The governor will meet with the Democratic Party leadership to discuss “Plan B” and the possibility of the elimination of more than 4,000 state employee positions.
With a stroke of his pen, Gov. Dannel P. Malloy signed the into law Wednesday afternoon, and with it the highest taxes in state history, uncertainty for thousands of state employees and, according to the governor, the fulfillment of a promise that the state would have a balanced budget without “gimmicks” or having to borrow to cover expenses.
The governor stressed the need for “shared sacrifices” and said he has a “Plan B” should the unions and state officials not come to an agreement that includes concessions.
Wednesday morning, prior to the public signing of the budget bill at the Capitol, Malloy told a group of editors and publishers gathered at the governor’s mansion that the “bottom line is that we will have a balanced budget without gimmicks that begins the process of paying our operating expenses in a transparent fashion and establishes our limitations.”
Malloy said the reorganization of the state Department of Economic and Community Development would help to create jobs, along with his proposed “first five” initiative, which gives incentives to the first five companies to create 200 jobs in the state during the 2-year budget.
He also highlighted changes made to his original proposal from Feb. 16th including the restoration of $300 of the $500 property tax credit and the elimination of the proposed additional tax on gasoline. He said many of the changes were a result of the feedback he received during his 17-town budget tour of the state.
Yet, the largest hole in the budget remains the $2 billion in concessions from the state employee unions that has been built into the budget over its two-year life.
Although none of the layoffs can take effect until July 1, per an agreement with former Gov. M. Jodi Rell, with various contracts requiring that employees be given lay off notices up to eight, six and two weeks in advance, Malloy said time is running out. Those notices are expected to be distributed at the end of this week.
“I don’t want to lay people off, this is not an environment in which I am anxious to put more people on the unemployment lines, but a promise is promise,” Malloy said. “We’ve gone in a different direction and I’m hopeful that labor understands that and I’m hopeful that we’ll reach an agreement.”
Secretary of the Office of Policy and Management Ben Barnes said Wednesday morning that the cost associated with laying off employees would be less than the cost of paying for their fringe benefits over the next fiscal year, which begins July 1.
Before any changes within the $40.1 billion budget are made, including an agreement with union employees, it first has to be presented to the General Assembly for its consideration.
Malloy said by Friday a “roadmap of what we need to do” will become clearer. One of the possibilities if an agreement is not reached with the unions could be “large-scale layoffs in excess of 4,000 state employees and large-scale programmatic changes,” both necessary to reduce expenditures.
According to CT News Junkie, the loss of 1,000 positions could mean a $100 million savings; so if 4,000 positions are eliminated it could result in far less than what the governor needs to fill the budget gap.
When asked that specific question by reporters after he signed the budget into law Wednesday afternoon, Malloy replied that the state was facing a "fairly higher level than anticipated of retirements right now."
"There are some other factors that I think will put that number in the zone, with other programmatic cuts, that we could reasonably balance the budget," Malloy told reporters if he failed to reach the union concessions.
State Employees Bargaining Agent Coalition spokesman Larry Dorman said that the state “cannot afford a ‘Plan B’ filled with layoffs, cuts in vital public services,” according to CT News Junkie. Dorman added that reducing aid to municipalities would compound the problem, according to CT News Junkie.
When asked whether aid to municipalities could be affected, Malloy said,” … Let’s answer this way… if I need to find a billion dollars, everything is on the table.”
A moment later he clarified his statement, adding that expenditures tied to court settlements, certain contracts, waivers or federal obligations would not be considered.
“Ultimately, we have to make decisions,” he said.
He said that any additional changes would not include further increases in state taxes, but conceded that in other states where this scenario has played out, any reductions in state aid to towns and cities would most likely mean an increase in local taxes
As for a timeframe to get this done, Malloy said every day after July 1 that state officials have not made the final cuts or employee issues have not been resolved, means a greater amount of reductions will be necessary to balance the budget.