Collapse of state labor pact threatens city

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What appeared to be a major victory for Gov. Malloy vanished Friday as state employees rejected a widely hailed deal on labor concessions and left the state with a sudden $1.6 billion budget gap.

With less than a week before the start of the new fiscal year, Malloy has called for a special session of the state legislature Thursday to give him the authority necessary to rebalance the budget with spending cuts. Those cuts are almost certain to result in the layoffs of thousands of state workers and a dramatically reduced flow of money from the state to city and town budgets.

“I am loathe to make the decisions facing us at this juncture — including layoffs, programmatic and municipal aid cuts — but I am left with no choice,” Malloy said in a press release.

Mayor John DeStefano Jr., in the middle of his own negotiations with city unions, reacted to the news of the labor pact’s rejection by ordering staff to prepare for a new budget gap of up to $10 million for the city, the second-largest recipient of state money.

While filling that gap has “potential upfront consequences,” some of the pain might be postponed by a year, city spokesman Adam Joseph said. Because the state’s budget is biennial, Joseph explained, cuts in municipal aid may be scheduled to take effect mostly in the budget’s second year.

“Hopefully that will give us some leg room to deal with this,” Joseph said, adding that when Malloy first presented a “Plan B” budget in the event that labor concessions are not achieved, the city’s budget office calculated worst-case scenarios for the city budget.

While Joseph said it is too soon to speculate about the effect of municipal aid reductions on further city employee layoffs, he said the state’s failure to reach a deal with its unions “may have a direct impact on local employees.”

DeStefano met with Malloy Friday morning along with the mayors of the state’s other four largest cities — Hartford, Bridgeport, Waterbury and Stamford — to discuss the available options in terms of cuts to state aid, which until this week were thought safe from the state’s fiscal axe.

Cuts in state aid to New Haven would be “devastating,” DeStefano said in April.

The governor has traditionally had the power to make unilateral cuts of up to 5 percent in the state’s budget with the exception of municipal aid. But if Malloy gets his way, he will have the authority to cut up to 10 percent and municipal aid, which totals about $2.8 billion, will no longer be exempt.

It remains to be seen whether lawmakers will grant Malloy the authority he needs to unilaterally make cuts to the budget. Chris Donavan, speaker of the state’s House of Representatives, said he will ask Malloy for a detailed plan of the cuts he intends to make before his chamber takes a vote on the matter, the Connecticut Mirror reported.

The final votes today by the 15,600 members of Council 4 of the American Federation of State, County and Municipal Employees (AFSCME), the state’s largest union, were enough to kill the deal, which would have guaranteed no layoffs in exchange for a two-year wage freeze and other concessions. While a majority of state workers voted to approve the deal, the rules used by a coalition of the state’s 15 unions required the approval of at least 14 unions and 80 percent of all members for ratification. The deal failed both conditions.

In order to fill a $2 billion gap in the state budget for the next two years, Malloy asked the state’s 45,000 employees to accept changes to their health benefits, pensions and wages. On May 13, Malloy announced that he secured $1.6 billion of that gap in a tentative agreement with union leaders, the remaining $400 million coming from additional spending cuts and existing revenues.

With that deal doomed and a re-vote deemed unlikely by union leadership, up to 7,500 state workers now face potential layoffs. Leaders from the State Employees Bargaining Agent Coalition (SEBAC), which represented all 15 unions in negotiations with the Malloy administration, will meet Monday to decide on next steps, coalition spokesman Matt O’Connor wrote in a statement.

“We will ensure that members’ voices continue to be heard through a fair and democratic process,” O’Connor said.

In an interview, O’Connor said efforts by SEBAC to promote the deal to rank-and-file members were undercut by the obstructionist tactics of outside groups. Specifically, he said, the Hartford-based Yankee Institute for Public Policy, a conservative think tank, abused the state’s email system to spread misinformation to union members about the labor deal ahead of the vote.

SEBAC filed a complaint against the Yankee Institute last Friday, and Monday Attorney General George Jepsen said he would investigate allegations that the think tank hacked into official email accounts, charges it denies.

While the deal’s failure set off days of rumors and accusations from the moment it appeared likely to happen, O’Connor, who voted to approve the deal, said there were understandable reasons for workers to reject it.

“[Union] members see a lot of people out of work, losing their healthcare and retirement benefits, and this deal is the sort of thing that is money out of the pockets of hardworking middle-class families,” O’Connor said.

Responding to criticism by both state and local legislators that union leadership did not do their part to promote the deal to members, O’Connor said a “tremendous effort” was taken to answer questions and concerns from state workers. The union of which he is a member, the Connecticut State Employees Association, held 90 informational meetings about the deal over the course of four weeks, he said.

Final voting results are still not available from two unions, but O’Connor said about 60 percent of all members have voted to approve the deal.