Lamont’s union ploy a huge risk

February 20, 2019

Connecticut ends the decade of the teens the same way it started: A newly elected Democratic governor who never served in the legislature, catapulted to power by public employee unions, confronts a budget deficit and asks those same workers for givebacks.

That’s what happened with former Gov. Dannel P. Malloy in 2011. We thought it would be different for Gov. Ned Lamont in 2019.

The state is in far better shape. Besides, Lamont had insisted on the campaign trail, and since, that he wouldn’t try to reopen the state employees’ long-term pension and health contract that expires in 2027. “A deal’s a deal,” he said.

Instead, he said he’d look for win-win options to save money. On Wednesday, he did offer some of those money-saving win-wins for labor -- health care changes that will save money.

But he also made the big ask on givebacks requiring a new contract. He wants state employees to agree to a new way to calculate cost-of-living adjustments, or COLA’s, for future retirees. The COLAs could fall to zero under Lamont’s ask, which ties the retirees’ raises to market performance for the state’s main pension fund. Currently, the floor for retiree COLAs is 2 percent.

Lamont didn’t have to do it, certainly not to balance the budgets for the next two years. The savings will amount to an average of $20 million a year, according to Lamont’s budget chief, Melissa McCaw.

That’s scant payoff for the political risk Lamont is taking by going after his core supporters right out of the box. And he has little leverage.

Remember, these are the unions he said he’d protect and have their backs as hundreds of them knocked on doors and staffed phone banks, helping Lamont beat a Republican who yelled from every town square that he’d cut union benefits down to size.

On Wednesday, the question the unions were asking was, why would Lamont do pretty much what Malloy did eight years earlier?

Most perplexing to the unions is that, as they see it, Lamont knows he can’t win this one. The state’s union workforce has two more years of no-layoff protection. In 2017, less than two years ago, agreed to let the state hire new “tier 4” employees with sharply lower benefits.

And while Malloy inherited a mess -- a $3.5 billion shortfall with freshly issued, $900 million debt he had to pay off for recession-era government expenses - Lamont took over a fiscally stronger state. The projected shortfall is down to less than $1.5 billion and Malloy left a rainy-day fund that will hit at least $2.1 billion this summer, maybe $2.5 billion.

The answer - why Lamont would take this risk for such a small payoff -- is related to who Lamont is, and how he appears to view the world. Malloy took a more pragmatic, some would say hard-headed approach, in which transactions ruled the day. You give me this, I give you that.

Lamont wants to be the ultimate mediator, the conciliator who can persuade the unions that giving this little bit back will pay off for them in the future.

“Some of you think Connecticut needs a “Wisconsin Moment” - where we walk away from collective bargaining and tear up the contracts.” Lamont said. “I want an anti-Wisconsin moment - a Connecticut Moment - where we show that collective bargaining works not just for retirees but also for the next generation of state employees, and the next generation of taxpayers.”

He’s talking about the hew and cry among Republicans to end collective bargaining for health and retirement benefits after the current, long-term deal expires in 2027. Wisconsin, under former Gov. Scott Walker, rammed anti-union changes down the throats of labor.

Union leaders aren’t playing ball. The bargaining coalition issued a statement late Tuesday, 81 minutes after Lamont signaled he’d ask for pension givebacks.

“To be clear; we will not be part of asking for still more sacrifices from state employees, who have

already given so much for the people they serve…State budgets now and into the future include nearly $2 billion a year in savings provided by state employee union members through three savings agreements negotiated over the past decade.”

That, of course, led to all the more criticism from Republicans and the usual critics of labor. And Democrats, including some of the strongest union supporters, didn’t come to the immediate defense of the unions. To a person, all the pro-union Democrats I spoke with said the same thing: Let the process play out, let Lamont negotiate and we will see what happens.

If this really is just a small ask, the unions should give it. But it might be way bigger than McCaw suggests, and we could only know for sure if we could predict the markets 20 years out.

Lamont’s tone is remarkably subtle. “Threatening to lay off our newest employees who are doing important work is not how I negotiate and not how I treat people,” he said.

But then: “How we work together to fix our long-term pension and health care costs will impact my thinking on the mix of state employees and outside providers in our government’s future.”

That doesn’t mean Lamont, in his friendly way, didn’t hint at a tough approach.

“How we work together now to fix our long-term pension and health care costs will impact my thinking on the mix of state employees or outside providers in our future,” Lamont said in his speech.

Translation: Give me this pension change or I’ll outsource more jobs, he’s saying — further perplexing union leaders. He dropped a similar hint in his speech on inauguration day, and Republicans heard it clearly, as Democrats and labor leaders waved it off.

Such a nice way of playing hardball. It’s a sign that Lamont has total faith in his ability to govern in a conciliatory way. Everyone wants him to succeed. It’s just a question of whether the pieces can add up.