Because when Gov. Jodi Rell and the Democrats decided not to make the required payments to the pension fund for the last three years, it became so underfunded that we now have to make those payments just to ensure the fund stays afloat. That said, if we require state employees to contribute 3 percent more of their salary, it will get an extra $96 million into the fund. A worthy step perhaps but doesn’t count toward the $1 billion Malloy has demanded.
Connecticut state pensions, like Social Security and most other public pension funds have a cost-of-living adjustment (COLA) that is tied to inflation. That said, Connecticut could cap or even eliminate COLAs for future Tier II and Tier IIA retirees. Again, it wouldn’t save any tax money now but would save the pension almost $50 million a year going forward.
There has also been talk of basing a retiree’s pension on their average salary over a five-year period rather than the present three-year system. This change would make “gaming” the system more difficult. Again, it wouldn’t save taxpayers now, but it would mean a saving to the pension fund of about $22 million a year going forward.
Finally, increasing medical premiums for active state employees is definitely an option.
Increasing employee premiums by $350 might save as much as $18 million. If we really want to dump on state employees, we could jack up their premiums by $1,000. At that level we might even save $60 million a year.
So where does that leave us.
No pay increase, a dozen furlough days and blowing their co-pays through the roof and we save taxpayers a total of about $388 million next year.
It’s an impressive amount. The problem is, if the Malloy Administration is successful in actually bringing state employees to their knees and wins all of those concessions, the budget will still have a $612 million deficit.
And that, in turn, brings up back to Malloy’s pronouncement that if the state employees fail to provide $1 billion in savings, the budget will be out of balance and the fault will lie squarely with the state employees and no one else.
Saying the budget is balanced when it is not is, in short, a gimmick to beat all gimmicks.
Malloy gets the credit for proposing a balanced budget despite knowing that it isn’t balanced. When Connecticut discovers the budget isn’t balanced after all, the fault is not the governor’s but those good-for-nothing state employees.
The very state employees, who, as we all know, are already Public Enemy No. 1.
It is a brilliant strategy.
The Malloy administration and the state employee unions are engaged in hard negotiations. The state employees know that if they don’t give enough they will be laid off. Then, when they do give, the administration will be “forced” to regrettably announce that the budget is fatally in deficit and the governor has no choice but to make additional cuts and propose additional tax increases.
So the era of budget gimmicks is over -- just as soon as we get through this last one.