‘<i>Deja Vu</i> All Over Again’ <br>As Connecticut Unveils <br>Governor Malloy’s Marvel

It’s “déjà vu all over again” at Connecticut, as Governor Malloy and his fellow Democrats in the Assembly try the same “shared sacrifices” approach — “painful concessions” by state employees with increased taxes and harsh spending cuts — that has failed before. The tax increases and spending cuts are real, but the employee concessions are illusory.After Malloy & Co. first tried the “shared sacrifices” gambit in face of a $3.1 billion deficit in 2011, Connecticut has been mired in a non-stop budget crisis, which after six years has culminated in a whopping $5.1 billion, or 13%, deficit in the biennial budget, now $40 billion.When it comes to state employee concessions, Mr. Malloy somehow thinks he is driving a hard bargain when he imposes a wage freeze in return for guaranteed job security. That just bakes in unaffordable compensation costs. It is simple math, given that the same number of employees times the same wages saves nothing, nada, nil.Mr. Malloy’s insanity goes even further, because he doesn’t even achieve the “wage freeze” he claims. In 2011, employees gave up a 3% raise in the first year, but got 3% raises in each remaining year of the four year deal. This time around, Mr. Malloy’s tentative five-year deal grants job security in return for a “wage freeze,” comprised of an actual freeze in the first three years and 3.5% raises in the fourth and fifth.Obviously, there are no wage savings in these “wage concessions.” So, any actual savings have to be found in benefits. Allegedly, the tentative deal entails a total of $1.6 billion in total employee concessions (leaving the citizenry with $3.5 billion in tax increases and spending cuts). If those concessions are to be found entirely on the benefits side, we should see big numbers in the summary of the tentative deal released to the public. We don’t.The only thing that might appear to be “big” is that new – again, new – employees will not be part of the defined benefit pension fund, at least not completely. Part of their pension will be in the form of a defined contribution 401(K) plan, and they will have to pay 15% of their health insurance premiums versus the 12% paid by current employees.How, though, do new employees figure into the numbers at all? They haven’t even been hired yet. Concessions from people who don’t exist? That’s a Malloy Marvel.Actuaries guess how many new employees will be hired, when they’ll be hired, how long they’ll work, when they’ll retire, how healthy they’ll be, how long they’ll live. Based upon these guesses, the actuaries estimate benefits expense savings on these future hires. Well, anyone can concoct guesstimates about the future which produce $1.6 billion in savings.Even if accurate, the only way the Marvel can factor into the current budget is by reducing the state’s current contributions to the retirement benefit funds, which are underfunded to the tune of $34 billion. That’s scandalously imprudent.Ditto the deal’s retirement benefit reforms for active employees and retirees. We’re told that pension contributions by most employees will double. Wow, twice the 0% (zero) to 2% of their wages that most employees are paying now!So much for the notion that there are any credible savings from employee concessions.Why should taxpayers be hearing about wage freezes in exchange no layoffs and about benefit reforms? In the private sector a business in trouble has to lay off employees and cut wages for those who remain. Retirement benefits virtually do not exist? The real issue here is one of fairness. State employees are getting things that do not exist for most citizens – and demanding that citizens pay for those things.State employee wages should be cut for the full five-year term of the new deal, or layoffs should begin. Cuts would produce real hard-dollar wage and retirement benefit savings, as pensions would be calculated off lower compensation levels.Anything else adds insult to injury for the rest of the state’s citizens. Not only will they be enduring this continuing fundamental unfairness, but they will be paying to close the entirety of the current $5.1 billion budget gap, absent any real employee concessions. They will be paying huge tax increases and enduring severely curtailed services resulting from big spending cuts. They’ll be paying a lot more for a lot less.

‘<i>Deja Vu</i> All Over Again’ <br>As Connecticut Unveils <br>Governor Malloy’s Marvel

‘<i>Deja Vu</i> All Over Again’ <br>As Connecticut Unveils <br>Governor Malloy’s Marvel

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