Lamont’s first budget, which he will propose Wednesday, would reduce the cost-of-living increases awarded to retired state employees when returns on pension investments under-perform. The state assumes an average return on pension investments of 6.9 percent and COLA adjustments would be capped at 1 percent if returns fall short of expectations.
This could save as much as $131 million next fiscal year and $143 million in 2020-21.
But Lamont could not impose these changes without the agreement of state employee unions. And Lamont reassured those unions repeatedly on the campaign trail last fall that he would seek “win-win” scenarios and “reforms” that reduced costs while benefitting both labor and state government.
The State Employees Bargaining Agent Coalition’s response Tuesday was swift and clear.
“To be clear: we will not be part of asking for still more sacrifices from state employees, who have already given so much for the people they serve,” the coalition wrote. “We will, however, continue working with the Lamont Administration and the General Assembly on ‘win-win’ solutions for achieving efficiency and that will benefit everyone. Additionally, we will continue fighting for a fair budget that empowers all to thrive together here in Connecticut.”
Lamont’s proposal would mark the fourth time in the past decade that state employee unions have been asked to provide wage or benefit givebacks to help avert deficits.
Unions granted a wage freeze and health and pension concessions in 2009 to Gov. M. Jodi Rell and in 2011 and 2017 to Malloy. But Lamont doesn’t have the same leverage that Rell and Malloy had to induce worker givebacks.
The 2017 concessions deal exempted many unionized workers from layoffs for four fiscal years, running through June 30, 2021.
The only exceptions are state police troopers — who declined to accept a wage freeze as part of the 2017 deal — and workers hired after July 1, 2017, when the concessions agreement took effect.
Full details of the governor’s plan to share teacher pension costs weren’t released Tuesday, but it’s based on a sliding scale that asks Connecticut’s poorest communities to pay the least and its wealthiest ones to pay the most.
Lamont will ask municipalities to pay a portion of the “normal cost,” an actuarial term referring to the full amount set aside annually to cover the future pensions of present-day teachers.
According to Comptroller Kevin P. Lembo’s office, this represents just 15 percent of the annual payment.
The remaining 85 of the annual contribution involves covering Connecticut’s past fiscal sins. This would remain the state’s responsibility.
As Connecticut tries to reverse decades of fiscal irresponsibility, the annual payment — $1.3 billion this fiscal year — is projected to spike between now and the early 2030s, peaking anywhere between $3 billion and $6.2 billion.
The projection for next fiscal year’s contribution is $1.39 billion and 15 percent of that payment is $209 million.
But Lamont also hopes to shrink the bill both for the state and for municipalities, workign with state Treasurer Shawn Wooden to restructure annual contributions into the fund in the coming decades.
This story originally appeared on the website of The Connecticut Mirror, www.ctmirror.org.
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