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State Employees Targeted As A Liability During Greenwich Economic Forum

by | Nov 16, 2015 5:30am
() Comments | Commenting has expired
Posted to: The Economy, Election 2010, Jobs, Labor, State Budget, Greenwich

Christine Stuart photo

Ned Lamont, Sen. L. Scott Frantz, Carol Platt Liebau, and Suzanne Bates

Connecticut’s public sector employee unions took a beating Sunday during a forum at the Greenwich Public Library.

“The most important way we can get our hands around slowing the spending in our state is by reforming public sector compensation,” Carol Platt Liebau, president of the Yankee Institute for Public Policy, said to a smattering of applause from the more than 200 gathered for the event.

The forum was sponsored by the Greenwich Economic Advisory Committee, but the Yankee Institute helped put together the panel that was moderated by Larry Kudlow, an economist and CNBC commentator. Representatives of labor weren’t in attendance and weren’t on the panel.

To make her point about public sector compensation, Liebau pointed to a report the Yankee Institute commissioned that found a sampling of Connecticut state employees receive total pay and benefits from 25 to 46 percent higher than comparable private sector employees.

“When you look at the part of the budget that’s growing the fastest that also relates to public sector compensation,” Liebau said. “Last year, the state payroll increased by 4.5 percent.”

A recently released report from the nonpartisan Office of Fiscal Analysis found payroll for state employees will increase 6.9 percent in 2018.

But payroll increases are not the biggest contributor to the state’s fiscal instability.

She said there’s also the unfunded pension liability and unfunded health benefits for retirees.

As of 2014, the State Employees Retirement System had a funded ratio of 41.5 percent. The unfunded liability of the health benefits for state employee retirees was estimated at $19.5 billion in 2013. New numbers are expected in the spring.

Asked if public sector unions are really the problem in Hartford, Suzanne Bates, the policy director for the Yankee Institute, said the union fights hard to elect the people they end up negotiating with so “they’re negotiating across the table with themselves.”

She said that adds another layer to the complexity of the state’s budget issues.

“It’s harder to convince the powers that be in Hartford that tackling public sector compensation is the way to go,” Bates said.

Christine Stuart photo

Larry Kudlow

Ned Lamont, a Democrat who lost the 2010 primary to Gov. Dannel P. Malloy, said he blames governors going back a generation for the state’s current fiscal woes.

“What you really need are strong governors who really make the difference,” Lamont said.

He said the problem is not the current employees. It’s the pension for employees hired before 1984. The state did not “set aside a dime” for those employees and the lack of funding caught up with it.

“You had governors promising health care benefits, promising pension benefits that they knew their successors couldn’t pay off,” Lamont said. “. . . And we let that happen.”

Lamont said the good news is that the state has begun setting aside more money for pensions and health care, so the state is on more solid footing with active employees.

He said it’s a little “conspiratorial” to say everyone is “bought and paid for” in the legislature. But he didn’t hold back about his feelings regarding Malloy’s decision in 2011 to extend the contract for state employee health and pension benefits until 2022.

“I think we need some governors with backbone. We haven’t had that for a long time,” Lamont said.

He said Connecticut’s governors have negotiated the state in circles for the last 30 years mainly “because the governor is trying to buy votes.”

The statement received applause and a kudos from Kudlow.

Aside from strong leadership, Kudlow asked Sen. L.Scott Frantz, R-Greenwich, who was the only person on the panel holding an elected office, what path he would take to solve it.

“Mathematics and the clock are working against us in a dramatic fashion,” Frantz said. “So we have to come together.”

He said they are hopeful the bipartisan budget negotiations will come up with some longer term structural changes that make sense.

However, he doesn’t anticipate “major restructuring of pension plans” to come of out of budget negotiations.

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Comments

(12) Archived Comments

posted by: Biff Winnetka | November 16, 2015  7:32am

Municipal bankruptcy is the path to public sector compensation/retirement benefits reform.  Once a few big name municipalities declare bankruptcy for the purpose of getting their public sector compensation obligations under control, then the stigma will fade and the floodgates of municipal bankruptcies will open.

posted by: AM76 | November 16, 2015  9:10am

30% of the state budget is going to municipal aid of some sort.  That’s in addition to the crushing burden of local property taxes.  Municipal employees in many cases enjoy more generous benefits than state employees.  Yet all I hear are promises to “hold municipalities harmless.” Until that changes this is not a serious discussion.

posted by: oldtimer | November 16, 2015  12:09pm

Some advocate having the rich pay their fair share to get the budget under control…

posted by: ehdatascientist | November 16, 2015  2:21pm

Public sector compensation and benefits is an appropriate place to start improving Connecticut finances and sustainability. 
An approptiate goal or objective, however, needs to be getting the state out of the top 10 states in the country for per capita total taxation.
Recovering 2 to 4 hundred million out of over a billion in this year’s tax increase does not cut it!  Spending cuts should more than exceed the tax increase and add several hundred million to the rainy day fund.

posted by: CTResidentForLife | November 16, 2015  3:00pm

Has anyone verified the accuracy of the Yankee Institute report?  What about Municipal employees & teachers as AM76 eludes to?  There is a lot more to be considered than the State Employee pinatas.  There are a ton of other programs that are in the budget that need to be addressed as well.

posted by: Bluecoat | November 16, 2015  4:04pm

From ctsunlight.org:
Current State Retirees: 46,766 Amount:$ 1,585,811,475.00
Average: $ 33,909

State Worker Cost:
Employee Records: 397,804
Payroll $ 28,709,129,038.00
Average: $ 72,169.00

“If something cannot go on forever,it will stop” Stein’s Law of Economics

posted by: Bluecoat | November 16, 2015  4:06pm

Do you want to play a game?
Visit http:ctsunlight.org, and see how many jobs you can find that make you say, “What does that person do?”, or “They make how much?”, or “What is that Department needed for?”,or finally, “Their pension is what?”

posted by: ocoandasoc | November 16, 2015  5:28pm

“...the union fights hard to elect the people they end up negotiating with so ‘they’re negotiating across the table with themselves.’”
This is true at both the State and municipal level, and it is the crux of the problem. CT voters vote Democratic in their local and legislative elections. And a Democrat in CT cannot be nominated or elected without union support. So it is really not much of an exaggeration to say that the CT legislature is bought and paid for.

posted by: oldtimer | November 16, 2015  5:56pm

Bluecoat… I scanned a few different state agencies and can’t believe the pensions! And somehow there are those who believe that “the rich” and corporations need to “pay their fair share”!!! Oh, almost forgot, the salaries/benefits are obscene as well! Plenty of low hanging fruit there to balance the budget…

posted by: shinningstars122 | November 17, 2015  6:23am

shinningstars122

@SuzaneBates “they’re negotiating across the table with themselves.”

@MsBates while your at it how about writing a piece on the virtues of Citizens United and how that has expanded democracy.

I have asked this plenty of   times, and they will never do it,  but can the Yankee Institute disclose who they work for and who donates the most money?

I mean you are a 501(c) (3), which states “501(c)(3) groups refer to the IRS code in which their income tax exemptions are defined. The code defines these groups as: “charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.”[9]

501(c)(3) groups cannot engage in political campaigning the way that PACs and super PACs can. They cannot contribute monetarily to campaigns, nor can they endorse candidates or parties. 501(c)(3) groups can engage in nonpartisan activities that encourage political engagement, such as voter registration drives”

They are barely are an “educational” group as they are virtually never objective and the “science” they rely on is often partisan, so it is clear they have a political agenda as much as any union in the state, so I not sure what IRS official signed off on this one.

The Yankee Institute loves to portray its self as fighting for the little guy or girl, but nothing could be farther from the truth.

I would love to have Carol Platt Liebau come from behind the curtain and write an editorial on this site.

posted by: dano860 | November 18, 2015  12:41pm

The message that is being put forward here is what needs addressing. Not attacking the messenger. Getting answers for or about groups doing the investigation isn’t the problem, just like our legislators, going off topic doesn’t resolve anything.
Many of the articles that follow this one only further substantiate the problems facing the state and the lack of revenue (taxes) being collected.
There is no doubt in my mind that many of the positions and attached salaries listed in ‘sunshine’ could and should be eliminated. We are one bloated little state.

posted by: Social Butterfly | November 18, 2015  1:19pm

Ths subject is wasted effort as the controlling Malloy Democratic administration will not take any path to solve it.