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20 Hartford Business Journal • January 9, 2017 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL Unions must agree to benefits concessions W ith limited choices on how to solve the state's billion-dollar budget deficits, legisla- tors must ask state employee unions for salary and/or benefit concessions, rather than depend solely on budget cuts and tax increases to make ends meet. While all three options will likely harm the state's economy in the short term, pre- venting higher taxes on businesses and individuals must be the No. 1 priority if lawmak- ers want to avoid long-term damage to the state's job-growth prospects. With one of the slowest growing economies in the country, Connecticut has already endured two of the largest tax hikes in state history over the last six years, budget- balancing moves that undoubtedly sapped business investment and hiring in the state. Coming off a year in which Connecticut added a paltry 1,400 jobs (from January thru November) and saw its population drop for a third year in a row, increasing the cost of living and doing business in the state will simply continue those negative trends. As the legislative session officially kicks off, lawmakers must tackle projected defi- cits of $1.5 billion and $1.6 billion over the next two fiscal years, shortfalls that represent about 8 percent of the General Fund. Surging retirement benefit costs are a major factor contributing to the continued deficits, along with weak growth in tax receipts. It's likely many oxen will be gored in the budget-making process, including municipal aid, social services and higher education, but getting concessions from state employee unions — on salaries, health care and/or retirement benefits — must be a key part of the mix (state employee pay and benefits make up nearly 35 percent of the state's $20 billion annual budget). Gov. Dannel P. Malloy deserves some credit for recently striking a deal with state employ- ee unions that restructures annual pension costs. The deal prevents the state's annual pen- sion contribution from going above $2 billion over the next decade by shifting $13.8 billion in expenses — which were supposed to be paid off by 2032 — onto the next generation. But the deal didn't change benefit levels for current or future retirees or require workers to contribute more for their own benefits. The governor must get more out of the deal for Connecticut taxpayers. State employees have come to the bargaining table before. In 2011, unions agreed to a two-year wage freeze and other concessions that saved about $650 million, but it hasn't been enough to solve the state's budget crisis. Unfortunately, state employees' current pension and health insurance deal runs through 2022, which was negotiated as part of the 2011 concessions, giving unions much of the leverage for now. But Malloy and his budget chief Ben Barnes must insist on re-opening the pact for negotiation. State workers have some of the sweetest ben- efits in the state, requiring no out-of-pocket costs for many medical services, including inpatient hospital stays, and $15 co-pays for visits to physician offices, according to the Connecticut Mirror. Meantime, the deductible ($350 for individuals and $1,400 max for a family) can be waived if plan participants enroll in a wellness program, according to the Connecticut Mirror. Compare those benefits to the private sector, where co-pays, deductibles and other expenses have been steadily increasing for years, and it's easy to see how state employ- ees are getting a plush deal on the backs of taxpayers. Unions have argued that lawmakers should raise taxes on the wealthy and eliminate business incentives to help close the deficit. That formula, however, has already proven to be a recipe for failure, producing a stagnant state economy that encourages more residents to flee to warmer, lower-cost states. State employees are supposed to serve taxpayers, not hold them hostage in a budget crisis. Let's hope they do right by the state and come to the bargaining table in good faith for honest and fair negotiations. n HARTFORDBUSINESS.COM POLL Will Gov. Malloy extract further wage/ benefit concessions from state employee unions this session? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: Will state lawmakers raise taxes in 2017 to balance the budget? 83.6% Yes 16.4% No OTHER VOICES The Obamacare debate isn't over By Tom Miller T he question of whether Republicans should repeal Obamacare appears settled. Vice President-elect Mike Pence was on Capi- tol Hill last week to rally his party's lawmakers. Later in the day, the Senate voted 51-48 to begin debate on a budget resolution that would help pave the way for repeal of Presi- dent Obama's signa- ture policy. But don't be fooled. The debate over whether to scrap the law is not yet over, and what appears to be merely a question of timing is about much more than that. As a result, Republicans will have to tread a careful path that balances a desire to abandon Obam- acare as soon as possible with the need to respect the reality that the complexities of changing the system will persist well beyond any near-term bill signing ceremonies. Of course, now that the end of Obamacare appears in sight, with the election of a Repub- lican president and the party's control of the Senate and the House, a chorus of voices is urging delay and caution. And it's true that widespread, sudden disruption of existing health insurance arrangements could short- circuit a workable transition to more market- oriented and less Washington-centric health policy reforms. Hastily concocted political experiments on tens of millions of Americans could deliver unintended consequences. Meanwhile, procedural and budgetary landmines on Capitol Hill also require care- ful planning, while holding together narrow working majorities — particularly in the Senate — as the Affordable Care Act is over- turned will involve multiple compromises. Members must swallow hard and pull back from past rhetorical posturing. But the reality is that such hurdles are by no means unique to Obamacare; they exist when- ever any major changes in direction for com- plex national legislation are proposed. Even the Obama administration and its allies had to drastically revise the plans it envisioned in Jan. 2009 and accept whatever it could get through Congress 15 months later. And it should also be remembered that many of the voices eager to recount how hard all this is will have other agendas — many want to pre- serve the status quo, not because it's par- ticularly valuable or popular, but because they claim it's just too late and too hard to change it. Still, while the risk of ending up on the merry-go-round of ACA replacement proposals lacking sufficient support, depth or effectiveness is real, there are risks posed by the opposite reaction: the desire for quick and simple repeal. Congressional leaders are well aware that other unexpected issues suddenly can crowd out and capture the attention span and politi- cal capital needed to execute the challenges of health policy reform. And they also have a non-negotiable obliga- tion to their voters to fulfill at least some por- tion of their longstanding campaign promises to repeal and (perhaps) replace (at least some parts of) Obamacare. Ultimately, the current Congress and the incoming Trump administration cannot afford to walk away from this issue without being able to claim victory. To do so, they will likely start by taking one sizable leap for their supporters — repealing as much of the ACA as congressional procedures, budget scoring rules, and vote counts will allow in the first half of this year. As a result, some, but not all, of the repealed provisions will limp on for at least another year, if not longer. In practice, that may mean something like the following moves: • Quick repeal of the individual and employ- er mandates for insurance coverage. • Delayed repeal of ACA taxes on the healthcare industry (at least until those sectors agree to "play ball" with the new majority's transitional plans). • Continuation of insurance subsidies for 2017 that later become gradually revised (flatter and broader refundable tax cred- its) in future years. • Accelerated reductions in Medicaid's coverage expansion through per-capita allotments to states. The next daunting phase of reform — involv- ing the regulatory side of Obamacare — will require larger, 60-vote majority compromises in the Senate that will leave just about all par- ties unhappy. In other words, after a giant leap into the mostly unknown in the first half of 2017, some of the key political and policy facts on the ground will have changed. Republicans focused on maintaining their tenuous majority still face a steep and long climb. In this next stage, they will have to keep adjusting their tactics to the specific battles at hand involving replacement and tran- sitional implementa- tion. But one thing is certain — slipping backward is not an option for Republi- cans. Whatever comes next will require that they at least be able to declare victory. n Tom Miller is a resi- dent fellow at the American Enter- prise Institute and co-author of "Why Obamacare Is Wrong for America." This column appeared on CNNMoney. Tom Miller ▶ ▶ Republicans will have to tread a careful path that balances a desire to abandon Obamacare as soon as possible with the need to respect the reality that the complexities of changing the system will persist well beyond any near-term bill signing ceremonies.