Hartford Business Journal

20 Hartford Business Journal • July 24, 2017 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL Lawmakers need more power over state employee contracts S tate employee unions approved a concessions package last week that will pur- portedly save the state nearly $1.6 billion over two years. Kudos to Gov. Dannel P. Malloy and the state employees who agreed to the deal, which requires wage freezes, furloughs and health and pension benefit adjust- ments in exchange for layoff exemptions and an extension to state employees' current benefits contract. But while the Democratic governor and his strong base of union supporters cel- ebrate their short-term victory, the deal is a bad one for the state long term. Not only does it prolong generous healthcare and other benefit contracts (which were set to expire in 2022 but would be extended to 2027) it also guarantees 3.5 percent wage hikes in 2020 and 2021. No evidence exists that Connecticut will be in a position to guarantee pay increases four or five years from now. In fact, our fiscal crisis is far from over, and any budget agreed to this year likely won't solve our long-term problems. Rising debt and retiree pension and healthcare benefit costs will saddle the state with fiscal stress for years to come. Lawmakers must have the flexibility and power to deal with this without being held hostage by guaranteed labor contracts. The only way to truly reform state government is to eliminate contract negotiations with state employee unions and allow legislators, who supposedly represent the inter- ests of taxpayers, to vote on wage and benefit changes. Any business that operated like state government has for decades — allowing gen- erous short- and long-term benefits to politically powerful groups without adequately saving for them — would be bankrupt, which Connecticut arguably is. CT's crossroads To be clear, we don't dispute that the state needs government employees to carry out taxpayer business and services. There are many hardworking state employees who deserve our thanks. However, Connecticut is at a crossroads and there may soon be no turning back, at least not for decades to come. We are losing population, wealth and businesses. Major tax hikes passed within the last seven years have had the opposite effect — we are bleeding state revenue instead of gaining it. Meantime, rising debt and legacy costs are forcing us to cut important services and underinvest in key areas like transportation and infrastructure. Property taxes, which are already among the most onerous in the nation, are poised to increase for many communities as municipal aid ebbs. Indeed, the very high quality of life Connecticut has been known for is at risk. Increasing taxes, as many union lead- ers have called for, will only exacerbate Connecticut's decline. This is no longer just a political argument — we must deal with economic reality. There were some positive steps taken as part of the recent concessions deal, which still needs legislative approval. The agreement, for example, requires workers to pay more for their healthcare and pension benefits and creates a hybrid pension/defined- contribution plan for future employees. But it only makes a dent in closing a projected $5.1 billion deficit over the next two years and doesn't go far enough in changing the state's long-term trajectory. More impor- tantly, we can no longer afford to be straightjacketed by long-term contract agreements. We understand there are potential legal pitfalls in reducing or eliminating collective bargaining rights, but we need political leaders willing to take those calculated risks. We need a government that works for taxpayers first, and puts the interests of our state's long-term fiscal and economic health ahead of powerful state employee unions. n RULE OF LAW Unions' anti-business sentiments must be opposed By John Horak T he following two stories tell us all we need to know about the mess in which the state finds itself. First, the June 25th edition of the Hartford Courant featured an op-ed by Stanley Black & Decker CEO James Loree, in which he stated that most public com- pany CEOs in the region are (for now) committed to staying in Connecticut and willing to do their part to help, but with three conditions: the state must get its finances in order without major new taxes; life must be breathed into Hartford; and the "state in general must take actions to create a more hospitable business climate." Second, a June 2nd commentary posted on the CT Mirror website about an SEIU 1199 (part of the state employees union) advertise- ment — which accused state officials of favor- ing the wealthy — advocated for capital gains tax increases and suggested this explanation for, and solution to, the state's budget problems: "We've tried budgets that favor the wealthy. That has only led to more deficits. Connecticut is not one race, one gender, one tax bracket. Let's start having a budget that works for all of us." Connecticut is in the tank largely because of its hostile business climate, and the climate is hostile because the SEIU and its minions (the people who buy into its thinking whether they be other unions, elected officials, state employees, journal- ists, commentators, or academics) long ago were victorious in the battle to con- trol the public agenda (the set of ideals and beliefs that dominate the state's politics and culture), and that agenda casts profit- making enterprises either as inherently immoral, and/or as an instrument that government should (by statute and regu- lation) manipulate to achieve a form of social justice to the SEIU's liking. The point is that we have already done what they want. We have taxed the wealthy, busi- nesses and everyone else to the tipping point (the point at which they leave); and the spoils of the SEIU's victory are found in our financial and emotional insolvency. Congratulations. High fives all around at SEIU headquarters. In their march to victory, the SEIU's flag bearers have pilloried our world-class business- es (GE and Aetna), brought others to the edge (Stanley), and (speaking of social justice) driven our community-based nonprofit social service agencies (which really do care about the "most unfortunate among us") to their financial knees by soaking up for themselves the resources non- profits need to survive. I speak to this topic passionately because I was long ago disabused of the notion that the SEIU cause had anything to do with what is fair. It is a lust for power driven by emotions that come from a dark place (resentment and its synonyms come to mind). Years ago, I was on the board of directors of a nonprofit social-services agency, which, like the others in the state, lives off of what the state will reimburse, and pays its employees only what the state allots. The SEIU commenced a drive to organize the nonprofit's employees, which featured the following tactics: • Sixteen "blue party" members of the leg- islature shamelessly signed an unsolic- ited letter to the employees urging them to vote for unionization. • The union also circulated flyers with the pictures of board members (yours truly included) around the neighborhoods where we lived (a not so subtle form of intimidation) informing our neighbors that we were against "working people." If we dared to push back on these tactics it would, each time, file unfair labor prac- tice grievances with the Department of Labor to ratchet up our legal expenses. • The SEIU won the election, the employees started paying union dues, and their wages and benefits have stayed about the same. Think about it — If this is the way they treat nonprofits that care for the disabled, addicted, homeless, and poverty stricken, I can only imagine the tenor of their behind-closed-doors conversations about business given the overt hostility to business in their public communi- cations, legislative agenda, messaging, memes, editorials, placards, and press releases — all of which our busi- ness leaders and own- ers (of all sizes) see and hear repeatedly. It does affect their thinking and plan- ning. Would you want to open a business in a state with so power- ful a force pushing an agenda of this type? Our economy has three sectors — pri- vate, government and nonprofit. The business sector is the only one that creates the wealth and profits that are the sources of our paychecks, tax revenue and charitable contributions. Until and unless some balance is restored, businesses will continue to leave, and our nonprofits will be left in place (they cannot leave) with fewer and fewer resources to do the important work they do. Let me close by saying that nonprofit orga- nizations, civic groups, trade associations, and interested individuals (with or without the involvement of governmental officials) should find a way to take Mr. Loree up on his offer to help. Government is too badly broken to fix itself, and Connecticut will be rebuilt, if at all, from the ground up and not the top down. n John M. Horak is the director of TANGO Nonprofit Education and Consulting. The opinions expressed are his own. HARTFORDBUSINESS.COM POLL Is the state employees' concessions package a good deal for CT taxpayers? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: Should the city of Hartford file for bankruptcy protection? 66.1% Yes 33.9% No John Horak ▶ ▶ In their march to victory, the SEIU's flag bearers have pilloried our world- class businesses, brought others to the edge, and driven our community- based nonprofit social service agencies to their financial knees.

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