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Malloy Dismisses Deficit Projections, Won’t Ask for More Concessions

by Hugh McQuaid | Jun 6, 2014 3:11pm
(37) Comments | Commenting has expired
Posted to: Election 2014, Labor, State Budget, Taxes

(Updated 4:49 p.m.) Gov. Dannel P. Malloy said Friday he will not seek concessions from state employees next year if he’s re-elected and called projections the state will be facing a $1.278 billion budget deficit in the next fiscal year “ridiculous.”

“A deal is a deal. We’ve made a deal and we’re going to honor that deal,” Malloy said of the 2011 State Employees Bargaining Agent Coalition concession labor deal his administration negotiated with state employee unions soon after taking office.

In 2011, state workers agreed to a two-year salary freeze and other concessions in exchange for four years of protection from layoffs.

Malloy said the deal, which was criticized for relying heavily upon difficult-to-quantify savings, has been undervalued.

“Quite frankly it’s a tremendously valuable deal. I think what’s misunderstood — perhaps purposefully so by some folks — is how much total savings that has brought about and really is the biggest reason we can look at our benefit package as sustainable,” he said.

The governor also disputed the budget projections from the nonpartisan Office of Fiscal Analysis.

“We don’t face a deficit. I’ve decided to boil this down a little bit for you. The deficit projections on the same services budget would require that we increase spending by 7.78 percent. You don’t believe we’d do that, nobody believes we’d do that,” he said. Nobody, no party, no politician is going to advocate that we increase spending by 7.78 percent. It’s a ridiculous number.”

Although Malloy insists the estimates are based on unrealistic spending assumptions, he often points out that he inherited a $3.6 billion single-year budget deficit from his predecessor. That number is based on the same projection methods which now predict a $1.278 billion deficit in the next fiscal year (FY 2015/16).

Like Malloy, Republican gubernatorial candidates have all said they would not raise taxes, but at least one was unwilling to take state employee concessions off the table.

Danbury Mayor Mark Boughton was the only one to immediately respond to the question.

“If we are going to solve our long-term financial challenges, everyone must be at the table,” Boughton said. “I would hope state employees would be willing to be part of the solution. Connecticut taxpayers have already stepped up to the plate. It’s now time for a complete and honest reorganization of state government. New employee benefits should be part of that discussion.”

Sen. John McKinney said he’s not surprised Malloy would make such a statement about the concessions, but nothing should be off the table.

“I guess with the big horse race coming up, the governor is trying for his own Triple Crown…no deficits, no new taxes and no concessions,” McKinney said. “I understand that it’s an election year, but I believe the deal Gov. Malloy made with the unions is unsustainable for state taxpayers and he knows it. We have a retirement system that allows a judge that works for 3 years to make a $100,000 pension. State employees have defined-benefit plans that are more generous than virtually anything that is available in the private sector. If we are serious about achieving balanced budgets, we need to open the contract and work together for a real solution that is fair to everyone who lives and works in our state.”

Tom Foley said Malloy can’t be trusted when it comes to concessions.

“In 2010 Dan Malloy signed a public union questionnaire saying he wouldn’t seek concessions. After being elected, he promptly broke that promise. Why should the unions believe him this time? As the saying goes, “fool me once, shame on you. Fool me twice, shame on me.”

Click here to read our previous report on the deficit projections.

Christine Stuart contributed to this report.

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(37) Comments

posted by: Janster57 | June 6, 2014  5:08pm

Malloy believes the state employee benefit package is sustainable.I honestly don’t believe I’ve ever heard anyone else say that, ever. And he simply doesn’t believe there will be a deficit. End of discussion. Wow. i want whatever he’s smoking. It’s GOT to be good!

posted by: state_employee | June 6, 2014  5:53pm

Here we go again with the lies from malloy and the villagers after the unionized state employees. People need to realize it is not the unionized workers that are draining the state budget, it’s the elite non union at the top.  I’m so sick of this crap.  I’m a state worker and a tax payer.  I get hit twice.
Malloy and the elite need to revise the non union pay scales, including the legislature and thier lucrative packages.

posted by: DrHunterSThompson | June 6, 2014  6:13pm

DrHunterSThompson

a deal is a deal.  good to hear.  state employees took a screwing a couple years ago, happy to hear he won’t try it again.

HST

posted by: rsoxrule | June 6, 2014  8:06pm

malloy and his minions have NOT adhered to the SEBAC agreement on the issue of “transformation.” rank and file put lots of sweat equity into measures that would improve efficiency and streamline bureaucratic processes. our efforts were met with disdain as his appointees mocked us and harassed us beyond reason!

posted by: art vandelay | June 7, 2014  7:41am

art vandelay

What ever happened to the suggestion boxes?

posted by: Common Sense | June 7, 2014  11:21am

Gov. Malloy, the shrewd politician he is,  does not want to lose “taxpayer-paid-votes.”  He stays in the driver’s seat because he wantrs to stay in the governor’s chair.

posted by: art vandelay | June 7, 2014  3:40pm

art vandelay

@Dr.HunterSThompson,  Could you kindly explain to me how state employees got “screwed”?  As I recall Gov.Malloy gave state employees a multi year no layoff clause and a slight increase in their co-pays.  I don’t call that getting “screwed”  What I DO call getting “screwed” is loosing ones job due to an increase in the minimum wage. College students looking for work this summer are getting “screwed” because employers have to pay them more so they can’t hire more of them.  I call employees who’s companies leave this state because of more restrictions placed on them by Malloy & the Democrats getting “screwed”.
No state employees have it pretty darn good sitting in carts while private sector taxpayers (what’s left of them) are pulling.

posted by: Janster57 | June 7, 2014  5:04pm

I have to double back on this one. Here we are with the second highest unfunded pension debt in the entire country and Malloy says it’s “sustainable”. I’m not terribly bothered by corrupt politicians, they have them in every state. In CT, however, it’s gotten to the point where they don’t even bother trying to cover their tracks. Malloy is in a position where there is nothing, absolutely nothing, that he wanted to do and didn’t. His response now to Connecticut burning is “I don’t believe it and I don’t care”. Nero played a fiddle while Rome burned. The only difference is Malloy doesn’t have a fiddle, best as I know. It’s terribly sad and my house is on the market. this state makes Rhode Island look like Silicon Valley.

posted by: state_employee | June 7, 2014  8:12pm

@art.  There was never a suggestion box.  That was a big fat lie.

posted by: raybbr | June 8, 2014  6:45am

Dear State_Employee:  You’re not going to like to read this but you don’t pay taxes.  The taxpayers of this state pay your taxes.  Sure, you get “taxes” taken out of your poor little meager paycheck but the money to pay those taxes comes from those who produce something.  Also, while I get it you don’t like the legislators pay there are less then a hundred of them and over 200,000 of you (state employees).  Blaming them for draining the coffers is absurd.

I have a question for all you state, non-taxpaying employees:  In this economy, when all other companies are cutting benefits and wages, why should you be exempt from cuts?

posted by: Not that Michael Brown | June 8, 2014  12:06pm

When is this deficit projected?  2016?  Terrible article.

posted by: oliviahuxtable | June 8, 2014  12:17pm

Here we go again…
Pitting public vs private workers for the economic crumbs left after the uber rich take theirs. The private sector, after years of being whipped into submission by their corporate slave masters, realize correctly that they have absolutely no power in their work situation to fight against their employers so what do they do? Scream and complain about public workers’ salary and benefits. Hey….I guess it feels better to force your pain on someone else since you are powerless to change your situation. So instead of the fat cat politicians asking for the wealthy to pay more, they look to the ol’ reliable state worker to fleece….and the private sector jane and joe are right there demanding more blood. This so that everyone can wallow in the mud. America, 2014.

posted by: Christine Stuart | June 8, 2014  12:20pm

Christine Stuart

Notthatmichaelbrown, The state operates on a fiscal year so “next year’s” deficit will be $1.278 billion. Look at the graphic in the story from OFA. These are nonpartisan fiscal analysts who take the current services budget and adjust it for inflation. Hope that explains it.
Best
Christine

posted by: Not that Michael Brown | June 8, 2014  12:50pm

@Christine. I will agree with what you have written if you willing to put the word ‘projected’ in front of ‘deficit.’  We have even realized the $47 million surplus for the 2013-14 year, never mind a deficit in 2016.

posted by: art vandelay | June 8, 2014  4:31pm

art vandelay

@oliviahuxtable,
First off private sector employees do not eat the crumbs from the urban rich. A private sector employee is “at will” meaning they accept the terms & conditions of employment by the person hiring. If an individual does not like those terms, they are free to look elsewhere.  Slavery ended in this country after the Civil War.  Nobody is forcing an employee to stay with the company they choose to work for.  Most if not all companies have a grievance policy if an employee feels he or she is not treated fairly.  Employees can change their situation in the private sector by applying for another job they feel qualified for or obtain more education so they are qualified.  My beef with state workers is that they have insulated themselves from the rules utilized in private sector employment by surrounding themselves with politicians who protect them at all costs simply for their vote.  As a taxpayer I am forced to pay for this insulation since it is impossible to vote the insulators out of office.

posted by: Commuter | June 8, 2014  7:30pm

Four years, four balanced budgets, plus big chunks of money put into the pensions and the rainy day fund. Restructuring of the pension fund to avoid billions in taxpayer dollars.

A glaring flaw in the comparison of the deficit that Malloy inherited and the current situation - in addition to the fact that Malloy has balanced four budgets and held spending increases in check - is that prior to Malloy’s executive order, we didn’t have GAAP accounting.

Its difficult to understand why this story is getting repeated over and over without mentioning any of this, nor making any attempt to explore what the alternative proposals are (or to be more accurate, talk about the lack of specifics from Foley and company).

With GAAP accounting, the next governor will have to submit a balanced budget. Someone might take the projected revenue, assume it will all be spent, and then ask Malloy what the priorities are.

Since Foley already acknowledges that he will cut services, what will those cuts be? Whom does he intend to lay off?

Get us the answers from Foley, then we can make an informed decision about whom to vote for.

posted by: NoNonsense2014 | June 8, 2014  9:13pm

@raybbr: Wow! Where do you get your “facts”? There are NOT and never have been 200,000 state employees. The number is somewhere around 55,000 full-time and maybe 25,000 part-time employees. And as for your “fact” about legislators: NOT “less than a hundred”. Try 151 representatives and 36 senators. And you assume that all private employees “produce something”. Wrong again. And the fact is that, yes, state employees do pay taxes. They get paid for working, just like everybody else, and they pay taxes, just like everybody else. The only difference is the source of their pay. State employees deserve to get paid for work just like everybody else. And the next time you decide to disparage state employees, think what life would be like without them. No state trooper when you have an accident on the highway. Heck, no highway to drive on. I could go on, but you won’t get the picture anyway.

posted by: mmal231294 | June 9, 2014  9:30am

I for one do not feel that 90% of State Employees are overpaid. We made some progress towards getting them to pay a portion of their Health Insurance and the newest Tier’s of employees have less generous retirement benefits. It was a start. And as HST states, “a deal is deal”. That being said, it is still unsustainable. Dan is either a fool or is blatantly lying, or both. And it matters not which, the status quo can only be supported for another few years. Let the layoffs begin.

posted by: Christine Stuart | June 9, 2014  9:36am

Christine Stuart

Notthatmikebrown,
The problem is if Malloy wants to use the $3.6 billion deficit he inherited as a number, which was calculated the same way as the $1.278 billion deficit then he has to acknowledge there is a deficit. I can understand he doesn’t want to do that, but you can’t have one number and not the other. That’s the problem. The $43 million surplus this year will go into the rainy day fund and presumably could be applied to lower the $1.278 billion deficit, but it doesn’t erase it.
Christine

posted by: raybbr | June 9, 2014  9:50am

Okay, I was wrong.  There are about 80,000 state employees and another 50,000 collecting a pension.  That still adds up. 

I maintain my contention that state employees don’t pay taxes - the taxpayer does.  Simply taking money out of state employees paycheck means the books are juggled to show a “tax” paid.  Also, get this:  When a state employee gets a “refund” the taxpayer is also footing that bill. 

As for the number of legislators there are 186 not counting the governor and his cronies.  That means there is a ratio of 80,000 to 186.  Or, 430:1.  That sure is a lot of state workers for each legislator to buy votes from.

As for having less state employees I notice that the state employee groupies always pick the state trooper as an example of “if we cut them you would complain”.  I might.  I might not.  How about the DOT workers standing around while one guy shovels?  How about the redundant levels of bureaucrats in each department?  No, they will never ask about them.

posted by: art vandelay | June 9, 2014  11:09am

art vandelay

Could someone kindly explain to me how last years budget was balanced?  As I recall the built in deficit was erased by the introduction of Keno.  The projected revenue from Keno was suppose to balance the budget.  Now that Keno was eliminated, theoretically last years budget has a deficit and by law is illegal.

posted by: Not that Michael Brown | June 9, 2014  1:18pm

@Christine - Except for the 3.6 was actually realized.  Time will tell about 2016.

posted by: Not that Michael Brown | June 9, 2014  1:22pm

@Christine - Also, I’m afraid you are parroting a machination used by McKinney - almost verbatim.

posted by: NoNonsense2014 | June 9, 2014  2:30pm

@raybbr: Clearly you are biased against State employees. So be it. But you’re still wrong. Once a State employee gets a paycheck, it is called “wages”—just like for everybody else. For your claim that “the taxpayer pays the taxes for State employees” to be valid, there would be no deductions for taxes from the PAYcheck. ‘Cos if we go by your math, then anytime I buy a Big Mac, I am not only paying the wages of the McD’s employee, but paying his taxes, as well. In which case, it all evens out in the end.

@Art Vandelay: Budget revenues are always “projected”, no matter where they come from. The Keno revenue from last year was simply more “projected” (OK, nonexistent) than other sources. But since Keno was not (and could not be) repealed retroactively, it doesn’t make last year’s budget any more unbalanced than it was.

posted by: Christine Stuart | June 9, 2014  3:54pm

Christine Stuart

Notthatmikebrown, The $3.6 billion was never actually realized because Malloy got rid of it. So that doesn’t make it any more real than the $1.278 billion. But they pick the rhetoric not me. I don’t parrot anyone btw. Nice try.
Christine

posted by: Not that Michael Brown | June 9, 2014  4:36pm

@Christine - You are right.  I should not have said realized.

That said.  Here is what McKinney said a week ago, “I’m willing to concede that Malloy inherited a $3.6 billion deficit, if he’s willing to concede to a $2.8 billion deficit over the biennium.”
http://www.ctnewsjunkie.com/archives/entry/nonpartisan_analysts_predict_2.8_billion_budget_deficit_for_2016-17/

posted by: art vandelay | June 9, 2014  4:37pm

art vandelay

@Nononsense2014,
The question is where do your “wages” come from. In your case it is the TAXPAYER and not the GNP like the rest of the private sector.  Your “wages” come from the tax dollars generated from a sales & income tax dictated by government.  Once you get your “wage” you cannot consider it a “wage” like one generated from the private sector. You’re comparing apples to oranges.  Yes I agree the wages you earn from taxpayers helps the GNP when you spend it, but it is only recycled not earned.  If private sector GNP fails to generate wealth, theoretically your source of “wage” should not be sustainable.  Your Union, Your Political Party (Democrats) & Malloy feel your wages should be sustainable at all costs no matter what.  That’s wrong.

posted by: art vandelay | June 9, 2014  4:40pm

art vandelay

@NoNonsense2014,
I wish I could project my household budget the way the state forecasts theirs.  If I don’t have the money I don’t spend it or I cut back.  Malloy & the Democrats do not nor will they ever subscribe to that theory.  It’s why we’re in the financial mess we’re in. Don’t get me wrong, Republicans are to blame too.

posted by: Christine Stuart | June 9, 2014  4:42pm

Christine Stuart

Notthatmikebrown, I was the one who first asked about the numbers back in April during a press scrum 
with Ben Barnes and the Republicans latched onto it. So as far as who is parroting whom…I still have the audio if you want to hear the awkward exchange. In fact, I’m going to Sound Cloud that before I forget I have it. CTN sadly missed it.
Christine

posted by: NoNonsense2014 | June 9, 2014  8:21pm

@ Art Vandelay: The money everybody earns in wages is recycled in one way or another. And you assume that State employees’ wages are not earned. The vast majority DO earn their pay, and work hard and diligently for it. But I know we’re going to disagree on that, so I’m not going to debate that further.

However, you might want to assume less. You know nothing about me or my career. I was never a union employee (nor was I management), and I am not and never have been a Democrat. I did, however, work diligently and conscientiously for more than 30 years and took very seriously the fact that I was a public employee performing a service for the taxpayers (of which I am one). I took great pride in my work, and I deeply appreciated my job, even all the years I didn’t get raises (more years than the unionized employees) and put in many hours of unpaid OT to try to accomplish what really called for more than one employee to do. But you know what? I worked in the private sector before becoming a State employee, and none of those previous jobs were as fulfilling or stimulating or rewarding (and I don’t mean monetarily). I was thankful every day of those 30+ years, and I’m still thankful. And whether you and others know it or believe it or not, there are lots of State employees like me.

posted by: art vandelay | June 9, 2014  10:30pm

art vandelay

@NoNonsense2014, I respect & appreciate where you’re coming from.  What I take issue with are state employees who have no clue as to how good they have it and demand more.They don’t realize that defined benefit packages are and should be a thing of the past.  Nobody should be “entitled” to a pension equal to their salary for the rest of their lives for NOT WORKING, let alone a ROLLS ROYCE health care benefit package on top of that.  Too many private sector employees who have worked their butts off for Fortune 500 Companies are dismissed in their 50’s and left out on the streets.  I can’t count how many of my friends that this has happened to. Am I bitter? Yes.  As a taxpayer, I’m sick of it.

posted by: art vandelay | June 9, 2014  10:35pm

art vandelay

It also peeves me as a taxpayer every time I see an off duty State Policeman getting out of his cruiser with his wife, grandmother & children on a shopping spree at Wal-Mart or Stop& Shop on a Sunday Afternoon.  Those cruisers should be parked at the barracks assigned to that trooper & he should use his own personal car to go to and from his house when he or she is going on duty.  Those are MY tax dollars being wasted on ware & tare of an automobile and gas I shouldn’t be paying for.  That’s pure BULL!

posted by: NoNonsense2014 | June 10, 2014  10:42am

@ Art Vandelay: Thank you. And I agree with some of the other things you wrote, such as use of state police cruisers and private sector employees who get dumped in their 40s and 50s. Shameful.

However, you may have an incorrect impression about pensions. Nobody, not even the judges we’ve read about recently, gets a “pension equal to their salary”. For regular employees (like me) it’s 2% of average of top 3 years times number of years worked (2% x 30 years = 60%). So my pension is 60% of salary (there was no OT, and years of no increases). And I AM very thankful for it. And when I am eligible to begin collecting Social Security, my pension will be reduced. And yes, the health benefits are great. But when Medicare kicks in, the State health care plan becomes secondary. Yes, that’s still great, and I know it. But don’t blame me or other rank-and-file employees for benefits that were in effect when we were hired. Those pension and health benefits HAVE changed, and people hired more recently pay more and get less than I do, and “normal” retirement age has increased as well. Is it still unsustainable? Yes. But again, employees get whatever benefits in effect at the time they’re hired, and I’m sure more changes are coming. One significant change that I would like to see is not including OT in the pension calculations. It should be based on base pay only. Will it ever happen? Who knows.

posted by: Common Sense | June 10, 2014  3:03pm

@NoNonsense2014:  Don’t pretend to be impoverished as 60% of salary for 30 years is still better than strictly social security income for most recipients. Count your blessings. You should be laughing all the way to the bank. You should not cry on Art Vandelay’s shoulders.

posted by: NoNonsense2014 | June 10, 2014  5:30pm

@ Common Sense: You might try reading what I actually wrote. I am neither laughing all the way to the bank, nor am I crying or pretending impoverishment. Since you don’t know what I earned, what my pension is, or what my financial obligations are, your assumptions are insulting. You missed the part where I am thankful for what I have; and, yes, I know people who only have Social Security to count on have less. Had you read Art Vandelay’s posts and my response—you know, the actual words—you would have seen that I was merely trying to correct misconceptions about pensions and benefits of regular State employees—not judges, UConn professors and upper echelon executives.

posted by: Common Sense | June 10, 2014  7:21pm

NoNonsense2014: It’s good you appreciate your edge over Social Security recipients. It could be worse as you have an income   that provides for you—when there are jobless and homeless people out there who are less fortunate.

posted by: art vandelay | June 10, 2014  9:29pm

art vandelay

@NoNonsense2014, I really don’t have any issues with your comments.  You’re right it’s the mid-upper level and tier 1 employees that have gained the most from the state pension system.  The state needs to eliminate the defined benefit package for all future employees in favor of 401K’s with a matching contributions by the state up to 6%.  When an employee retires he can be given a lump sum with no medical.  It’s what’s done in the private sector.