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July 25, 2017

CBIA: Labor pact could lock in 'unsustainable' costs

PHOTO | Pablo Robles Joe Brennan, president and CEO of the Connecticut Business & Industry Association.

The five-year extension of state employee workers' contracts agreed to in a House-approved concessions package is of deep concern to members of the Connecticut Business and Industry Association, according to CBIA CEO Joe Brennan.

Extending the labor pact from 2022 to 2027 not only would tie government's hands going forward, but would lock in pension and health benefits costs "that may not be sustainable" over the long term, Brennan said Tuesday.

The agreement maintains an expensive benefits system that state government no longer can afford — even after the concessions — through 2027, some Republican lawmakers said in reaction to approval by the House of Representatives. And it greatly restricts the state's ability to lay off workers mid-2021, they add.

But Democrats maintain the labor agreement will save the state $1.5 billion this fiscal year and next. The agreement, for example, freezes wages for a few year, requires workers to pay more for their healthcare and pension benefits and creates a hybrid pension/defined-contribution plan for future employees.

The yet to be approved state budget "is a $5.1 billion problem," Brennan says, referring to the projected two-year deficit. "This [labor pact savings] is $1.5 billion of it, so there's still a long way to go."

Though CBIA members are expressing their concerns to Brennan about the labor agreement, they also say not getting a budget done “further hurts Connecticut from a business climate standpoint,” Brennan said, “so they want to see a deal done as soon as possible.”

Gov. Dannel P. Malloy said in a statement the deal also will result in $24 billion in long-term savings for taxpayers.

“[The labor package] is a major step forward in creating the foundation for a responsible, balanced budget that will help put our state on a more stable and sustainable path,” Malloy said. The Senate next considers the labor agreement on July 31.

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