Thousands of State Jobs Being Cut: Malloy

The state could be facing another loss of jobs, this time for state employees as Gov. Dannel Malloy seeks to rein in spending as the budget season starts.

Malloy’s budget chief Ben Barnes said to reporters shortly before Malloy addressed the General Assembly that the state workforce will be reduced by several thousand.

“We will be reducing the number of funded positions by several thousand,” Barnes said. “Exactly how that breaks out between attrition and layoffs is unknown.”

Living Within Means

The governor noted in his State of the State address that families and businesses in Connecticut have been forced to budget differently since the Great Recession.

Malloy is asking the Connecticut General Assembly for more control over state spending in an effort to have a predictable budget season.

“Connecticut state government must reset our expectations of what we can afford, how we provide services, and how we save for our priorities,” Malloy said. “It won’t be easy, and it often won’t be politically popular. However, it is absolutely necessary if we want to create a more sustainable and enduring economy.”

The administration’s budget calls for a 3-percent reduction compared to the adopted budget. Barnes said $90.5 million would be saved through the deficit mitigation plan rollout.

Specific budget reductions would total $118.2 million and “across the board” budget reductions of 5.75 percent would save $360.8 million.

Across the board would apply to many, but not all state accounts.

Malloy added that families living in Connecticut don’t set their budget at what they would like, but must live within reality and Connecticut’s government must do the same.

“It won’t come without sacrifice – it will require the reduction of the state workforce by more than a thousand employees through attrition and other means,” he said.

The governor also called for a state spending cap, which became a popular idea after the state instituted an income tax in the early 1990s.

Malloy’s administration is in the process of negotiating with 13 state employee bargaining units.

“I will simply say that our expectations for these negotiations should be based on what we can afford, not what we previously spent,” he said.

“An Impossible Fiscal Cliff”

Malloy noted that many changes have been made to how the state deals with pensions since he took office. The state pays its pension obligations every year, but that still won’t be enough for a predicted fiscal cliff in 2032.

State Comptroller Kevin P. Lembo predicted a $4 billion pension payment in 2033 if the state stays on its current course. Officials have argued over the exact amount that would be due, but it’s agreed to be something massive that the state would have great difficulty dealing with.

“The instability created by this cliff is shaking the confidence of the business community and looming over the next generation of Connecticut taxpayers,” Malloy said.

He said it’s time for a frank discussion on how to deal with the pension system. His proposals include refinancing debt, adjusting assumed rate of return and changing the Tier One pension plan to pay as you go.

Structural Changes to Budget

Malloy’s plan calls for a more sustainable and predictable state budget.

Connecticut fell into a snafu last year when the legislature passed the budget in an 11th hour move. Businesses decried new taxes and the lack of predictability.

The General Assembly had to go back to the table in a December special session to close a $350 million budget hole.

“Let’s not pass a budget on the final day of this session this year,” Malloy said. Let’s get it done early.”

Malloy said allocating funds in blocks for government functions instead of line items would help managers function more efficiently under constrained budgets. Currently, the system focuses on what is funded instead of outcomes and accountability. Every agency gets a line-item budget.

In return for such latitude, Malloy proposed holding state agencies accountable by judging allocations based on effectiveness. He also proposed putting agency expenditure information online on a regular basis.

Republicans Call for Sweeping Changes

Earlier in the week, senate and house Republicans presented their budget priorities for the upcoming session. The plan calls for implementing long-term structural changes to restore budget sustainability and predictability.

It also calls for a transportation plan that would protect transportation dollars without tolls or tax increases.

“Connecticut is stuck in a fiscal fiasco and it’s time for serious changes in the way our state budgets,” said Senate Minority Leader Len Fasano (R-North Haven). “In the last month we’ve seen our deficit for this year grow yet again, we’ve seen our projected shortfall for next year jump to over $507 million, and we’ve seen the out year deficit balloon to over $4 billion.”

The Republican transportation plan calls for a maximum 30-year total of $71.3 billion for transportation without increasing taxes or tolls. Republican leaders argue that the governor’s Transportation Finance Panel report showed $66 billion in urgent and essential repairs and that their plan would be more than enough to cover that.

Republicans are also calling for:

• Mandatory approval of labor contracts by the General Assembly.
• Non-hazardous state employees pay 4 percent of their salary to pension benefits.
• Cost of Living Adjustments to pension be capped at 3 percent for future retirees.
• Calculate final average salary for pensions using base salary only and not overtime.
• Increase state employee health premiums from 5 to 15 percent of the total cost, which is roughly equal to private sector employees.
• Eliminate longevity pay for state employees.
• Cap allocations that can be made by the State Bond Commission to $1.8 billion. Currently the uncapped amount is around $2.5 billion.