Labor Deal Is Dead; Malloy Seeks Expanded Powers

An AFSCME local representing correction officers rejected the concession deal in voting tallied today, formalizing what has been apparent for days: the unions' tentative agreement with Gov. Dannel P. Malloy for $1.6 billion in savings over two years is dead.

Malloy said he will ask the legislature in a special session Thursday to authorize him to now make the necessary spending cuts to balance the budget, rather than present detailed revisions for lawmakers to approve. He said granting him that authority would be the quickest and easiest way to amend the budget.

SEBAC spokesman Matt O'Connor (l) and Larry Dorman talk to reporters after concessions deal was officially defeated

"I'm going to do everything in my power to minimize that impact," Malloy said, particularly in the upcoming fiscal year. The governor added he has made "no hard decisions" yet about any specific reductions in town aid.

With votes from the last of nine AFSCME bargaining units complete, the largest state employee union has rejected a deal that the administration says would have saved $1.6 billion over two years, though fiscal analysts have questioned the number, and provided job security for four years. The final AFSCME vote was 6,781 to 5,547.

Based on previous statements by Malloy and his staff, the administration now expected to issue about 7,500 layoff notices, a staggering 16 percent of the unionized workforce. Tim Bannon, his chief of staff, said the administration will finalize layoff plans over the weekend.

No notices are going out today.

A union spokesman, Larry Dorman, said he hoped that the governor would not act on layoffs until after the union leadership meets Monday to consider their options. "It's important not to go nuclear," Dorman said.

But it was unclear what options, if any, the unions have. Malloy has ruled out re-negotiating, a position that another spokesman, Matt O'Connor, says that the unions believe is firm.

Asked about the possibility of a new vote, Dorman said, "I can't see that happening right now."

On Thursday, Malloy called a special session of the General Assembly for next week to either approve revisions to the biennial budget that takes effect July or to grant him recission authority to make the necessary cuts. He has ruled out further tax increases to close the gaps created by the failed concession deal: a $700 million shortfall in 2011-12 and $901 in 2012-13.

Gov. Dannel Malloy after concession deal failed: 'I'm going to everything in my power to minimize that impact'

Today, he made clear he wants the authority to make the cuts, a move that spares legislators from now voting on programmatic cutbacks. The legislature has long granted the governor limited authority to unilaterally reduce many budget accounts by up to 5 percent, though municipal aid cannot be touched.

Malloy wants to raise the limit on rescissions to 10 percent, and more importantly, to end the exemption for municipal aid. The Democratic legislature refused to grant him that authority during the regular session, but it is likely he will get his wish next week.

Senate President Pro Tempore Donald E. Williams Jr., D-Brooklyn, and House Speaker Christopher G. Donovan, D-Meriden, were not immediately available to comment on Malloy's suggestion that the politically difficult budget cuts be left to him.

Instead, Williams issued a statement broadly supporting the governor.

"Given the rejection of the labor agreement, it's critical that we act decisively before the beginning of the new fiscal year," Williams said. "We support the governor's call to action and will work with him to ensure that Connecticut has a balanced budget."

But while many segments of the budget technically are subject to the rescission clause, realistically they also cannot be touched. For example, state employee salaries and benefits, which represent nearly 30 percent of next fiscal year's $20.14 billion budget, are set by contract. Medicaid, which is more than 20 percent, is governed by federal entitlement rules that require states to serve all eligible patients, and debt service, about 11 percent, also is a legal obligation.

Past governors generally have cut spending by no more than $150 million through rescissions.

Doubling the limit to 10 percent presumably would allow Malloy to cancel closer to $300 million in spending. But ending the exemption for municipal grants, which total about $2.8 billion, would allow the governor to cut another $280 million without having to seek legislative permission.

The governor said Friday that he understood why lawmakers were reluctant during the past session to expand the Executive Branch's power while there still was hope for a labor deal. But he said Connecticut must be prepared to move quickly to balance its budget to retain its fiscal reputation before the bond rating agencies on Wall Street.

"I think that's the best way to reassure the market place about Connecticut's earnest drive to balance the budget," Malloy said.

READ MORE