CONNECTICUT GENERAL ASSEMBLY
Monday, July 31, 2017
The Senate was called to order at 1: 16 o'clock p. m. , the President in the Chair.
ACTING CHAPLAIN TIM KEHOE:
We ask for patience to understand those who disagree with us, sensitivity to the needs of others, and prudence to make decisions which work toward the common good.
SENATOR BERTHEL (32ND):
I pledge allegiance to the Flag of the United States of America and to the Republic for which it stands, one nation under God, indivisible, with liberty and justice for all.
The Senate will come back to order. Senator Duff.
SENATOR DUFF (25TH):
Thank you, Madam President. Madam President, would the clerk now please call House Joint Resolution Number 301, please?
SENATOR DUFF (25TH):
Oh, I'm sorry Madam President.
Oops, 551 please.
SENATOR DUFF (25TH):
I'm sorry would the Clerk please now call Senate Resolution Number 51?
EMERGENCY CERTIFICATION SENATE RESOLUTION NUMBER 51, RESOLUTION PROPOSING APPROVAL OF AN AGREEMENT BETWEEN THE STATE OF CONNECTICUT AND THE STATE'S EMPLOYEES BARGAINING AGENT COALITION (SEBAC).
Good afternoon, Senator Osten.
SENATOR OSTEN (19TH):
Good afternoon, Madam President. Madam President, I move acceptance of Senate Resolution Number 51, and I seek leave to summarize.
Motion's on acceptance and passage. Will you remark?
SENATOR OSTEN (19TH):
Thank you very much, Madam President. Madam President, I have and I would encourage people to sit and get comfortable because I have a number of points to talk about this resolution, and what I really want to start with is how Connecticut started allowing their public-sector workers to collectively bargain. So, Connecticut has allowed public sector workers to collectively bargain for some nearly 40 years and Connecticut state employees and their 15 unions do their bargaining over healthcare and pensions together in coalition. The history of the state employee bargaining agent coalition is rarely heard but important to recognize. It is often to referred to as SEBAC.
A coalition is defined as a group of people, groups, or countries who have joined together for a common purpose. However, it is often assumed that a coalition is a voluntary and temporary joining together that dissolves once it's goal has been achieved. Though SEBAC is referred to as a coalition, in fact, it is much more a formal and permanent organization. SEBAC has formed subsequent to legislation -- was formed subsequent to legislation passed in Connecticut in 1986, requiring that all state employee unions bargain as a coalition. This was as a result of a long and protracted expensive negotiation between a variety of bargaining units. SEBAC is a formally organized coalition of 15 unions representing over 30 different bargaining units. The unions are big and small, yet no one union totally dominates SEBAC.
SEBAC is mandated to negotiate for all state employees, healthcare, and pensions but over time has served to work on many issues that effect state employees. To understand the conditions that lead to the formation of SEBAC it is important to briefly describe the history of state employee unionization in Connecticut. Many other states do protect their workers either through their state's constitutions or decisions that have been made through various courts. Collective bargaining for public employees was made legal in 1975 in Connecticut. Other states allow either some or nearly all public-sector employees to unionize. The laws governing collective bargaining -- could the Senate stand at ease please?
Senate will stand at ease. [brief pause]
The Senate will come back to order. Senator Osten.
SENATOR OSTEN (19TH):
Thank you very much, Madam President. The laws governing collective bargaining in the Connecticut for the public sector are modeled on the National Labor Relations Act. It states that when a majority of eligible workers with a community of interests chose to be represented by an employee organization they are granted exclusive bargaining rights and may then proceed to negotiate a collective bargaining contract. This process in Connecticut has been ongoing for some nearly 40 years. Nearly all state employees in Connecticut are represented by unions in a similar fashion to U. S. Law agricultural and domestic workers, as well as management are excluded from the state labor relations board oversight.
Prior to collective bargaining in 1975, Connecticut state employees were represented by several different organizations and unions, even without collective bargaining state employees in Connecticut enjoyed the rights to a dues checkoff as well representation in disciplinary hearings under the civil service code and just cause provisions in Connecticut statutes. In 1976, after being authorized to participate in collective bargaining, unions held elections. These were fairly straightforward. What was negotiated in 1977 with each individual union was essentially the incorporation of already existing personnel policies known as the blue book. Some wage increases along with some concessions that included a two-tier vacation schedule that would lower vacations for new employees and a two-tier longevity bonus schedule that kept bonuses for existing workers and lowered the bonus for new employees.
The State Labor Board ruled that pensions were a mandatory subject of bargaining. The state approached the new unions and proposed negotiating over pensions, mostly because the state pension was, back then, underfunded. In response, several unions formed the pension coordinating committee. It negotiated a coalition pension solution with the state. The PCC reached an agreement with the state that created a pension tier that had lower benefits. It was known as Tier 2. However, the rest of the unions representing the remaining state employees refused to agree to the new tier and the state was forced to negotiate separate agreements with each and every other union using interest arbitration. The process took years, was expensive, and in the end almost all the pension agreements were similar. It wasn't until July 1, 1984, that the new pension agreements went into effect creating Tier 2.
The process of reaching a pension agreement was so debilitating, costly, and ultimately unsatisfactory to both the administration and the Connecticut General Assembly that groundbreaking legislation was passed in 1986 to streamline reaching agreements on both pensions and healthcare with state employees. The legislation was passed, interestingly enough, while the legislature was controlled by Republicans in both the House and Senate. It did away with the fact-finding process and implemented binding arbitration to decide all unresolved issues during negotiations. And most importantly, for the creation of SEBAC, the legislature passed mandatory coalition bargaining on pensions and healthcare.
The unions also had seen that even when negotiations were conducted separately, contracts essentially followed a pattern and no single union did much better or worse than any other. As far as health insurance was concerned, most state employees were covered by nearly identical plans. The unions negotiated a healthcare system that would cover all state employees and would create a joint management union ongoing structure called the Healthcare Cost Containment Committee. According to the agreement, one-third of the savings that came about as a result of the Healthcare Cost Containment Committee would go back to the state, one-third to improvements for active employees, and one-third to retiree premium co-payments.
The Healthcare Cost Containment Committee still meets today, and has helped create one of the most comprehensive and affordable health insurance systems. The passage of mandatory coalition bargaining necessitated organizing all 15 different unions into a cohesive and collegial and effective organization. The SEBAC bylaws represented great compromise that protects the rights of small unions but implements basic democracy amongst them. It's not clear today who thought up the name State Employee Bargaining Agent Coalition, but one of the first things they did was hire the negotiator for the PCC. The first SEBAC would go into effect in 1988 and would encompass state employee pensions and healthcare. The 1988 agreement was an arbitrated one and the arbitration took some nine months. The first agreement was said to run for six years and included some improvements and smaller changes to the healthcare plan and the pension.
In 1991, the United States went into recession and the Governor sought money from the pension funded from wage concessions. At that time, SEBAC rule stated that the majority ruled on all issues. Obtaining money from the pension funding was controversial, and the chief negotiator at the time said he didn't think he could get SEBAC to agree to open up the existing contract. Concession bargaining was a new thing but SEBAC eventually agreed to make pension funding adjustments and the SEBAC unions agreed to wage deferrals. SEBAC became the organization the employer went through in order to gain concessions or to save money from the pension healthcare. SEBAC also worked towards a variety of issues revolving around fairness towards workers, one of them being pay equity. Pay equity for women has been a national issue as far back as the 1990's. There was an agreement to enter into negotiations with the state to fix the problem of women making far less money than their male counterparts. The state coalition on pay equity scope was formed and Connecticut achieved a remarkable victory. Actual pay equity for women at the higher rates that men within state service had been getting, and they received that for all jobs.
So, for instance, a correctional officer who is a woman is now receiving the same wages as a correctional officer who is a man. SEBAC contracts, which only covered healthcare and pensions, were long contracts, initially six years. In 1997, three years after the second six-year-contract went into effect, Governor Rowland decided he needed revenue to enact his agenda, so he requested that SEBAC open its contract. SEBAC informally adopted the principal envision that their needed to be a negotiation on any concession. They felt that workers worked long-term and often political leaders have short-term investment into the state.
In 1997, in exchange for developing a slightly lower pension tier for new employees Tier 2A came about. It saved the state, in the long run over a billion dollars, and Governor Rowland agreed to a 20-year agreement at that time. Governor Rowland, shortly thereafter, was elected for his second term, and he demanded more major concessions from state employees that were not negotiated. In 2003, a deal was made that ended that crisis. Eventually, there was a settlement between the unions and the state for over a hundred-million dollars based on his actions for unilaterally singling union members.
From 2000, SEBAC has essentially negotiated most of the benefit and pay packages for all state employees. Each time there's a deficit SEBAC is approached for help in eliminating the shortfall. SEBAC's position is it will always be willing to sit down and help the state. The law requires that SEBAC is obligated to negotiate pensions in healthcare, but SEBAC unions and the administrations of multiple governors have agreed that wages and other compensation must be negotiated at the same time. Healthcare and pensions are ratified at SEBAC meetings, but each individual union has its own internal ratification process when a pay package is part of a settlement that each union must ratify.
In 2011, when Connecticut faced the largest per capita deficit due to the great recession, Governor Malloy was forced to ask state employees to give up negotiated wage increases, bonuses, make some pension and healthcare changes, and to start making employee contributions for retiree health benefits. The ultimate settlement included an additional year of wage freezes and some modifications to the pension. The new agreement extended the 20-year healthcare and pension agreements for another five years until 2022 and guaranteed job security for four years. It included a cost-sharing funding mechanism that would shore up the severely underfunded retiree health benefits, so they would remain viable. In addition, the healthcare plan included what is referred to as the Health Enhancement program that reduced or eliminated co-payments for required wellness exams and for chronic disease management. Unexpectedly, 98% of all state employees signed up for HIP. Consequently, the health insurance plan has seen only a nine-percent increase; far below the national average and far below the average of other state plans over the last four years. And, for the first time in Connecticut's history, the state agreed to start paying down some of its unfunded liability.
Binding arbitration and the fact that strikes for public employees are illegal has also helped. Arbitrated decisions generally follow patterns and its fairly rare to see wage and benefit increases that buck trends. Ultimately, it is accountability, patience, discipline and a long history that sets SEBAC apart from most coalitions. The coalition is not voluntary, and as such must come to agreements and follow through on its commitments. To be clear, state employees have, in the last 25 years, worked with the state to provide needed concessions to help the state protect services and to protect taxpayers, as they are also taxpayers. And, I think that's often missed. State employees are taxpayers. They pay their taxes because they know how important it is to have a system that protects the services that they provide.
Now, I want to go into highlighting some of the tenants of this agreement. The highlights of this agreement are as follows: It saves taxpayers approximately $ 710-million dollars in fiscal 2018 and $ 850-milliion dollars in fiscal year 2019. The savings grow to $ 24-billion dollars over the next 20 years. It turns a $ 20. 7-billion-dollar underfunded liability into a $ 1. 5-billion surplus over 30 years. Employee concessions include wage and increment freezes in three fiscal years that will permanently reduce the cost of projected pensions by more than 10%. It increases employee pension contributions by two-percent of pay. It increases the employee share of healthcare premiums by three-percent. It also increases the cost of co-pays on prescription drugs and non-emergency emergency room visits. It includes three unpaid furlough days. It creates what has long been asked for; a new tier for hybrid pension and retirement plan that combines a traditional-defined benefit plan with a 401K style defined contribution plan.
An independent actuarial analysis stated that this restructures our pension system into the future while respecting the promises that have been made in the past. The proposed pension changes will save the state millions of dollars in fiscal year 2018 and millions of dollars in fiscal year 2019. Over the course of the deal the actuarial determined employer contribution would decline; millions of dollars creating a more stabilized system. It modernizes health benefit plans to reflect the best thinking about how to keep employees healthy at the lowest cost possible.
These proposed health benefit changes will save hundreds of millions of dollars in the first two years but both the premium cost sharing and the formulary changes ratchet up those savings to well over $ 100-million dollars per year. Major changes to the retiree health benefits program producing significant immediate savings and gradually shifting costs onto employees and retirees into the future. These savings quickly eclipsed $ 200-million dollars per year, as retirees move to the Medicare Advantage Program. Wage freezes that save $ 716-million dollars over the biennium. It takes advantage of our demographic reality. At least a quarter of our workforce is likely going to retire before the existing SEBAC agreement ends. This deal allows the state to change the benefit structures five years sooner; meaning that there will be more than 10,000 employees under the new Tier 4 pension by July 1, 2022. This attrition will save the state almost $ 77-million dollars in the first two years with savings increasing to $ 97-million annually thereafter.
Now what's being said about this agreement? Many people think that we should go after employees for another $ 500-million dollars in givebacks and gut collective bargaining. We would have to unilaterally break existing contracts. The current SEBAC labor agreement goes through 2022. It means that we would lose all of our short-term savings and short-term is for five years. It ignores lawful extend agreements that are in place to preserve order that covers specific bargaining units with expired wage deals. It undercuts the ability of the state to bargain in good faith. The executive branch has legal authority to negotiate with labor. It is being said that Connecticut needs to pursue a new direction when it comes to our state budget. That path must include structural changes to government and protections for core services and not rely on excessive new taxes to plug the massive budget shortfall. It also must include changes to state employee benefits to create a system that is fair and sustainable for employees who are tax payers and other tax payers alike. This agreement does just that. The pension plan was studied by the Boston College Center for Retirement Research and found the plan to be moderate. For instance, a typical rank in file worker retiring this year making $ 60,000 dollars a year would have a retirement benefit of $ 25,000 dollars.
All employees now pre-pay for their retiree healthcare. Most important, pension health, and retiree health plans are an asset to the state. All plans are designed to encourage a long service, low turnover, workforce, which improves service quality and reduces training and recruitment costs. We have a designed benefit plan because its benefits work best for career workers; that is people who actually retire from state service. We have a health plan, which saves the state money not by denying needed medical services, but by providing and encouraging through our health enhancement program effectively requiring that people get needed screenings and preventative services to prevent future more costly serious illnesses. Our health plan protects the investment that the state has made in its workforce. It reduces excessive absenteeism and it does not require people come to work sick.
Tier 4 in this agreement would save the state even more money while continuing to reflect the state's investment in the quality public services that people in communities need and the critical public structures like good roads, bridges, schools, upon which our economy depends.
The net effect of the deal of that is before us today is a savings of $ 1. 5-billion in the biennium, $ 24-billion over 20 years. Either a deal increases unfunded liability or it decreases it. Either it saves money or it doesn't. In this case, the deal saves many billions and decreases unfunded liabilities by many billions. It's been said that the SEBAC deal severely ties the hands of future Governors and lawmakers. This is patently not true, shown directly by the number of times they have come to the table. It removes current legislative authority over pension and healthcare issues. Again, this is patently not true. This legislature has often ruled and as a matter of fact it was this legislature that set up the SEBAC organization in order to have our executive branch effectively bargain over pension and healthcare. It prevents privatization. Again, this is patently just not true. While the previous SEBAC agreement was in, there have been many privatization attempts that have come through to fruition. Just ask our DDS group home providers.
It says that there will be absolutely no layoffs again and untrue statement. Job security only applies to permanent employees as of 07/01/2017. It doesn't apply to those workers who are hired after that date. It doesn't apply when the state eliminates a position because they have restructured government. They offer that employee comparable transfer. If the employee turns it down, the member loses their job. This has been the same language for some 30 years, and if you think that this has not had an impact on state employment, in the last 10 we have seen a 15% reduction in the state workforce. The percentage is even greater when you consider that we have transferred jobs from full-time employment to part-time employment. Generally speaking, the state loses about 2,000 workers a year through attrition or them moving on to other jobs and there is still an ability to do significant reorganization. We are so understaffed today we can easily do so. The state in his body often stand in the way of reorganization when we ask people not to close things that the state has said we should look at and we should consider eliminating. Having sat in many appropriations meetings where I heard that we could not privatize different department of labor standards from both sides of the aisle, both sides of the aisle asked to not close certain facilities that were being looked at. This state and this body needs to remember that when they move forward, and I would say privatization is not a panacea. Often, it's cost us more money. That's why we have the contract standards board to look at things.
A recent DOT study showed work done in-house would save millions versus what was being spent on contractors. Many of the units within our state government did improve privatization protections in this current agreement but only by requiring that subcontractors transfer their knowledge to the state workforce as soon as feasible so that the state is not held hostage by the contractor. The only other substantial privatization change is a provision in P4 that allows the union to advise the commissioner of ways to do work internally at lower prices, but the commissioner is not under any obligation to take any action. The can choose to do what they would want. This extends the contract; that is true. This SEBAC agreement extends the duration by five years but wage and hour only until 2021. There are significant savings on all fronts that allow us to save other programs and not raise taxes. We can still change if there is an unseen event per the contracts clause in the United States Constitution. It has been said the deal contains new costs and that SEBAC delays savings.
So, let's talk a little bit about overtime. Overtime calculated and pensions. It's an area where many people have had a wide variety of opinions. There is no capping or elimination from overtime it said. That is just flat out wrong. The deal ends pension spiking, which the unions themselves oppose as bad public policy. So, that's for all new employees in Tier 4. The agreement uses a 25-year-average for overtime applied to the pension calculation and smooths out overtime. It is also capped at 60%. This is not the first time that we've looked at pension spiking. In the previous agreement in 2011, there was contract language to prevent overtime spiking. This is starting to show an effect. Now why would you say that people would not like overtime spiking? It's not healthy. It doesn't create a competent workforce. We don't want to see people working overtime every day. We need them home with their families. We need to have new workers in doing the job. Now sometimes the state makes the decision that overtime is cheaper than hiring a new employee. Elimination of including overtime in pension calculation favors highly paid salary workers over hourly ones who are often required to work overtime, and at the end of working an eight-hour shift need to stay for another eight, and I've seen times when they've had to stay beyond the 16 hours based on the situations at the workforce. Some people have talked about compensatory time. Compensatory time generally speaking is illegal under the Fair Labor Standards Act where we have placed our agreement on collective bargaining.
We talked a little about the social security disability retirement offsets, and I would remind people that this is a negotiation; that the state doesn't win everything; that the unions don't win everything; and that we come to an agreement on issues. The disability retirement modification and continuing discussions located on page five states that the current plan, which imposes social security disability retirement offsets on retiree plans or designated dependents following the passing of the retiree are removed from the plan. The social security disability retirement offset may increase costs to state taxpayers. Subsection two of this section requires disability retirees to apply for social security disability within two years of their receipt of state disability retirement. There is no penalty in place if a disability retiree fails to make their application. This section further states that the cost of filing of any appeal resides with the state and that no disability retiree shall receive less than total benefits. This section further states that the parties presumably the office of labor relations and the unions will continue discussing the appropriateness of differing or offset rules. Does this provision allow for additional modifications to be made? Removing the offset for spouses will actually save the state an estimated $ 25-million dollars annually. For every single disabled retiree who succeeds in getting SSDI the state will save either that person's full pension or at least two-thirds of it. If the person is below 65, the state will save additional thousands each year on health insurance because SSDI recipients become eligible for Medicare at any age, no later than two years after they become disabled.
We are incentivizing people to move to SSDI and require them to apply. If not, you'll lose your pension. We did this for Medicare Part D and it worked. Why penalize spouses after retiree's death, reducing their pension for SSDI benefits their deceased loved one is no longer receiving? We've not stopped any amended agreement coming before this legislature. We also talked a little about the expansion or we have heard expansion of sick time and family leave. We used the FMLA definition immediate only. We are allowing an employee to use the time they already have on the books. I can't see that we would not allow workers to use time they have on the books to help out an aging parent with Alzheimers, a child with cancer. This does not mean that they can take extra time off because someone has a cold. This means that they can spend time with their loved ones and even our President today has agreed with this assessment that we should help people spend time with their families.
We've also talked a little bit about purchasing service for our sheriffs who now are judicial marshalls and why do that? Maybe we should just tell them they can't do it. This is an agreement. And what we want is we want some of these judicial marshalls to retire. Some of them are in their 60s, 70s, and yes, we have 80-year-olds working in hazardous duty. This allows former sheriffs to purchase credit for service, addresses a very limited number of circumstances involving older workers who worked under the old county sheriff's system. It costs us about a million a year, but it would also save us because we would have younger workers who start out at the bottom end of the pay scale. We want to encourage folks who are in their 80's to retire. Quite frankly, even if they're in their 80's they cannot retire before 2019.
New contractual costs; some people will say because the federal government has required us to have people get a commercial driver's license and not through their regular medical exam that we shouldn't pay for it, but we ant our people to get CDLs so they can work for us and that we know that they are doing the right thing. This exam is a job requirement. It requires a great deal of planning and schedule coordination. It's reasonable that the parties would bargain for this, and we save money by doing this.
Longevity pay. We've talked about longevity pay before. People wonder why we're still paying longevity pay, and we've decreased longevity payments, but I would remind people that managers and those that were non-union had it rolled into the bottom line of their salaries. We will eventually not be paying longevity, but I think it's a commitment to someone's job. To talk a little bit about managers, people say why do non-union state employees pay more? Non-representative employees have a right to organize under the law. If the state chose to require managers to contribute more, that was its decision and not the fault of the bargaining unit members.
People talk about non-hazardous duty and hazardous duty. Hazardous duty employees, I would remind each and every one of you, die earlier than regular employees. They do so because of the stressors the job puts on their bodies, not because they exhibit less healthy lifestyles. It's that their job indicates that they always must be at the ready. Their lifespan is about 12 years younger. They're first responders, and their lives are literally on the line all the time. We are requiring higher earners to pay higher premiums for Medicare Part B; that's not a bad thing. I think that helps us out.
Why won't the Assistant Attorney Generals participate? Well Assistant Attorney Generals have not had the opportunity to bargain the other pieces of the contract, so they need an opportunity to sit down and talk about that. There are 200 people that are Assistant AGs and sense 2008, they've seen a 12% net total raise. We know that they will end up with the same wage structures that other people in the SEABAC 2017 agreement have, but there are other things that need to be talked about, and we need to make sure that we're including their working conditions.
Again, people have talked about managers. Unions cannot be expected to bear in mind how the state compensates and provides benefits to managers. The statement that future governors and legislature will have no control over their workforce and that they will lose managers is simply not true. The legislature does not essentially control state workers anyway. The executive branch commissions, commissioners, and managers will lead the agency in carrying out policy. So, I would just like to say in ending the discussion on whether or not we should support the SEBAC agreement. I believe that we should support it, that in the last 83 consecutive months private sector workers have grown in the last same timeframe there has been a decrease each and all government workers. In 2008, we had 52,193 workers in collective bargaining units and 2,348 in the managerial pay plans. Today, we have 44,130 workers and 1,559 in the managerial pay plan. Even with agreements, we have decreased our state employees year after year after year and that was with an agreement that said that there would be no layoffs because this happens through attrition. I urge my colleagues to take this agreement to heart and recognize that our state employees who pay taxes each and every year are willing to give 1. 5-billion dollars over the biennium and over 24-billion dollars over the next 20 years. I think it's an agreement that we should all support, and I know today that I will be supporting this, and I think all my colleagues should support it too. Thank you very much, Madam President.
Thank you. Will you remark further? Senator Formica, good afternoon, sir.
Good afternoon, Madam President. I rise to have a few comments on the resolution, please?
Please proceed, sir.
SENATOR FORMICA (20TH):
Thank you, Madam President. I appreciate the hard work that went into this process. I know it's been stressful, and I appreciate the passion of many on both sides of this issue, and I certainly commend Senator Osten for her passion as exhibited today and every day she's a member here. As an employer in the private sector I appreciate the good work of all the state employees, and my vote today should not be misconstrued as being disrespectful to the great work that they do here each and every day for the people in the state of Connecticut. As I do each and every day in my small business, I will work hard to preserved jobs, both in the private and the public sector as long as I have a voice to do so. But, I believe Connecticut is at a crossroads. I believe that it's time that we take a different direction. So, about this, as with any deal, there are good things. However, there are some things that we need to look at and what the true cost of these contracts really are, and the effect that some of these provisions will have today and tomorrow and it's the tomorrow that I'm concerned about.
I believe this deal, as presented, is unaffordable for our state, and will tie the hands of our future legislatures and Governors for years to come. I've had the great pleasure to run a municipality and have owned and operated a small business here in Connecticut for 34 years prior to my serving and continuous actually with my serving as state Senator. Workers on Main Street Connecticut are not afforded some of the benefits that are included in these contracts, and in no particular order I will just share a few that concern me and they're picked from assorted contracts that are presented today. Longevity, longevity is not eliminated but simply delayed and rates will increase by 5. 5% each year. Tuition waivers can apply to any waiver value to any of Connecticut's higher education institutions, except for one. There is a $ 500-dollar travel stipend if you're teaching or working more than 10 miles from campus.
I'm concerned, and I question an MOU reopener in July of 2019, which would demand restructuring of salaries and pay structures. I'm concerned about an increase in the amount of union stewards and the amount of training hours that would necessitate, and then additionally from 275 to 400 and an additional 1,000 hours of bank that we would have to deal with. There are pay increases in certain contracts from $ 16 to $ 18, increase in per hour standby assignments, increase in physician rates from $ 42 to $ 50, on-call shifts increase from $ 80 to $ 100 during a few years over the contract and retention bonuses are increased as well.
In closing, Madam President, the five-year wage increases included in this proposal are nearly 13% if you include the $ 2,000-dollar cash bonus and the 3. 5 step increase in each of the last two years - I'm sorry -- wage increase each of the last two years and when you add in the step increase that's more like a five and a five. But, the items that I find most harmful are the four-year no layoffs and the extension of the SEBAC agreement for five more years, taking us out to 2027.
Connecticut needs a new and a different direction. We need to send a message to our residents and our businesses that we value them, and we want them to stay in Connecticut to thrive in Connecticut, to prosper in Connecticut, and that the state of Connecticut is committed to send a message of confidence and stability and that we here understand how difficult it is to make ends meet here in Connecticut each and every day. Job guarantees, contract extensions; there not happening in the private sector; therefore, Madam President, I don't believe they should happen here in the public sector. I believe we need to finalize a budget, and I believe that we need to do that as soon as we possibly can. We need to lock ourselves in a room and work it out for the benefit of the non-profits who suffer every day under our current situation, for the cities and towns who are influx and wondering, for our residents, and for those who analyze and grade us in the credit markets, for our businesses and certainly for our employees.
I believe, Madam President, this deal would severely limit our options moving forward, and therefore I intend to vote no on this today, and I urge my colleagues around the circle to do the same. Thank you, Madam President.
Thank you. Will you remark? Senator Frantz.
SENATOR FRANTZ (36TH):
Thank you, Madam President. I appreciate that. You know, in looking at this agreement in front of us today, you'd think that the state would be one of the leading states in terms of job creation and economic recovery since the end of the great recession, and quite frankly we're not. We're kind of at the bottom of the barrel, the bottom of the heap with respect to our real mediocre, in fact, pathetic growth rates with respect to the economy job creation. We're still well under 100% -- well under 80% in terms of job recovery since the beginning of the great recession whereas our neighboring states are well in excess of 150% in the case of Massachusetts, which is geographically the exact same kind of state as Connecticut is at 300%. Why is that? It has to do with leadership and policy, good policy versus bad policy. This, I believe, is bad policy. Connecticut's been up to this for far too long, and we can no longer afford to go down this path where we are locking ourselves into high cost labor arrangements going forward for as much as 10 years in this case and absolutely tying the hands of future governors and future lawmakers; maybe not 100% but 95%, 95% whatever the case might be depending on what the court decisions are it does that. That is the effective result of action such as this one here.
I can tell ya ladies and gentlemen, from my neck of the woods down in Southwestern Connecticut, which is an engine that provides a tremendous amount of revenues to the state of Connecticut, people have not been more concerned about any issue other than this issue that we're voting on today in my tenure here coming up on 8-1/2 years. All eyes in the business community, business decision makers are looking very closely at what's happening today and people in general are looking very, very, very closely at this like they've not looked at other issues more recently in the state. And, the reason why they're doing that is because they know that today's vote, today's result will determine what direction the state goes in the future. This is, indeed a crossroads, as was pointed out before. We could choose a bad, bumpy path where we're going to continue to have mediocre job growth, pathetic economic growth, additional downgrades from Wall Street's rating agencies and making our debt service that much more expensive putting us into -- we're already in an inverted flat spin death spiral. It's going to exacerbate that situation greatly if we don't do the right thing here by getting our costs under control. This is exactly the opposite. Yes, there are some good things in this contract, but it does not go far enough at all; it's a dollar short and a few days too late.
The balance has always been the case for the last decade or longer in the state of Connecticut and is under further pressure if this goes through because it shows that we're not capable, as an institution here under the dome of keeping our costs under control. It's the same old, same old story that's gotten us from the number one, number two, and number three state to a number 48, 49, and 50 in all of the different and important categories that people look at. And that's why we have this exodus of corporations, which my God how embarrassing is it to have General Electric pick up and leave the state of Connecticut after 40-something years. How terrible is it that Aetna is now making noise about taking potentially all of their 5,000 employees along with their leadership team, their management team down to New York City of all places. You know, it's -- and there are a lot of companies that don't make the radar screen that have already made this decision or are this close to making that decision as well.
And, I've talked about this so many times before, your wealthiest taxpayers, the ones that have contributed so much and ask for nothing in return are all gone, and they're disgusted with what's happened here in the state of Connecticut for reasons just like what we're looking at today and voting on today. Who knows how this is going to go, but if you look at these different contracts, the details are just unbelievable and when you tell people in your district about these different details if you were delineated before they're just incredulous. They cannot believe that someone dreamed these conditions up and you know the prevention of any sort of privatization going down the road in the future; we all know that if it's 90% in the language that you can't do this it's not going to happen. The overtime, the lack of taking into account overtime for pension purposes, eliminating that for pension purposes was completely ignored in, I believe, every single one of these contracts.
Reimbursements for all sorts of different things, whether it's uniforms or cars or tuition. The raises of roughly $ 2,800 dollars including the step raises and then cash bonuses; it's been calculated there may be 13% to 14% raises over the next five years even though for the next three years there is a wage freeze. These are things that the state of Connecticut simply cannot afford. These are things that the people in Connecticut and business people in Connecticut just cannot believe when they sit it with their own eyes and believe me they are paying very, very close attention. It is worth fighting this, and if anybody is sitting on the fence on the other side of the aisle, please, please take into account that a vote for this is going to set us back years, light years perhaps, and it's certainly not going to help us on the Commerce Committee and the Finance Committee at all, as it continues to drive people out of the state of Connecticut.
Rhode Island, our neighbor, with a Democratic governor, they got it right. They have a hybrid plan that actually makes some sense; it has some teeth, and boy did that put them on the map and they're on their way to a much more successful recovery than we are in the state of Connecticut. And, as far as legislative involvement with respect to pensions and healthcare benefits, there are 45, 46 other states that allow their legislative bodies to vote on these issues. There is no reason why we shouldn't have control at the end of the day with a yes or no vote on whether a contract is acceptable. And, in this case ladies and gentlemen, I find this a completely unacceptable contract and you know you might as well take the state and put it in cement boots and take it on the Bulkeley Bridge and throw it over. It's not going to work for this state, and it is the death nail for everything that's important to the people of Connecticut, especially those who desperately need the services of the state because they're just not going to be there. Thank you, Madam President.
Thank you, sir. Will you remark further? Will you remark further? Senator Larson.
SENATOR LARSON (3RD):
Thank you, Madam President. I rise in support of this deal. You know, frankly, I have been looking at this for quite some time and have had some concerns about some of the material effects of this, but I don't think I can look past 44,000 state employees. I don't think I can look past 5000 managers. These are people who come to work every day, pay their fair share of their health benefits, pay into their pensions; these things are not just handed over. There has to be some work accomplished. I drive 100 miles a day to my job in New Haven from East Hartford, and I see public works employees. I see building bridges all along the interstate. We're familiar with the great healthcare system that we provide, the prison system that we have, the police force that we have, and again the highway services. Three years of no pay raises we look to accommodate municipalities and myself just like Senator Formica had the opportunity to serve as Mayor in the town of East Hartford for eight years and negotiated several of these pensions, and we live in a framework of collective bargaining because we want consistency and dependability from our employees, and I think we get that. I believe we get that.
I think oftentimes we forget about people who are coming to work everyday who have a right to stability in their own lives as well. There are clearly nuances within each and every one of these contracts that throw everyone awry, but I don't strap on a gun before I come to work everyday and I don't hold prisoners in a cell and look forward to that responsibility myself. These are items that we as government need to provide for our residents, public safety, highway services that are incredible. When I look at the opportunity, I live in East Hartford and I see Main Street, Burnside Avenue, and Silver Lane being maintained by state employees and I-84. And we talk about the public sector but in the comparison to the private sector, I wonder if there's ever been a study about the cost analysis of not plowing 84 and trying to get to work? How much would that really cost us if we had to evaluate that each and every day? How about if we have to shut the state down because we can't get to work? How about if we don't have state police to monitor some of these smaller communities that just can't afford their own services? So, you know, this is an extension and as you look at it, and as Senator Osten has eloquated in the definition of this you start to see the Tier 1 people coming off sooner than later. We start to see an influx of younger employees coming in sooner than later, and I had some concerns about that because we want to look at the long-term stability of our plan.
I believe it's still going to snow in Connecticut in 10 years, and I still believe we're going to need police in 10 years in the state of Connecticut. And, so is this a perfect contract? Maybe not. Is it good? I think so, and I think it solves an awful lot of our problems from a cashflow perspective right away and I think that these are times that we could continue to work on and massage. This is a budget, and it is a contract, and I think it has to be monitored appropriately by the professionals that we rely on. I would be remiss if I didn't credit Governor Malloy and you Governor Wyman for your efforts in funding this pension obligation for the last seven years. Where would we be in the state if Dan Malloy and Nancy Wyman didn't stand up and fund this pension agreement. You guys have not been able to get a lot of credit for that, but I believe you deserve plenty of that. Madam President, I'm going to support this.
I think that there are opportunities for us as legislatures to keep an eye on it as we move forward and where we may be able to intersect and add value I think we can do that, and I think this plan is an opportunity for us to move in a direction on this current year budget sooner than later. Lord only knows the municipalities that are awaiting for decisions on their funding, on their bonding, etc. It's important for us to move on this. I don't have $ 1. 5-billion dollars worth of cuts rolled up my sleeve, and frankly I think that when we talk about stability and the interaction with the business community, I think you get good value here in the state of Connecticut, and I think we have 44,000 people that do a great job for us. Thank you.
Thank you. Senator Miner.
SENATOR MINER (3RD):
Thank you, Madam President, good afternoon. I too rise to speak on this agreement. Madam President I don't know if the other side of the aisle got a copy of this, but we have Office of Legislative Research documents, Office of Fiscal Analysis documents. There are pages and pages that I think we could all pour through and choose a reason or two to support, 100 reasons to support or 100 reasons to oppose. But, I would take us back to what got us started here. The Governor in his opening comments said that in an effort to try and balance the budget he was going to achieve $ 700-million dollars per year in savings in labor concessions. He didn't say he was going to achieve $ 700-million in labor concessions per year and oh by the way at the same time give up 58 pages in some cases of labor concessions. We didn't hear him say that there was going to be an extension of the SEBAC agreement. We didn't hear him say there was going to be an extension of any other agreement, and yet I think we all knew that some of this was going to happen somewhere along the line.
Like Senator Larson, I drove in here thinking to myself you know the guy out picking up garbage on 84 today before they mow the lawn, does he really know what's in this agreement or she? My guess is no. My guess is that my neighbors and your neighbors didn't know that in this agreement there are 150 or 250 in some cases more hours so the union can negotiate or do whatever else they would like to do as a part of achieving this agreement. That's what they got. You can't deny it. It's in here, it's in about six different pages. And some days there are hundreds of person days, it's not hours. These are whole days. So, that's really what I think this is about. This isn't about whether our neighbors had agreed to come to the table and accept furlough days. Do they want them? No. Will they give them? Yes. Accept a wage freeze? Does anybody want a wage freeze? No one wants a wage freeze. But, what's it in the context of? If this was another corporation, I can tell you most of our districts include people that would've accepted a wage freeze, and furlough days, and increased payment for healthcare and increased payment for pension if the company that they worked for was still here.
Senator Larson's quite right. Would we be the same state if we didn't plow the highways? If we didn't care for our poor? Would we be the same state if we didn't have anybody watching the prison? No, we wouldn't be the same state. But, that is not what this is about. What this is about is whether or not this agreement puts us on sound enough footing to move forward, and I would say to you that I think it's too rich. It's not rich for the guy or the gal that gave up the furlough day. It's not too rich for the person who agreed to a wage freeze. It's not even probably too rich for somebody who is just getting here that may not get what somebody whose been here for a long time has been able to get in terms of pension benefits or healthcare benefits. But, just look at these numbers. We've gone from $ 5 dollars to $ 10 dollars on a co-pay for generic drugs, 5 to 10. If anyone of us repeated that to our constituents we would be laughed out of wherever we were. They went to $ 250 dollars for non-emergency use of a hospital. How many times have we harped on the situation that you should be going to Wellness Centers? We have school-based health clinics. We have every opportunity to help people get better. The last place you should be going to is a hospital with the sniffle, and it's in this contract that you're gonna have to pay up to $ 250 dollars. How about you can't go there? How about you do what my constituents do? You can't go there. If it's not emergency it doesn't matter whether it's $ 35 or $ 250.
I've said for a long time to our caucus if we can't, as part of this agreement, draw a line in the sand and say the generation after a certain date July 1, 2017, October 1, 2017, is a new day. Every business in this state of Connecticut, insurance business, major manufacturer is going to say this is just a flavor of what we've had. That's my fear. That's my fear. I've had conversations for the last three months with my constituents, some state employees and some not, they're concerned. They're concerned that maybe what they did wasn't enough. They're concerned that maybe what we would expect would be too much more. If we don't get this right, ladies and gentlemen, I'm afraid that it's not going to get us where we need to be. Senator Frantz spoke earlier about you know the state of Connecticut's economy. You only need to look at tax revenue and if you don't believe tax revenue look at automobile sales. Off 10% between 2015 and 2016, continuing on that trend in 2017. The sales tax implications just in that one issue was over $ 70-milliion last year. Those are not good bellwether signs ladies and gentlemen. Those are bad signs. And, so to have a no layoff clause, and I really believe it is a no layoff clause, you have to jump through hoops. You have to offer all sorts of opportunities and at the end of the day still in some cases you still can't lay somebody off. We need the ability to completely reorganize the state of Connecticut, and I know what that means. I know that in some cases that probably is going to mean the loss of a job, but that's the only way the state is really going to get on the right track.
So, there are many reasons in this document, 58 pages in this one and I think probably 20 in the other. I can go union by union, agreement by agreement. I can agree or disagree with Senator Osten about what they say. I wouldn't challenge her on the history of union organization in the state of Connecticut because I think she knows it better than any of us. But that's not what this is about. What this was about was trying to achieve a savings at a time when we had a deficit of $ 1. 5-billion and knowing that it's grown since it first came out. We all got the same news. OFA came to pay us a visit, long face, revenues down. We all knew that the target had to be higher. So, I would suggest to you that as painful as this may be individually for people, as reasonable as it may appear in terms of the amount of money that it is stated to achieve, the truth of the matter is it may not be enough. And, we may have completely missed the target with the next generation of state employees, but that was the opportunity that I think most people in the business community are waiting for. They're waiting for us to make that Rhode Island statement, which wasn't bust the union. It was to re-base just like Sikorsky did, just like Pratt and Whitney has done, just like any large employer has done. They have completely revamped the way they do wages, benefits, and pension, but that's not what we've done here.
I also think that I heard the Governor has been quoted as turning this down would violate collective bargaining. I disagree. If he turned it down, that would violate collective bargaining because he was a party to the negotiation. This is our role. Our role is to vote yes or no and voting no doesn't necessarily mean that it's all wrong, that it's all bad. It may be that it missed the target. It may be that it doesn't do enough here, and it needs to do more there, but we can do that by just giving some guidance. Now, I think what happened is the Governor had this in the done pile. This folder was on the done pile on his desk, and that's what he'd like to see is to have it be done.
I would suggest that if we vote no today it merely takes it off the done pile and puts it back into the reconsideration pile. There's no reason we can't achieve the right outcome through this agreement. My neighbors are still my neighbors. They still want to help the state of Connecticut. I don't think they want to have anyone point out some of the things that are in this agreement that don't ignore to them. I think they'd be embarrassed to know how many different groups have free tuition for their children. I think they'd be embarrassed to know a $ 30,000 stipend is to be paid for a signing bonus for doctors. There are some things in here that I think most of us would have a hard time explaining to our best friends, and that isn't what the DOT people that I -- that work you know in Litchfield County negotiated for. They don't want to be viewed as getting too much. They want to be responsible. They want to be reasonable, and they are, as Senator Larson said, hardworking people.
So, I would suggest that by turning this down we merely take it out of the finished business done pile and put it in the reconsideration pile and be very clear about what we think we would like to see in this agreement. We don't need private ups. We don't need more furlough days. Perhaps we don't need another year of a wage freeze. Perhaps we can draw that line somewhere and make the real distinction between the Connecticut that succeeds and the Connecticut that is just some flavor of the last 10 years or pick a date where we're just not getting off the ground. We need to get off the ground here in the state of Connecticut, not only for our private sector employees but our state employees. Thank you, Madam President.
Thank you, sir. Senator Bye.
SENATOR BYE (5TH):
Thank you, Madam President. I rise in support of the Bill, and I want to thank Governor Malloy and the unions for what I know from both sides were very difficult and extensive negotiations. Many times, both sides walked away from the table because it was difficult. I also want to thank Senator Osten for her leadership today. I think what we have to face when we look at this and the amount of savings in this package and in the budget over the last several years, is in fact Connecticut is re-basing and has been re-basing. We don't get credit for it always from the other side of the aisle, but they too have suggested cuts and changes that have helped us to re-base and Governor Malloy isn't always popular for some of the re-basing that he has done, but it has been difficult. And, there are good news stories in Connecticut too people. It was just today while at hub said that Connecticut had the best schools in the United States, and if you want to talk about Connecticut's future and the hope for our future what other state doesn't want that statistic when they're looking at their economic future? So, I'm proud of that.
I want to make some comments in relation to Senator Osten's historical comments because I think they're important. I spent time talking to business people in my district, and they often say the state employee benefits need to be more in line with the private sector. Why are the state employee benefits so rich? Well, it goes back to Governor Rowland's negotiations 20 years ago. Because 20 years ago healthcare benefits, co-pays, and premiums were in a very different place and employees on average paid far less in co-pays, far less in premiums 20 years ago. And retirement benefits were very different. I often think about West Hartford Center, which if you go there at lunch you will see many, many senior citizens having lunch at restaurants that I can't afford to go to but they're sitting here having lunches and enjoying a secure retirement. Very many of them are Aetna executives who are retired on pensions from insurance companies whether it's Aetna or Cigna because many years ago -- not even that many -- 25, 30 years ago, 20 years ago people were retiring with full pension from these organizations. So, when Governor Rowland was making that deal to extend healthcare benefits 20 years he wasn't saying let's give them benefits that will be really rich in 20 years, he was saying we'll give them the same healthcare benefits that they have now. So, what has happened? The truth is the private sector has significantly reduced their share of healthcare benefits and that's hurt middle class workers who even as their wages go up the healthcare co-pays and shares and HSAs and $ 5000 dollars here and there takes that money out of their pockets hurting the middle class. 20 years later, things are very different. At the same time, state workers and many other sort of union shops that exist in our state, they have had unions saying hey your profits are going up so you can't ask us to pay more of our healthcare benefits. There's been a give and take and they have been fighting for healthcare benefits for their members.
And I say think goodness because they have representation standing up and saying we want the same healthcare benefits or better. But, in fact, the deal before us state employees have given quite a bit, up to 15% a year for three years in increased premiums. I happen to think everyone in the United States of America should have healthcare, and I've seen this year -- I know currently my wife's medications cost more than $ 8,000 dollars a month, and if she didn't have the healthcare that state employees had, we may not even be able to afford those medications in the long term. I think every person in the state of Connecticut that has an illness that needs a prescription drug, should have access to that. We should have universal healthcare, and I'm glad that our state employees have someone fighting for that. Union representation has been critical to preserving worker benefits and the middle class. Negotiated wages are what built the middle class in this country.
I put some data together just to look at what's happening out there to paint a picture for workers. In 2015 there was an article in the New York Times called Corporate Profits Grow as Wages Slide in 2015. What that showed and data from the Commonwealth Fund; when you put those two things together is that from 2006 until 2015 workers' share of their healthcare costs went from 6. 5% of their pay to 10% of their paycheck. That means that people are working harder, maybe moving up, but they weren't bringing any more money home. That's what's been going on in the corporate sector. Meanwhile, at the same time, corporate profits in 2015 rose to their highest rate ever, 10% of the gross domestic product, the highest level since 1929. So, while profits are rising to record levels, the cost of healthcare to those folks, workers is going up. So why? If profits are up, worker's wages have been flat. We know that, we hear that, and healthcare costs are going up. Because there aren't enough people frankly who are having representation in my mind to say that if profits are up wages should be up and healthcare should be up for the workers. But, in fact, the profits are being made because wages aren't going up and because a corporation's share is not going up with that. I think that's important to keep in mind with Senator Osten's comments because while state employee healthcare benefits have maintained stable, the rest of the state workers -- not state workers, people working in the state they've seen theirs come back. And they don't think that's fair. I have to say I'm really tired of the boogey man of state workers being the whole region for our budget woes. It's just not true. Healthcare costs are going up for our residents. We have cities and towns who we've tried to flat fund and try to keep property taxes down; that's a huge portion of our budget, and those schools that I just mentioned. The best in the country. Guess what, it costs a lot of money from the state and from our local property taxpayers to keep that position.
Those are big challenges to our budget, and if we're really being truthful about our long-term liabilities which we hear all the time, we have an issue Connecticut. We need to address it and fix it. That's not here because of the current state employees. That's because it's legislature and governors before us did not fully fund the pensions, yet we always in arguments hear those two things put together. If you look at the costs of the current retirement system they are not different than the cost of a 401K. We saw that in our budget appropriations hearing with higher-end. It's people that were hired before 1986, so I think that's really important to keep in mind. We, as a legislature, have to deal with these long-term liabilities. We have been making cuts, billions in cuts. Ask Senator Osten, Senator Formica, they will tell you and I will tell you for the past three years we've been making cuts, and we will continue in this current budget. And, as Senator Osten said, in 10 years the state workforce has been reduced 15%. State workers have stepped up and contributed in tough times. SEBAC didn't have to come to the table now nor did they several years ago, but they've consistently come to the table to renegotiate knowing the state budget is in a difficult place. They did that again this year, and they're giving back over $ 1. 5-billion dollars that will be a part of our budget deal if this passes today. And, if it doesn't, and I know there are people who will vote no, but if this doesn't pass that's another $ 1. 5-billion dollars in cuts from the budget that simply aren't there. This budget is already going to be very painful. If we don't adopt this today and adopt a budget real soon, your cities and towns will struggle. Our non-profits are hurting so much. You've all been hearing from them. I've been hearing from many families who have family members with developmental disabilities. The services are not where they need to be. Children are languishing in our emergency rooms. We need to pass this and pass a budget. This is a critical first step today, and I urge my colleagues to support this agreement. Thank you, Madam President.
Thank you. Senator Boucher. Senator Boucher, please.
SENATOR BOUCHER (26TH):
Thank you very much, Madam President. Madam President, I can imagine some national headlines after today following on the heels of some other unfortunate news headlines that read “What's wrong with the state of Connecticut?” has been in some publications or in the Barron's magazine “How did rich Connecticut become the worst performing state?” They may be writing something to the effect of it's a sad day for Connecticut taxpayers or historic vote to protect state unions for 10 years or special interests rule the General Assembly. By voting for the packages that's been negotiated by the Governor's office, the General Assembly has taken or will be taking an action that will reverberate, I believe, in Connecticut for decades to come.
The anticipation today that is leading up to this vote has been building throughout the day. I could feel it in the hallways and so forth as some of the leaders have sought to convince their own reluctant members to vote in favor of the contracts. Well, they may be successful. We'll see very shortly for sure to see if there is a lock-step vote for a contract that the General Assembly should really have control of and has been in control of for nearly 38 years. Now, some here have already sought to blame others 20 years ago for putting Connecticut on this path. However, continuing that practice doesn't make any sense and it's certainly not helping the Connecticut going forward. We're supposed to be looking ahead. We've had nearly a decade already to address this and to say no this not the kind of practice we're going to continue, but we also have to really realize that no Governor has any control over the final decision. That final decision on spending, on taxes, on budgets and these 33 agreements all fall to the state House and to the state Senate. And, by the way, the fallout from all of this, which we are seeing, which is lost jobs, lost homes, lost population all seem to rest and weigh on us today in this Senate and those that really control the votes.
These 33 various union agreements contain some cost savings, yes, probably for the first two years and I might add for many of us in the private sector we haven't seen a wage increase in maybe 10 years since the recession quite frankly and bonuses have shrunk as well, even for those that are producing a profit. But, in looking more deeply at these contracts, what we're seeing increasingly is that there are many more costs associated with it, and by the way this is 40% of the costs that we have and the budgets that the General Assembly has to move forward on. Unfortunately, these contracts, these 33 agreements are a long ways and much more generous than what our -- not even comparing everyone here, everyone here is saying we're comparing it to the private sector. Uh-uh, I'm comparing it to our local municipalities, to our fire, our police, our teachers. Those bargaining units receive much less and this contract, the one thing, never mind what's in it lock up the state for 10 years. That's something that is shocking to everyone I speak to. It's unheard of in municipal and teacher contracts whose workers contribute nearly 7% to their pension. Many have to spend $ 4,000 dollars of their own personal income before they even touch their healthcare. And so many are moving to something the state seems to be very reluctant to do and that is 401K defined contribution plans for their pensions.
When it comes to state benefits, even the federal officeholders that we all know, U. S. Senators and congressmen choose to keep Connecticut healthcare benefits instead of taking their federal current benefits because it is that much more generous and I might add so much more expensive and why we're now facing increasing local property taxes, increasing costs to our local municipalities while still protecting what many believe are some of the most generous benefits in the country. Again, this vote is to keep an unaffordable cost in place and protected for 10 years at the expense of our overburdened, overtaxed Connecticut residents, towns, and our schools that will now be forced and faced with possibly higher property taxes and higher individual taxes as well.
We are facing a $ 5. 1-billion-dollar deficit after one deficit after another. Since I came to the Senate in 2008 I don't think I've seen a year when we've been able to close a budget, and this is after as you've heard time and again until you're tired of hearing it two historic tax increases. Let's face it, our Senate and our General Assembly has been dominated one party until this January where we are now an 18 to 18 tie with the Lieutenant Governor having a historic influence over the process casting that tie-breaking vote. Who knows, that might even happen today. These union packages of 33 agreements negotiated, as I said before while producing some savings doesn't even get close to closing the budget numbers that we're going to need for the next two years; that we should have passed by the way on June 7th, so that our towns and schools could move forward. And, though there are wage freezes, the concessions that are suggested are erased in the following eight years of this very unheard of -- can you imagine a local contract for 10 years? They also include a four year no layoff provision and also language that does not allow for state jobs being provided by the private or non-profit sector.
These agreements, there is no question, and we've said this before, will tie the hands of this state into the future and make it near impossible, nearly impossible if future recession should occur. And, by the way, it does with regularity, we cannot deny it. There's one in our future. We don't know when. Typically, it's every 10 years. Interestingly enough, coincides with this agreement as well. We will not be able to address this without tax increases and reductions in services to those that most need it on our state. This is a sad day if, in fact, this agreement moves forward and the decision lies right here in our hands. I cannot remember a important vote since I have been here. It's an important vote for the residents of Connecticut, and it is a sad day if one special interest group benefits at the expense of every other interest of the state. And the people here, you've heard it, they've had enough and many of them that have given up have moved out, but we most stop this. We have to stop this and convince the people of our state that we are changing our ways. I hope the vote today will send that message. Thank you, Madam President.
Thank you. Senator Winfield. Good afternoon, sir.
SENATOR WINFIELD (10TH):
Thank you. Good afternoon, Madam President. So, we all come here from different districts with different stories. I actually prefer to sit in the back and really not say anything today. Today's a kind of special day for my family. It's the fifth anniversary of my mother's death. You may have heard me speak about this before. And, I told the story of the last conversation that we had, and in that conversation, I learned a little bit about her history and her name. I realized that part of what I'm doing here, part of the mission that I have here is going back to help people. Now I'm going to tell you that I rose today in support of this agreement because despite some of the negative things I've heard, I actually see this as helpful to many of the people who hurt in this state, and it's not just something that benefits those who are union workers. That $ 1. 5-billion dollars that we're talking about that we don't have to cut out of what we're doing here in terms of the budget, that we don't have to take out of programs that are already going to be cut, that are already -- some of them trying to figure out how do they survive. That matters to people beyond those individuals who are parts of the union.
But, before I go too far into that, I want to talk about what I've been hearing because you know people keep talking about why people are leaving the state and why people have the opinion they have about the state. I heard it's a sad day in Connecticut. I've heard that over and over again for years. I'm hearing about lost homes, lost jobs, the state's in cement boots, this is the death nail, over and over again. At the same time, our neighbor a little bit to the south had a commercial very recently that was shiny, it was brilliant, and talking about all of the things that they were going to do but when you really look into it I'm not sure they know exactly how they're going to do to do it, but they're talking about what they're going to do. And we're talking about the death nail for Connecticut. We're talking about the state being pushed over in cement boots to drown. It has something to do with why people believe what they believe about the state of Connecticut. Because the people here who represent possibility are not talking about possibility. We're talking about death. We're talking about what's wrong with Connecticut but there's a lot that's right with Connecticut because whether we know it or not, there are people who come to Connecticut because it is a state that people want to live in.
I think that what we're doing here is positive, but let's talk about the issues that we put on the table. Let's talk a little bit about the private sector versus what we're doing in a public sector. Let's talk about 83 months of job growth that's in the private sector in Connecticut. Now, let's talk about job losses, 90 months in the public sector we're talking about. We shrunk the size of our work force; it's a reduction. It's real whether you like to admit that or not. And, let's also talk about those individuals who are union members who it sounds like they have the richest deal ever because this is not the first time they've given. These aren't the first times that they have gotten pay raises. Someone spoke about 10 years of no pay raises, well I and people around the circle know it, and I'll put it on the table. I work for a union. I have to answer the question, because we have had no pay raises, why there are no pay raises for those same unions. So, this is not three years; it's an ongoing thing.
And on the issue of the wonderful part of this that is no layoffs, well I have the agreement right here and yes there are no layoffs but it does allow the state to restructure. There's a part of this that deals with that, so when we say there are no layoffs and you can't restructure, that's just not true. There's a way that that can be done here. There are contracts that we're talking about that are pursuant to this agreement. No layoffs don't mean that you can't be fired. We're talking about this as if these people who agreed to this just got the best deal ever, they got everything they wanted, and so it's great. There's a reason why we had to give them not 10 years, five years. We keep talking about 10 years. We already have five years. We're to 2022. There's a reason why we had to give them five years, because it was difficult to get people to agree to this. It's a negotiation. You give up something to get something. You give up something to get that $ 1. 5-billion dollars that is going to help us not have to cut another $ 1. 5-billion dollars. And, the thing we gave up was we're going to extend it to 2027, an additional five, not 10 years, because whether we do this or not, 2022 is locked in. I don't think that's the craziest thing ever. I don't know how you get the $ 1. 5-billion dollars without it, and I know some people have plans for how you might get that that would wind us up in court, so we don't know that we would actually yield what their talking about. This we know works. It's right in front of us.
So, if you care about the people of the state of Connecticut, I'm asking you to not say that this is the greatest thing ever. I'm asking you to say it's in front of us. We know it works, it's not just going to give something to the people who are union members. It's going to give something to the people of our state. It's a positive thing. It's a positive step we can take. I'm asking you to vote yes with me. I'm also asking you to talk about the state like the state that I know, the beautiful state of Connecticut with the bright future that we can all help to move towards. Thank you.
Thank you. Will you remark further? Senator Gomes.
SENATOR GOMES (23RD):
Thank you, Madam President. I'm going to try to take this slow and easy and take it back to where I come from. My history, everybody knows, I got 54 years in the labor movement, and I've negotiated many contracts, and I understand the meaning of a contract. Two entities sit down at a table and they agree to something. All of this that they are taking back from the union and SEBAC agreement didn't occur overnight. Many times, people sat down at a table and like Senator Winfield says you give up something to get something. Over the years, they have accumulated -- some of the state employees have accumulated some. There was a Senator in the midwest that said years ago a million here and a million there pretty soon you're talking about real money. Well, now it's a billion here and a billion there. And now what we're talking about is money that belongs to people who have negotiated something for their future, for their families, for their healthcare, for their pensions. I live on a pension. I put 21 years in with the United Steelworkers. I have a good pension. I live on social security, and that's part of retiring.
Every time we have some sort of money problem come to this state we talk about the corporations and how their fleeing this state. Senator Winfield made a remark about some of the neighbors toward the south. The Governor of Florida came up here and passed out some extensive offers for everybody to move down there and when you investigate something you'll find out they are doing much worse than we are. We talked about GE fleeing this state. I can remember 20 years ago when GE wasn't paying a dime of taxes and selling tax credit to other companies. We talk about Traveler's Insurance one of the ones fleeing. I can remember six years ago when Traveler's Insurance laid off 5,000 employees and they gave their CEO a $ 93-million-dollar bonus. If that isn't obscene, I don't know what the hell it is. We're talking about people's livelihoods here. We're talking about something that -- we're not talking about they were the cause of what's happening in this state. We're the cause of what's happening in this state, the legislators over the years. The money that we've misspent and we're not gonna talk about Democrats or Republicans, we're gonna talk about us. Now, we want something from the unions to give back. Not once or twice, they've done this several times and each time they've given up something that was negotiated between two entities and promised to their people.
I'm the co-chairman of the Labor Committee. This year we had over 100 Bills that were anti-union Bills. Three of them were right-to-work Bills. Prior to unions being in existence, some things happened to people that worked for a living you wouldn't believe. The giants of the industry Carnegie and all of them talked about they were the giants of the industry. We referred to them as the robber barons and let me tell you something, the robber barons are back. We're having people that are working for a living and working for less. When we talked about fighting for the 15, the $ 15 dollars an hour, we weren't talking about a gigantic raise. Do you know something? We talked so much about fighting for the 15. People don't realize if you got the $ 15 dollars an hour you're still working for a low little wage. In other words, an underpaid wage. When you talk about people that belong to a union, let me tell you what you're talking about. You're talking about people that got together and did something for themselves. When you don't have a union and you work for a company, you are called an at-will employee, and what it means by at-will employee is the at-will of the employer to fire you for any reason they want and the only reason that they can be blocked from doing that is if they don't pay any attention to your right as a citizen.
I feel like I've been around a good many years and I'm sitting here in the Senate. I'm sitting here at the will of people who put me up here, and I don't necessarily come up here for anybody that really got any money. I represent people who are trying to make a living and trying to feed their families. In this state here, everybody likes to refer to the state. I come from Fairfield County, the richest county in the United States, and they talk about the money that people got in this state. Ladies and gentlemen some people might not know it but there are 29,000 millionaires in this state and lately we've created 17 billionaires. And, in the meanwhile, wages are being repressed and we're going backwards and people are having a harder time feeding their families and taking care of their families. So, I'm talking about this agreement, the SEBAC agreement. We're not talking about a couple of bucks or something, we're talking about $ 1. 5-billion dollars and this isn't the first time the unions have been hit up for money asking to give back some, and they've come to the table quite willingly and done this. And now we're sitting around saying that we should negate what they are offering and not vote for it. In those 100 anti-union Bills that came to my committee there were Bills on arbitration. They wanted to knock out arbitration. They also wanted to knock out our rights to bargain for anything, and if you did that to people you're going to be pretty surprised at how it's going to bounce back on you.
They also have said that unions are the fault of what's happening here, the lack of unions is what's happening here, the lack of wages, the lack of people having the right to raise their family on a decent wage, not only a decent wage but to be able to have a health program. I heard somebody mention something about going to the emergency. Before you had the union or you don't have a union or you don't have a constructive health plan, guess who pays for that? Because the minute that somebody that doesn't have any health benefits, their kids get sick, they take them to the emergency room and guess who pays for it? The taxpayers. So, we're looking for something that people can stand on their own, take care of their own families in healthy times and other times and be able to raise their children, send them to college and so on and so forth just like everybody that's got the money. I don't come from money. I don't come from neighborhoods that have money. I come from people that have very little and what would I do up here to get from anything? You'd be surprised. You'd be surprised what I would do to somebody else to do for my people. That's my job. I've done it for years. I've negotiated contracts and represented people long before I became a politician, and I didn't become a politician by my own say. I always said that nice is nice and it's nice to be nice. But, if you come looking for a fight you come to the right damn person.
But the thing of it is also we that have a responsibility, we have to give back to other people. I told people a lot of people did a lot of good things for Ed Gomes and that's my job to give back. And right now giving back means that we should approve this SEBAC agreement because it's the right thing to do. There's a lot of people involved in it. There's a lot of people that gave up money for it, and you better believe that I hear people here saying it's not enough, not enough? Like I said, a million here and a million there is real money, well $ 1. 5-billion dollars is a lot of money. I hope that you will vote for this agreement.
Thank you. Senator Hwang. Good afternoon, sir.
SENATOR HWANG (28TH):
Good afternoon, Madam President. How are you? How are you ma'am?
Absolutely wonderful. Thank you so much.
SENATOR HWANG (28TH):
Well I begin this discussion by reminding myself that it is one of the most incredible privileges to be able to represent the 28th district in the circle, and I also get to represent a state in which our children were born and have been raised and learned to love the values that this state so proudly espouses and that is Yankee pride and self determination and truly a sense of responsibility that in order to be successful you have to work and you have to earn your keep and you have to make your mark and that in your success you are able to give back but only when you succeed and that is the biggest challenge we're encompassing right now. We've heard discussions back and forth about you know that the SEBAC agreement is great but on the other side that it is a spiraling challenge of death. I think somewhere in the middle is where we're at but far more important is this perception.
Perception of the outside world of what we're doing in Connecticut is not a good one and the perception is we are not doing the right things. So, as we said over and over again, I said before when we had the debate that the idea of insanity is doing the same thing over and over again and expecting a different result and I recollect that when the Governor was running for office he talked about past predecessors doing the same thing, extending the agreement, kicking the can down the road that it would never happen that leadership would take forth but here we are right now again kicking the can down the road. That's what this deal is to me. It's kicking the can down the road. You know I woke up this morning so excited because we were going to embark on something new, something compelling and visionary that we could say to the rest of the people in the state the rest of the people in this country that Connecticut will reclaim its place as a state of ingenuity, a state of great pride, a state of success but as the day went on, as it ebbed and flowed as we are at four o'clock right now, I'm somewhat disappointed that we may go back to the same old comfortable habits of kicking the can down the road. You know, clichés work because they are so, so real.
In this case, we look at the SEBAC agreement and there are contributions. There are concessions but are they enough? I don't believe so, and if you ask people down in the streets that we represent not the major unions and its leadership, not the corporations, not the millionaire, not the amorphous entity that you hear in this circle and in this debate but you talk to people and what they're saying in this agreement is it is not equally shared sacrifice. When you explain to them the fact health insurance deductibles if you participate in a wellness program is zero. They have to ask twice. No way? No, it's zero. The contributions and the citations that we would cite and when you share that with people up and down the street, hardworking people, not millionaires, not big corporate chieftains, not union leaders, regular Joes and Jills down the street. They looked at the package that is afforded our state employees, and I think they're a little bit upset. And, I've talked to some state employees, union members, and reluctantly and private they've shared I know it's a great perk. It's a great privilege. It's a tradeoff we made, but the real problem is we're in a crisis mode. We're in a $ 5-billion-dollar budget deficit. We're asking for those individuals, every single individual to give a little bit more, to do a little bit more than what has been agreed to on this agreement and the fact is as Senator Winfield cited earlier, there is the capacity for restructuring but why do we need an agreement that binds it for a no layoff provision for four years to extend the contract, end terms and requirements for 10 years. Why are we not working right now sitting in a room bipartisanly working on restructuring without a SEBAC agreement that we are going to pass today? Why are we not going into that discussion with the flexibility, with the honesty, with the opportunity to set a better road map that creates a new idea, a new vision, rather than the same thing over again. Because you know what passing this agreement creates? It creates a continuum of the blame game. It's going to be the blame game of taxing the rich, taxing the corporation at the expense of those that are most at risk, most vulnerable, the most needed care in our communities. That's what it comes back to. We pass this agreement. We force the blame game all over again. It's always somebody else's fault because we're so restricted by what we can do.
There is nothing prohibiting us to work together right now without this agreement and in rejecting this agreement opens the opportunity to create a new vision of how we can operate as a state. I'm not saying all the terms are bad in here, and I think we all agree on that. Both partisan, bipartisan bases have said it has some good merits, but why tie our hands with this agreement? Why are we not going forth and saying this is a good starting point? Why don't we go back to work tomorrow with a broad new perspective and using this agreement as a template guideline but not to be bound by this but to be able to restructure and do what is best for the state of Connecticut for every individual. Stop using corporations. Stop using the millionaires. Stop using hereins as amorphous entities. Talk to the people up and down the street that we represent. And you know what? They're not being represented right now. There is such a disconnect with what we do up here versus representing the people that elected us. Well, I can tell you, people are hurting and they have taken notice. We have a fantastic opportunity. Vote down this agreement, get back to work tomorrow, and restructure an agreement that benefits everyone moving forward. So, I thank you for this opportunity to speak and thank you ma'am.
Thank you, sir. Senator Cassano.
SENATOR CASSANO (4TH):
Madam President, I rise to speak in favor of the proposal. We really have two options, the option to accept or reject. And as I look at the options I don't have a real problem with this. I live in Manchester. In my district I have Glastonbury, Bolton, Andover. We have one of the highest concentrations of state employees and state retirees and if you look at this end these four seats here, probably more than 60% of those people live in our districts. They live right here in Central Connecticut. They don't live in Fairfield County, they can't afford to. We hear so much about the middle class. Who are these people? The disappearing middle class. Is there anybody more middle class than the state employees? Anybody? I'm sick and tired of hearing about the loss of the middle class and here's a group of people that dedicate their lives to make a better Connecticut and we think nothing of paying them. What does that mean? I know from experience when I went into the community college system we started at $ 8,000, $ 9,000 dollars that could've gone to the high school for $ 14,000 but we loved the community college system and thought it had a real future and had a real impact on the future of Connecticut. There are thousands of people that went into that same situation where they would earn less money made over a period of time. They probably made up some of that, but people say they should be giving back. If I read the materials here correctly, I believe that the average employee is giving 17% back in this process.
When we talk about these state employees in the SEBAC agreement who are we talking about? We have the visions of the UConn professor who's a high professor that does two a year and makes a million dollars a year. That's not who we're talking about. You and I know who we're talking about. The highway workers, they're out there at 2: 00 a. m. plowing the snow. They're out there laying tar on the road when it's 100 degrees. They're shoveling the ice off the bridges so we can be safe. They're working under some of the worst kinds of work conditions that you can imagine, and we think nothing as we drive home and see them at night or in the morning. More than 70 have lost their lives doing their jobs for the state of Connecticut and they get a middle-class salary. DEEP workers. We lost 10 DEEP workers. Not an easy job when you're protecting the forest so we can guide deer. They have a tremendous responsibility. And who has more responsibility than the state worker who's taking care of our parents or our grandparents or our children or our aunts? Or teachers in the school system with a middle-class salary? Cathy's mentioned before working in the prison system. I doubt any of us wanted that as a career. Is there a tougher job? Think about it. Middle class salary, middle class job. Probably the toughest job of all state employees as we think about it, our healthcare workers. A lot of our healthcare workers are already gone. Go to the places that I go to like MARC Inc. and the various organizations. You've been there, I know you have. We see people with disabilities with people, seniors, and so on being taken care of by who? State workers, SEBAC agreement workers. We could reject it. Wow.
I have a superintendent in Bolton that is one of the brightest, most articulate superintendents I've ever met and boy is she on me every day with an email on how they need their funding. Reject this today and what happens tomorrow? There is only one pot of money available to move forward. Municipal aid. I think it's over $ 700-million that we'd have to make up? My numbers may be wrong, 760 or something like that but the only place if we reject this is that municipal aid fund who still haven't been able -- municipal officials have still been unable to establish a tax rate, an automobile rate, and if we take this they will have no money for school money. And for the other pertinents, we've already taken away their highway funds. We have devastated them. And how do they pay for the services when we don't? The property tax. The highest tax that anybody pays in America. Watch that baby sail if we fail to pass this. We are sticking it to the people in our very towns, big time. It's not fun to be in these situations. None of us ran for office to be in these kinds of situations. We ran for office with these visions of doing these wonderful things and we spend more time sitting around in a circle debating things that we really don't want to hear about, but it's a part of the job. It's part of the job. Without a spending plan, we can't go anywhere. Without adopting this agreement, we can't even get to a budget. And without a budget I don't care how big or small your business is, the stability of all of that is gone. So, I don't see us having lots of choices here. I see us doing what we have to do, and ironically those salaries those state employees that we keep talking about they're not high-paid people. They're just not highly paid people. Joe Citizen lives in our neighborhood. Let's take care of him and let's do it right. Thank you.
SENATOR LINARES (33RD):
Madam President I rise to make comments.
Please proceed, sir.
SENATOR LINARES (33RD):
Today, we are debating an agreement that has been struck between Governor Malloy --
Would you put on Senator Frantz's microphone please? Thank you.
SENATOR LINARES (33RD):
Thank you, Madam President. Today, we are here to debate and discuss a deal and agreement that has been made between Governor Malloy, his administration, and Government Union Leaders in the city of Connecticut. In Connecticut, we have contract law when it comes to deciding on wages, benefits, and salaries of our state employees and what that means is only the Governor and only the unions can come together and make an agreement. Until recently, we have not been able to vote as a body in the Senate on these agreements. Thankfully, now that we have a power-sharing arrangement in the Senate we're able to debate and discuss these arrangements. Now, currently our state is facing a drastic multibillion dollar deficit.
Our capital city Hartford is staring bankruptcy in the face and many of our municipalities through poor planning are facing insolvency. Aetna and GE, some of our largest employers, have left or are leaving the state. It used to be that General Electric would make things in Connecticut and people complained about the taxes in Massachusetts. Now General Electric is making things in Massachusetts and people are complaining about the taxes in Connecticut and under this deal taxes are going to skyrocket. This deal between Governor Malloy and union leaders will fix one-third of our state costs for over 10 years. It locks in retirement benefits for over 10 years. It requires no layoffs for over four years. It locks health benefits in for another decade. It locks pay increases and increases in bonuses in for another decade. It offers tuition reimbursement, even in some cases state union employees get cars that they can drive on the taxpayer's dime.
Now, I would like to ask Connecticut citizens that work in the private sector, do you have and expect a pension? Do you have almost the entirety of your healthcare cost covered? Do you have a guaranteed employment bonuses and even guaranteed salary increases? 90% of American workers do not and most Connecticut workers do not. The state employee leaders are leading their union workers in the wrong direction. This deal is going to break the engine that feeds them. It is going to break our government. This deal is a devastation waiting to happen. We will be faced with a $ 3. 5-billion-dollar deficit after this deal. The mathematics, the economics behind this do not make sense. There will have to be another massive tax increase, possibly one larger than we've seen over the last two, which have been the largest in our state's history. We have been hemorrhaging jobs. We have been hemorrhaging wealth, constantly flowing out of the state because of poor management and decisions like these.
Millennials, my generation, are choosing to live elsewhere and we will see that occur more often as taxes like these will push jobs out, push opportunities out for millennials, young people to come to the state and innovate, raise their families here. Not to mention what this will do for non-profits. I can't -- the local YMCA, the folks that work for those organizations they don't have even close to the kind of benefits that the union leadership is negotiating for in this agreement. In fact, they are just struggling to make it. They're struggling to survive. Survival is what Connecticut private citizens in the private workforce are fighting for right now. This deal will increase taxes 10%, 15%, 20% in the next decade and it prohibits the state from making structural changes that it needs to solve for drastic emergencies. Now, what can we do? What should be doing as a body? We should be taking matters into our own hands. We can do that. We can do that by making Connecticut wage, waiver, health, pension agreements statute law which is what Rhode Island did. Governor Raimondo had courage, which is what we need today. We need courage from people on both sides of the aisle. Courage! That's what we need desperately, desperately we need courage. Just like she had. Governor Raimondo was able to reform their pension plan. She was able to make structural changes and as a result Rhode Island is growing jobs. Young people are moving to Rhode Island. Businesses are moving to the state. They have their future under control. They have taken matters into their own hands. Our legislature should be doing just that.
Make Connecticut labor law statute law. We can vote on that today. So, that we can start making changes to our pension plan so that our kids and schools can afford pencils in the future. Cause, at this rate, we can't afford anything for our schools, for our roads, for our bridges. We need a defined contribution plan, a 401K plan just like everyone else has. We need to reduce government costs, invest more of tax dollars directly into services. Right now, more and more of every tax dollar is not being spent on services that go back to the taxpayer and that is wrong. We should be looking to sell state-owned assets. Now, I know that later tonight DEEP will be presenting a plan on an asset in Waterford so that the state can get into the hotel business. A hotel developer, who developed a hotel in Rhode Island and invested in the community and now the town is getting tax dollars from that investment and there's economic development in Rhode Island right across the border, wanted to invest in a property in Connecticut and was denied by the state because the state wants to start investing in lodging. Where are we going with this? We should be selling state assets. We should be encouraging innovation and entrepreneurship. We should be focusing on business development. Talk what about Rhode Island has done, look at what Florida has done. Florida has reduced taxes. They've reduced regulations. They've seen a million new jobs. It took courage. It was hard, but that was the direction -- that's the direction that Connecticut has to go in.
We can easily sit down in a room together, knock down these caucus walls, come up with a budget, do a page-turn on a document and get a budget done without making drastic, drastic decisions like this that can put our state in harm's way for decades to come. My fear is that if a deal like this passes the state is going to need nothing shy of a miracle to turn it around. We can stop this now. We can vote this deal down. I know that many of you believe this is the wrong decision for the state. We can come together. We can work on a budget, do our jobs, roll up our sleeves. Let's get a budget done. Let's take control of our own destiny. To my colleagues, I ask you to show some courage. Let's roll up our sleeves. Let's get the hard work done. Let's set this state on the right path. Thank you, Madam President.
Thank you. Senator Slossberg.
SENATOR SLOSSBERG (14TH):
Thank you, Madam President. Good afternoon to you.
SENATOR SLOSSBERG (14TH):
For me, this process started with looking at our overall financial picture, at the financial health of our state. I have spent, with many of my colleagues, the last multiple weeks, days, and hours night and day sitting with people in this building, in this state, and outside of this state looking at our fiscal health and our overall picture. And, there is no doubt that we have very big and serious problems. It's not just a $ 5-billion-dollar deficit over the biennium, but we are projecting $ 2-billion-dollar deficits every single year after this and for a long time thereafter. So, we have some major financial challenges ahead of us. But, today we're here to vote on a labor agreement. So, let's put this labor agreement into context.
We have a $ 5-billiion dollar deficit, and as many people before me have said, we have an agreement that saves us $ 1. 5-billiion and that's a big number. That's 30% of that deficit number. It also restructures the health plan to achieve long-term savings, and that's a big change. It moves retirees over to Medicare Advantage saving hundreds of millions of dollars in the out years. People have talked about all the details, so I'm not going to repeat them all here, but I will just mention a few things that were important for me to do in my homework and that I've heard about here today.
And, I just want to make it clear people talk about layoff provisions. There's a no layoff provision and that's going to tie our hands forever or at least for five years, four years, until the wage and work roles are up. But the reality is, and we spent a lot of time talking to people about this. That layoff provision is really not in effect if you are restructuring or your doing major changes.
What will happen is your state employee will go to another agency, so it's not like you can't restructure. We are not hamstrung by that. We can restructure. We can reorganize. We can do those things. The difference is, though, the state employee was working in whatever agency it was that's going to get reorganized is not going to be out of work. I don't think that's a bad thing. I think that's probably a good thing. But, if they're not going to be out of work and we're doing these structural changes, then how are we going to get savings from layoffs? Well, here's the bottom line -- how many of you, and I know there are many, have called state agencies and found that they were understaffed, that we're frustrated in this circle because we can't get the work done because our state employees can't get the work done because there's not enough of them to do it. And, I'm not suggesting that we grow government wildly, those of you know me know that I'm very much about right sizing government. But, as the chair of Education I know that many, many times I've gone to the Department of Education and asked them for assistance, asked them for data, and they've said well we'll call the one guy who does the data for the entire state of Connecticut and every board of education and every municipality who deals with education knows this person's name. I won't say it here. He works really hard, but boy they are understaffed. And, if want to actually address education issues, we ought to put some bodies in that agency to make that happen. And maybe they need to be moved from another agency, maybe there's another agency that has lots of people and they should get moved. But the bottom line is this agreement doesn't stop us from doing that and that's important and I wanted to make sure that was true. So, that was part of my homework.
One of the other things that I hear people talk about that really upset me when I heard about it was this idea of COLAs, a cost-of-living increase. I spent a lot of time looking at this, and the reality is that you know for our Tier 1, Tier 2, Tier 3 employees yes, they get a COLA, and so they get their base pension. It is a defined benefit. I know for some people those are evil words, but having said that, they get their defined benefit and they get a minimum COLA increase on that base pension. That bothers me. I'll be honest with you. That bothers me. Because it bothers me in the context of all the other things that we have to pay for and I'm paying for someone who's already retired. We're paying for someone who's already retired and they're automatically getting a cost-of-living increase when a cost-of-living increase is really there to help people, pensioners, when the cost of living actually goes up. This stuck in my craw, it bothered me. Well, in this agreement the new Tier 4 employees, they don't get that minimum anymore. If the cost of living goes up, they get a COLA, and if the cost of living doesn't, then they don't. That's a big change. That's a big change for our state and that is a big change for our state employees that they agree to. So, there's a lot more things in this and there are certain things obviously you can decide there are things you like and things you don't like. But there's big savings in this, and there are things that are addressed. And, the bottom line is that without this agreement we will have a $ 1. 57-billiion dollar hole to address in our budget and we will lose the long-term healthcare and savings and pension that have been negotiated. And, that's a really big hole in a really big deficit.
So, there are some people that have said you know what, we don't like this agreement. We don't like the extension. We don't want this to go out until 2027. We're uncomfortable with that. I'm not so comfortable with it either. In all honesty, I'm not, but on the other hand I believe in collective bargaining and I don't believe the answer is to impose these changes unilaterally. And, I'm a pragmatist. Aside from the fact that it bothers me in general, I think it abrogates collective bargaining. There's a math problem there. That exposes us, this state, to significant liability. We're taking a huge risk. You want to say I'm going to impose this unilaterally then we're going to get sued. And the last time we got sued cost us $ 100-milliion dollars. Put that on your bottom line. That's not a good outcome. So, the things we talked about a little bit that are challenging in this agreement is that if we pass the agreement, well we've got our wage and work roles in place until 2021, which at that time that will expire.
So, I think there are a lot of people who think this whole agreement goes to 2027. I want to make sure that people understand that there's really two agreements, two types of agreements going on and that our pension and health benefits will be in place until 2027. That's 10 years. That's a long time. So, a lot of people have talked about our fiscal health and that's how I started my remarks today. So, how do you extend these, how do you reconcile extending these pensions, these benefits and obligations for the state while at the same time realizing that every year we are seeing our expenses go up? The answer to that is a lot bigger than this one agreement in front of us. The problems we have are not about the agreement in front of us. The problems that we have are systemic. They're bigger, they're much bigger, and that's really where we need to be focusing our efforts. We need to focus our efforts on systemic reform because we have to start to dig out of this permanent fiscal crisis. And, I want to be really clear. This problem that we have that is so huge was not created in a day and it was not created by our state employees and it will not be solved in either one or a couple collective bargaining agreements. I would also note that a lot of things people talk about that they don't like or they point to in terms of state employee wages and packages and benefits come from agreements that were from a long time ago. I actually sat down and read every SEBAC agreement since 1989. There's a lot of those that are left over.
Today's agreement is not a bunch of giveaways, it's a reasonable package. And, as I said, the problems in our state are a lot bigger than this agreement. So, we've been fighting to try to answer the question of how do you fix the big picture cause that's really where the question is. And, as I said before, we need systemic reform. We need to do some bigger things that affect more than just wages and work roles. We need to define and statute under the state of Connecticut arbitration laws, the state's ability to pay. So, we go in our arbitration we need to know the arbitrator needs to look at what is the state's ability to pay. You know if our fiscal health is such that we can't pay our bills or we don't have a budget reserve fund anymore or we have $ 83-billion dollars of short-term and long-term liabilities and our revenues projected to be flat, our arbitrator should know that. We have big problems with our teacher's retirement benefits program, and we have long-term unfunded liabilities that we cannot pay. We're struggling with that and we have bond covenants that we have that make us have to pay them. It's time to get creative guys. We need independent financial assistance. We need to sit down with everybody at the table and we have to renegotiate that entire plan to ensure the viability of it.
And very important, and something that hasn't happened in this state is we need a pension legacy debt commission. We need a liability asset management plan. It's time to get some expert financial advice in this state. When we start asking questions about what does our cash liquidity look like in five years and no one in this room can answer, that's a problem, but that's not a problem about a collective bargaining agreement. That's a systemic problem that we need to address. We need to get our debt service under control, so we need to establish a cap on our bonding and start to exercise some fiscal discipline in that area but that isn't affected by this collective bargaining agreement. We have a list of reforms, there's 12 of them. I'm sure there are a lot of people in this room who have lists of additional reforms, but if we want to roll up our sleeves and fix something that's what we need to be focusing on. That's where we need to be working. And if we make these reforms in our budget, we will begin the necessary and very hard work of getting out of permanent fiscal crisis. I will be fighting for these reforms in the budget alongside with my leadership, and I don't believe we should walk away from a $ 1. 75-billiion dollar savings and long-term health and pension savings contained in this agreement. So, I will be voting yes for this agreement today.
Thank you. Will you remark further? Senator Leone.
SENATOR LEONE (27TH):
Thank you, madam. I'm going to arise for some comments on the Bill before us.
Please proceed, sir.
SENATOR LEONE (27TH):
Thank you, Madam President. As I'm listening around the circle on this very important issue, you know I'm struck by many of the comments that are being made, and I wholly believe that everyone's coming from their personal beliefs and what they consider is right all for the benefit of the state to move our state further along. And this piece here in front of us, this agreement, this SEBAC agreement is just one leg of the stool in order for us to proceed. We are moving forward towards a $ 5-billion-dollar hole that we have to accommodate. This SEBAC agreement gives us $ 1. 5-billion and counting. That's a huge and significant number. Some say it's not enough. I could see that point. I could say sure it's not enough, let's get some more, but are we in a position to go back to that table to get more? That's an executive branch function. The governor had to deal with what was dealt to him. He had to talk with a union that did not have to come to the table. They didn't have to do it, and we could be here facing $ 5-billiion dollars of real money that we have to find that covers so many aspects of how this state runs. And $ 5-billion dollars, that's zeroing out multiple line items doing impeccable, unaccountable harm to those that provide for the state, including state workers. Every tax payer will be affected. $ 1. 5-billion is a lot but maybe not enough, so how do you get more? How do you force two parties to come back to the table who believe they have given up significant pieces of their self-worth and return for something to make the deal go through and then we come back and say that's not enough, start it all over again?
It's now July 31st. June 7th, we were supposed to have a budget. We're almost at an impasse, and we still have to find a way through. We have an almost impossible situation, and we have to somehow figure out how to make it a possibility, how to make it a reality and protect people's lives, protect people's jobs, protect people's security. I don't know when unions in general became the enemy. Unions became in existence because of how businesses and corporations from decades, centuries ago, treated their workers. And those workers were harmed, sometimes losing lives. Child labor laws were created as a result of it. So, it was a matter of fairness, and when those things happened people got together and said there's got to be a different way but how do you fight the powers that be? You have to organize. You have to work towards a way to get to the table. That's how it happened. So, it really came out of a sense of fairness and how a person should be treated. How an employer should treat an employee. That's how we have what we have in front of us now, and if those things were to happen a lot of these things we wouldn't be talking about. But, still those grievances occur, and so here we are. And, yet we still have to find a way through. We have to find a way through this impossible situation. And what frustrates me is in how we're trying to conduct our business to find that solution.
The only thing I find sad about Connecticut, the only thing I find that is disheartening or used in such negative connotation is us publicly saying this to the world how bad Connecticut is and then not coming to the table to work on a bipartisan issue to find the solution. The only thing that's going to be sad is if this vote's solely on a partisan level. Right, if this moves forward then one side could say they won and the other side could say we lost. And, then there is the crux of the problem. Two sides, two entities not working together for the better of the state and that's where we fail. We fail because we're not working together. And to say no to this agreement at this stage of the game where it could better, it could be worse, we're starting back from zero. We would have to fall under the continuing resolution, which is decimating services, which is decimating contracts, which is doing irreparable harm and getting worse by the minute by us not acting.
So, we have 50% saying you should vote for this and you have 50% say you should not vote for this. So, who's right? Who's wrong? One side is gonna say they're okay and the other one is not. So, that's where this impossible situation is presented to us because no matter what we do here, whether we're going to support this or defeat it, half the people are going to be unhappy. But, that's what we're here for. We're here to make difficult choices, and its difficult choices that was presented to us. This was not our doing solely. This is decades in the making of multiple legislators and multiple Governors not contributing to these pension and healthcare costs over the decades. That's been documented. It's been written about, and it's been said publicly non-partisan by independent parties, so this is not just a Democrat or Republican thing. This is concrete evidence of the state not paying into the system. So, here you have an idea of let's starve the program and then when the program can't sustain itself, let's fault the pogrom for its existence and let's get rid of it. That's the solution. Let's get rid of it altogether through no fault of the people that are doing the work. We have agencies that are wholly understaffed, infrastructure that is woefully behind in terms of what we need to be doing for the safety of our people, yet we can't fund it because we can't hire people. And if this SEBAC agreement doesn't go through, we can't' even get to the Tier 4 savings that puts people on measures commensurate with the private sector, as if the private sector is the only solution. But it is a solution, so we're going in that direction, but if we don't move forward, we'll never even be able to get there, which forces us to continue to pay some of the costs that we have now that we've contractually agreed to many, many years ago. So, I don't think starving an entity. It's like having a small child who's hungry but then steals a loaf of bread but then you fault the child for stealing the bread so let's put him in jail because he broke the law. That's not how you handle a situation. There's gotta be a better way. And $ 1. 5-billion gets us a long way towards getting there. Then we have to come up with $ 3-billiion dollars and change in cuts to make ends meet. And those are serious decisions. There is no sugar-coating it. It's going to be hurtful and to think if anyone has any clarity that rejecting this is then going to somehow make things better, I have news for you. I don't think it's going to be all roses and wine and cheese at the table. I think it's going to be a lot of penny-pinching, a lot of belt-tightening, and there's going to be a lot of people out of work. And its jobs that matter at the end of the day because a person without a job then has to go on state welfare to make ends meet and it just exacerbates and spirals downward and it's much harder to pull yourself out.
So, I think we're facing some very serious issues in front of us. This is not by far the best situation we could be in, but we're going to have to move forward and the Governor and this administration had to work with a union that didn't have to come to the table to provide some relief toward this big hole that we're facing that was years in the making. You could fault certain individuals, you can fault certain entities, but there's no two ways about it. This was years in the making and now we're the ones tasked with finding a way forward. And, so again, I say no matter what we do here some people are going to be unhappy and some people are going to be happy or justified. And we'll all have to see how things progress going forward, but I believe Connecticut has a brighter future even with this storm in front of us because all storms end, they always do and then the sun rises again and it's a brighter day and we look forward to the future. And we have to start providing answers and solutions for that future that will come. We have invested ideas and money to spark innovation to lay down the groundwork for the next type of technologies that not only this state, this country, this world is facing and the technology is moving at such a fast pace that if we don't embrace it and learn how to wrap our arms around it we'll be left behind.
Manufacturing used to be the engine; it still is. Some people think manufacturing is dead, but it's not. It's alive and well, but it's not the only sector. We need to embrace technology coming forward. If we don't do that, we will have more companies leave. As a matter of fact, the companies that always touted as going to Massachusetts or going to New York they didn't leave just for taxes, their CEOs publicly stated they went for the innovation hubs for the brains that were there as a result of all the community, state, and universities in those two respective cities. They wanted to be where the ideas were and where the future lies. That's how Connecticut get's out of this conundrum is to start investing in our future, in our children, in the education system, creating universities and colleges that can lay down the groundwork for the future and not live in the past. The past is gone. We have to start moving forward and investing in those ideas. So, for those companies that have gone to those states that are higher taxes, taxes is not the reason they left. They've said that but it seems to be a common refrain that is the only reason why they left this state. I beg to differ, and I'll have that conversation with anybody. They didn't leave just for taxes, they left for those reasons that their future is in those hubs of creativity and that's what we need to do here.
And we're actually on that track to do that through our innovation efforts through the commerce committee and through the finance committee, through the chairs that have given us some of those foundations for companies to invest. And, as a result, companies are coming to Connecticut. They do come. Jobs are coming here. We might not be the high growth of the southwest where it's always sunshine, but there's a lot of people that love Connecticut and want to choose to stay here. And, I think we need to promote what is good about Connecticut, even we disagree we should promote what's good about Connecticut. It's a marketing plan and having the ideas will sell that plan. There's no state that is unscathed that everything they do is right. Every state has their issues and I'm sure if we were in those state legislators, we would be dealing with those issues, but we're not. We're here talking about Connecticut. And Connecticut has a lot to offer and that's what we should be talking about, even with these deficits that we will overcome. Because at the end of the day, that is our job. We have to do that. Even as things may not look so bright in the future, they will get brighter if we do the right thing. If we work together, but if it's going to be a continuation of one side saying no or saying how bad things are and projecting that to world, yeah then people are paying attention. Whey do they want to come here if the legislature can't get along. That's now how we promote who we are. We need to work together, and I think we can do it. People always ask me so is Connecticut like Washington where there's complete dysfunction and complete disarray where nothing is happening and you have decades and years of nothing moving forward and I say no. We work together on many issues bipartisanly and about 80%-90% of our legislation we do that in committee in a bipartisan manner and do what's right for the state.
But on fiscal matters, we have a philosophical agreement. Voters will get to side each every two years; 2018 is not too far off. That's no different; 2020 is not that far off; it's no different. And 2022 is not that far off; it's no different. It may change, it may not. It may ebb and flow, but the business of the state still has to continue. This floor, the upper chamber, the Senate, the lower chamber, the House; regardless of who's in the executive branch we still need to function. We still need to work together. We still need to do it in a bipartisan way because if we don't do it in a bipartisan way nothing gets done and that is the wrong message to send not only to our constituents but to those who we're trying to court to come here to Connecticut. If we truly want to market ourselves, we market ourselves with saying what's right about Connecticut, how we can provide ideas. And, if we have to have negotiations and one side has a list and the other side has a list, if you can get to half of each then we should be getting half the votes of each but that hasn't seemed to have been happening. It can't be all one way or the other. And, I think to force another branch of the government to undo what they tried to do in good faith with an entity where there was a negotiation, I think that sends the wrong message because if this function, if this Bill fails tomorrow we're right back here. We have to find a $ 5-billion-dollar hole and there is a consensus on how to do it. So, we're not going to see a brighter future, an immediate future under that scenario. So, unless you can present to me another $ 1. 5-billion-dollar alternative that is real, that is going to have a meaningful impact, and then we start talking about some of those future cuts and decisions that we're still forced to make I don't see how we do this in a way where everyone comes out unscathed. So, we have to do this in a way where we treat people fairly, and I think if we treat people fairly and our constituents fairly they will understand. They may not agree, they may not like, but I think they will understand, and if at the end of the day they disagree, well then that's where we agree to disagree. And that's how you have a debate. You have a vigorous debate where what you say and what you believe in matters and hopefully that can win the day. And, if it doesn't, you live to fight another day. And, at the end of the day you have to fight with what you believe in and you have to live and die by what you believe in and how you go about your business.
And, I think my colleague Senator Gomes said you know nice is nice. It doesn't take anything to be nice. And, I think if we came from that perspective it would be a whole lot easier than it needs to be or than it has been. So, I say let's be nice to each other. Let's work together. Let's find a way through this impossibility that's before us. I choose to support this Bill that's in front of us because it's $ 1. 5-billioin dollars, which is real money. And, unless you can give me another $ 1. 5-billion dollars in alternatives that doesn't decimate this state, then I wouldn't be willing to support that. So, I support what's in front of us. I hope others do as well. Thank you, Madam President.
Thank you. Will you remark further? Senator Logan. Good afternoon, sir.
SENATOR LOGAN (17TH):
Good afternoon. Thank you, Madam President. I rise to comment on the resolution before us.
Please proceed sir.
SENATOR LOGAN (17TH):
This is a huge vote. My most important vote to date. Some would say that I have had a successful career in the private sector as an engineer, as an executive at a local water company, and I never ran for public office before. As a first-time candidate, I ran on a pro-economic growth message, a pro-taxpayer message, a pro-liberty message. I ran as a family man, as a father who wants to see his kids hopefully grow up to work and raise families right here in Connecticut. And my message resonated with the voters, and now that I'm here I love this job. I tell folks all the time it's great to be in the middle of all the action. I'm one of the new voices here in the Senate chamber. I want to see our state get healthy again. We can turn Connecticut around with the right ideas. I have been pushing for state workers pension reform, state workers overtime abuse reform, an enforceable state spending cap, a cap on state bonding, elimination of wasteful government spending. So, I'll be voting no on this so-called concessions deal. You know what I'm going to say is probably not very popular, but it's what I believe. I believe the state employee union leaders have a strong and unhealthy grip on some members of this legislature. I have a great respect for the rank and file state employee union workers. I have family members who are long time state employee union workers. State employee union workers, the rank and file; they are hard working state employees and they provide important and in many areas vital services for Connecticut residents. But, this deal that union leaders have cut with the Governor is unaffordable. The concessions deal is deeply flawed, and would do nothing for Connecticut residents who are not unionized state employees.
The Senate needs to vote down this concessions deal and give our beloved state of Connecticut a fighting chance to change the status quo and go in a new direction by working towards getting our fiscal house in order ASAP.
SENATOR LOGAN (17TH):
Excuse me. Senator Looney. Why do you stand, sir?
SENATOR LOONEY (11TH):
Yes. Thank you, Madam President, for a point of order.
Please proceed sir.
SENATOR LOONEY (11TH):
Yes. Thank you, Madam President. I would ask the Chair to caution Senator Logan that his comment earlier about certain members of this General Assembly being in an unhealthy grip by state employee union leadership I think goes beyond the pale of what's allowable comment in this chamber in terms of impugning the motives of members and their voting and impugning their independence. I would urge the Chair to caution Senator Logan on that remark and to indicate that this chamber deplores those kind of remarks.
Thank you. Senator Logan. At this point, I know that you're new here and we welcome you here but it was -- it is not a common discussion to point anything out especially like that. So, I'd ask you not to do that again. Please proceed, sir.
SENATOR LOGAN (17TH):
Yes. Thank you, Madam President. And, you know I am still new to the chamber here and the rules and I will definitely be more careful moving forward with such comments. Thank you for pointing that out Senator Looney.
So, I don't like the fact that this concessions deal guarantees four years of no layoffs. I don't like that by year four of this concessions deal that it guarantees salary hikes of more than 13%. I don't like the fact that this concession deal would tie our hands and make a significant portion of our expenses untouchable for 10 years. Think about that, 10 years, out to 2027. That's a good way to run a business into the ground, and it's a good way to run this state into the ground. Yet, that's what this deal does if it passes the Senate today.
We need to understand and be clear about what will happen if this concessions deal gets approve and state government ties it's hands for a decade. If this concession deal is approved, we will have more tax hikes, more local property tax hikes, devastating cuts to education funding throughout all of Connecticut. More draconian cuts to vital services for the disabled, the homeless, the addicted, such as those hooked on opioids. This concessions deal if approved will have more draconian cuts to vital services related to vulnerable children and seniors, domestic violence victims. I ran for office, we all ran for office here in the Senate to prevent all of that from happening. The voters in the 17th district towns of Ansonia, Derby, Bethany, Beacon Falls, Naugatuck, Hamden, and Woodbridge sent me to Hartford to steer Connecticut in a new more sustainable direction. We are already taxed to the max. Connecticut residents need relief, not heavier burdens. Now, I am in a position, we here in the Senate are in a position to improve our state over the long term. We are in a position to block bad policies from becoming law. The numbers and facts show that this concessions deal is just a plain old bad deal. So, I plan on voting no on this concessions deal, and I urge my fellow Senators to do the same and vote no. Thank you, Madam President.
Thank you, Senator Logan. Senator Markley, good afternoon, sir.
SENATOR MARKLEY (16TH):
Good afternoon, Madam President. Thank you very much. I joked with Senator Logan, knowing I was going to speak after him, that I wasn't going to have anything left to say but it was truer than I expected. I think he's laid out the case very clearly to my mind. And, you know he spoke for a minute about what got him into politics. I'll say the same thing, what got me back into politics about 10 years ago, I guess. I started to grow very concerned about the condition of the country and of the state in particular and felt that I had been remiss and selfish in holding myself away from it for so long because of the frustrations that I had found in my previous involvement with it. And, it was an odd experience that no sooner did the notion of returning to it occur to me than the possibility started to present itself, and in short order I found myself back here. I ran the campaign in 2010 in big letters on all my pieces “It's Time to Face Facts” because it was so clear to me that our state was in a desperate economic situation with a crushing debt, with unfunded obligations, with a staggering economy, with high taxes that were discouraging investment and innovation and relocation of business and the sustenance of business here in Connecticut. And, for seven years I've watched with frustration as in my opinion we have remained behind the curve in addressing these problems.
I feel that, to take Governor Malloy as an example, I feel that if he had the attitude he has today when he took office in 2011 the state would be in a very different situation. He needed and we needed to start getting our debt under control quickly, not to raise taxes, not to continue down that path, and to put an end to spending increases. I think he recognizes that now as much as anybody. You know he said in an article recently “If I had a magic wand, I would've done much more. ” And, I think by that magic wand he's not meaning the magic wand to have the power to do more necessarily but the foresight at the moment to know how much more needed to be done. That article, incidentally, was not published by my friends at National Review, it was in the Daily Beast. Another very discouraging assessment of Connecticut's situation. I don't know how many of you have read it. One of the most -- it has a number of very clear and terrible facts and statistics in it. For instance, their observation that the percentage of our budget, which is devoted to debt obligations has increased from 12% in 1997 to 31% today and since Governor Malloy took office it has gone up 10% a year on average year after year.
In the last two years, we've seen our income tax receipts actually drop. Knowing that fact, knowing the amount of our budget that is now devoted to our past obligations and the poor performance of our economy today I don't see any evidence that our state is going to be in any better position to pay the raises which are included in this contract which is before us in the third, fourth, and fifth years than we are to pay them in the next two years. And, I'm afraid that what we're doing if we approve this contract is once again trading short-term relief for a long-term obligation, which we can't meet. That is exactly what has put us in this mess, doing that time after time. Governor Malloy came into office rightly bemoaning the way in which previous governors and previous legislatures had tied his hands, but we sit here today on the verge of doing the same thing to the next governor and maybe the governor to come after that. Why would we do that? Why do we make it impossible for our state to change direction and impossible for legislators who succeed us to respond to the demands of their voters for us to go in a different direction by putting us on a course that we can't change? In the course of the debate, I think this is the most important vote that I have been here for, partly because of the divided nature of the legislature, but I think this is a vote that is going to define where we're going this year and where we're going for many years to come.
I've listened to my colleagues on the other side and I've wanted to respond to almost every one of them at some point. I feel like I'd like to do it like Mystery Science Theater where I could sit in the audience and just be a peanut gallery for it. But, Senator Leone said how could we refuse this contract at this moment. Let me say this is the first moment we have the opportunity to pass judgment on this contract. It's our obligation if we think it's wrong to turn it down right now today and we don't have to accept the deal, which we believe or which we know in our hearts we aren't going to be able to afford in the long run. I'd also say much is made of the fact that the contract was negotiated in good faith. It's not a matter of the faith that a contract was negotiated with. I feel no more obliged by that than I would expect union members necessarily to accept a contract because it was negotiated in good faith. We all have to make a judgment of what's put before us. I was a real estate agent once upon a time for a little while. If I worked something out with the seller's agent let's say and went back to my buyer her had the right to say yes or no to it. That's just the way it works. And he had to do that based on his own financial ability to meet his debt. And I'm not unhappy about this vote however it comes out. That's not what my life is about, but I'm concerned about the state of Connecticut. And, I know that my constituents are terrified by the situation that we're in. And, they are alarmed by the fact that we would accept something like this that ties our hands.
I don't enjoy making gloomy prognoses either. Senator Winfield earlier talked and several people have talked about the fact that if some of us weren't so negative things would go better. We're not here to be cheerleaders for the state. We're here to give direction to the state. We're here to try to heal the state. If I go to my doctor, I don't want her to tell me that everything's fine if it's not. I want her to be honest with me. I want her to tell me what needs doing, and if it's hard all the better, all the more important that she tell it to me directly. We might want to recognize the virtue of being positive, but we can't forget the virtue of being honest. We cannot cure this state until we recognize that we are going in the wrong direction and have been doing so for a long, long time under both parties, under many different legislatures. That's history, as Senator Leone says, but the question is what do we do now? This deal would guarantee that we continue to go in the wrong direction, and it will make changing direction much, much more difficult for those who come after it. I would only ask that my colleagues who share in my opinion of this join me in opposing this resolution. Thank you.
Thank you. Will you remark further? Senator McLachlan.
SENATOR MCLACHLAN (24TH):
Thank you, Madam President. I stand for the purpose of comments on the resolution before us.
Please proceed, sir.
SENATOR MCLACHLAN (24TH):
Thank you, Madam President. I am concerned as my dear friend Senator Joe is concerned for many reasons, but one of those major reasons is that it is clear to people who are watching the legislature here in Connecticut who are not political but are running businesses or going to work every day, Wall Street who is paying close attention to Connecticut and how it's being operated. All of those people are saying that Connecticut's headed in the wrong direction. When I say that I pull up to the gas pump and two or three people will come over and say hello and say what in God's name are you doing at the state capitol. I can't be the only legislator in this building that's having that experience. I can't be. Even those legislators that are going to vote for this today must be getting accosted at the gas pump, must be. So, what does that mean? That means that the people on the street are saying cut it out, you gotta stop what you're doing, it's not working anymore.
Wall Street downgraded the state of Connecticut's debt three times in 12 months. We're told by people who are watching bond ratings that it's highly likely that another downgrade is in the near horizon if we don't set this government on the right path. Approving this deal today is not what people are looking for. The voters, the business people of Connecticut, our debtors, the rating agencies who rate our debt, have all made the message perfectly clear to us. It's time for Connecticut to move in a different direction and this agreement is more of the same. I urge rejection. Thank you, Madam President.
Thank you. Will you remark further? Senator Somers, good afternoon.
SENATOR SOMERS (18TH):
Yes, good evening, Madam President. Thank you. I rise for comments on the resolution.
Please proceed, ma'am.
SENATOR SOMERS (18TH):
Thank you. We've heard a lot today. A lot of what I was going to say has already been said, so I wanted to share with you all in the circle a few calls that I've gotten over the past week concerning this agreement. And they're calls from retired folks but mostly what concerns me is calls in my district which runs from Groton up to Plainfield, which I would consider a very socioeconomically depressed area, calls from manufacturers in that district. They've all been watching what we're doing. Their eyes are on our vote today and what they have told me repeatedly is this decision we make today will be the final straw for them as to whether they stay here in Connecticut or whether they leave. And this is not scare tactics, this is the reality. Businesses plan way in ahead, five years, 10 years. They have a plan. They've been watching the way Connecticut's been going. They've been watching the debt that it faces, the downgrades of its bonding, and how the legislature has acted. I have been told by at least two manufacturers in my district that if this vote goes through today they already have where they will relocate their facilities to another state. That to me is a scary sign because when we lose those folks, we lose the jobs, we lose the income, and we leave an already socioeconomically depressed area even further back.
The calls that I got from some of the folks that are retired are really, really interesting for me. We talked about some of the agreements here and state employees and the benefits that they get. I had the fortune of having my own business at one point, so I have executive experience. I also ran a town when I was the mayor of Groton, so I'm used to negotiating contracts at the municipal level for great union employees. And there are very different than what you see as a state union employee contract. In fact, if our state union employee contracts were equivalent to what we see in the private sector union or in the municipal union we would not be in this situation. So, I got a call from a retired person who worked for a Fortune 500 company. He gets a small pension of $ 30,000 dollars a year and lives on social security. He asked me what is the average cost that a state employee pays in for their healthcare, so we were able to get that information from the Office of Fiscal Analysis. So, the average cost of a state employee paying in with one dependent is $ 2,500 dollars a year. Now, we're asking, as part of this concession package, that's going to increase by 1%. What's 1% of $ 2,500 dollars? It's a drop in the bucket. When this retired person is paying $ 1,800 dollars a month for him and his wife. So, I think there has to be some recognition on perspective as far as what we're asking folks to concede coming from the baseline from which they are used to having benefits. The benefits that are provided to the state employees, who do a fantastic job, are so completely out of line in the norm for the private sector or for public union employees and municipal union employees.
There is no comparison. And, in my opinion, a concession means actually really giving something up, giving it back. The people that I represent in my district they don't have guaranteed employment for five years. Actually, when this goes through, if this goes through today we will have people further out of a job in my district. The people I represent, they don't get paid a bonus for coming to work and the people I represent don't get bought into a nice, big rich pension system that's guaranteed. They have a 401K. The difference is 401Ks are not guaranteed, but the people that I represent and all of us represent on many cases they are responsible now for paying for this exclusive protected class in Connecticut. It's a protected class of the state union employees.
We hear a lot about giving up, but I want to ask you what are the taxpayers and the citizens that are not state employees what are they giving up to fund this? They're giving up their ability to stay in Connecticut. They're giving up their ability to pay their taxes. They're giving up their ability to have their kids remain in Connecticut. For me, leadership is not about the next election. It is about the next generation and the next generation will be saddled with this agreement for the next decade. For 10 years our hands are tied. I don't know any business that enters into a 10-year-agreement, ever. And we have no layoffs for the next five years, guaranteed employment for five years. I can honestly say that if you vote today for this agreement, you are not taking every citizen in Connecticut into your thoughts. You're taking 2. 4% of the working population in your thoughts; that's who you're fighting for today. I need to fight for all of the citizens in Connecticut and all the citizens in my district.
I believe that the negotiations that, again, were done between Governor Malloy and the union leadership have failed in what they've come up with. Right now, the unions will get their raises, they will continue to use unlimited overtime. There is nothing that has been done about longevity payments. They will keep their pensions, and most of all they will be guaranteed jobs for the next five years. There are so many little give backs in these contracts; things like increased tuition payments, increased time that you get to spend working on union business, things that prevent privatization, and it goes on and on and on. Again, concession for me means that one party actually gives something up, but if you look at this agreement over time there's a 13% increase in wages. This agreement is a document that really surrenders to the political expediency that we have here. Voting on this contract means higher taxes. It means slowing the already sluggish economic growth that we have here in Connecticut. It means losing businesses. Voting for the contract is more of the same. I'm sure we are all very well aware of the definition of insanity; it's doing the same thing over again.
Governor Malloy, when he came in office, complained and bemoaned the fact that his hands were tied and now he is doing the same thing to whoever the next governor will be. So, I ask how in passing this contract if we are facing nearly half of the annual budget taking it off the table for a decade because we're locked into the cost. How can anyone sitting in this circle think that's a good idea? What that means is when you have that much of a burden on your annual budget you will have no other place but to reduce funding for municipalities, which means significant property tax increase. You'll cut funding for education, again significant property tax increase, and you will devastate those who need the help the most in the social services. There's simply no place else to go.
For me, this is a bad idea. This is a bad contract, and it is bad for Connecticut. There are things that can be done and for Senator Leone, the Senate Republicans have a list of things that can be done without opening up this contract that gets us where we need to be. I have to say that if Connecticut was the Titanic, this deal allows the state employee the first dibs in the lifeboats, while the rest of us are singing “Nearer, My God, to Thee” or freezing in the water. Governor Malloy is the Captain, yet he doesn't have the decency to go down with the ship. For me, I can only ask that you will reject this contract. Let's go back to the table and negotiate something that is more fair that gets the unions more in line than what we see on the local municipal level or the private sector union. Let's get back together, and let's look at how we move the needle for Connecticut forward in the most constructive way. This is not the way to do it. Thank you.
Thank you. Will you remark further? Senator Suzio, good afternoon, sir.
SENATOR SUZIO (13TH):
Well, good afternoon to you too, Madam President. It's good to see you here.
SENATOR SUZIO (13TH):
I rise to make some comments about the proposed Bill.
Please proceed, sir.
SENATOR SUZIO (13TH):
Thank you, Madam President. It's no secret that where I stand on this Bill. I've opposed the SEBAC deal for the last two weeks publicly and I want to begin by clarifying that my criticism of the deal is in no way intended to be a criticism of state employees. In fact, two of my immediate neighbors, one to my left and one across the street from me are DOC Officers. And, I've had the good pleasure of working with many state employees. Only last week I was at Crystal Lake in Middlefield -- I mean in Middletown and a DEEP employee was with me at 6: 30 at night on his time. And that's just one example, and even over the weekend I was speaking with OFA employees who were answering my questions about the SEBAC deal, so I make my criticism of the deal aimed at the deal itself and not at the state employees or any complaint whatsoever about our state employees. But, I believe the vote on this deal has to be made in the context of the situation, in the context of the extraordinary situation that we're in financially here in Connecticut. As someone who is a financial person whose worked in the financial world and the business world for over 45 years now, I would say to describe Connecticut's present financial condition as a crisis is an understatement. We're in a catastrophe, a financial meltdown of unprecedented proportions that every day gets worse. And when we look at the SEBAC deal, we cannot ignore that situation and those facts and circumstances that we're operating under.
A few months ago, my colleagues in my caucus, the Senate Republicans conducted a very, very detailed analysis of the budget projections and went through line by line over 1400-line times in our budget. They looked in every nook and cranny in the budget and identified many savings and changes that could account for about 60% of the projected $ 5. 1-billion-dollar deficit. But, at that point in time, they reached a dead end. There wasn't any more possibility of cutting expenses further without hurting people deeply, and we wanted to avoid that in our budget. Consequently, we were hoping and praying that the SEBAC deal could account for the missing 40%. And I want to reiterate that. We're not depending on state employees putting the entire burden on their backs. In fact, what we've identified is 150% more than what we're expecting from the state employees as far as what we need to balance the budget and to avoid the devastating consequences of tax increases, cut backs to the disabled or shifting the burden to our cities and towns. And, indeed, if the SEBAC agreement is approved as it stands right now there are no other choices ladies and gentlemen, you by voting for this agreement will vote for either a tax increase or passing on the cost to our cities and towns like the Governor himself already proposed in the form of the Teacher's Retirement Pension obligations or cutting services to the disabled and the most needy.
Already, we've seen the consequence of that with the Governor's executive order and the impact on the intellectually disabled community, for example. So, as constructed, the proposed agreement leaves us only with a choice between bad and worse. The question is it unreasonable to have hoped for a better SEBAC deal. And you know, based on my conversations with individual state employees, I'm convinced that many of them are greatly concerned about the state of Connecticut's condition and were ready to work with us to really help us balance the budget without the catastrophe that's eminent. For example, many of them said to me that they expected and were willing to give up their furlough -- not their furlough days, their longevity bonuses and they were actually pleasantly surprised to find out that the deal does not require them to give up their longevity bonuses. But, virtually every state employee that I spoke to regarding that was already willing to do so, yet it was not part of the agreement.
So, I want to take a look for a second at how the SEBAC deal does affect the average state employee. I'm going to go over some numbers that I reviewed with the Office of Fiscal Analysis for independent corroboration and what SEBAC requires in the first two years is an increase in contributions to the pension fund of 1. 5%. In addition, it requires three unpaid furlough days. For the average state employee, based on my review of the office of fiscal analysis, that's tantamount to about $ 1,100 dollars per year more in contributions toward the retirement plan and about an $ 850-dollar loss in terms of the furlough days. Taken together for the first two years the out-of-pocket cost to state employees, the average state employee, would be about $ 3,000 dollars, but only 12 months from now, July of 2019 the SEBAC deal calls for a bonus to be paid to state employees. That bonus is the greater of $ 2,000 dollars or $ 1,000 dollars plus their step increase. When we reviewed the average compensation of the state employee with OFA it was determined that that theoretical employee would be getting just under a $ 3,000-dollar bonus. In other words, the state employee was getting a bonus that was roughly equivalent to what the increased pension contributions would be and the three furlough days would cost. Then, in July 2019, two years from now, the salary increases go into effect, the COLA. The cost-of-living increase would come into effect at 3. 5% followed by step increases and adjustments in the step increases. And, again, these numbers are reviewed with the office of fiscal analysis and roughly the steps were not all paid at the same time but generally speaking from what the OFA told me January is a common date.
So, after the July 3. 5% increase there would be a step increase in January and then that same July and July of 2020 there would be another 3. 5% increase followed the following January by another step increase. And when we took this and applied this to the average state employee, it amounted to a 10,000 plus increase in pay over that 18-month period of time. Now, at the same time, at that point with the SEBAC agreement, the state employee would be ponying up again $ 1,100 and that would increase because if their salary increased they would be ponying up $ 1,600 dollars or so to their pension and they'd be responsible for putting more money into the healthcare costs. Again, according to OFA at that point in time it would be about $ 600 more per year. So, at that point in time, the state employee, this theoretical average state employee would be making a little over 10,000 dollars more per year and would be paying out about $ 2,3000 dollars more in benefit costs.
I think state employees when they really see the real numbers will be pleasantly surprised by the SEBAC Concessions Deal, and I'm convinced that it does unfortunately represent an opportunity loss for us because the up front savings at the front end of the deal are going to be unfortunately more than offset by the losses and the increased cost on the backend of the deal just at the wrong time by the way for the next biennium when we'll be looking at a situation where the increased cost of the SEBAC deal are going to come into play and if our state hasn't recovered economically you think we have a big problem now, just wait until two years from now when now we're staring at a situation with these cost increases kicking in and, at the same time, the state's still lagging behind. You would think we would've learned our lesson from the mistakes we've made in the past, but apparently, we haven't. Indeed, I'm very much afraid and very concerned that if this opportunity lost, the passage of this agreement does happen, we are going to be faced with no good choices to balance the budget. We are going to either have to pass a tax increase, we're going to have to shift costs to the cities and towns, a low teacher's pension fund, we're going to be talking about cutting services to the disabled, just like is happening right here today when intellectually disabled children are being thrown out into the streets from the agencies that were taking care of them because they're funding's been cut by the current executive order. The approval of the SEBAC deal guarantees nothing but destructive choices for us and, in my opinion, will accelerate the ruination of Connecticut. I won't be a part of that. I won't be a part of approving a deal, unfortunately, that sets us up for failure, and I won't be a part of the destructive decisions of the budget that will follow from it. I urge anyone in the circle who still has an open mind about this to give very strong consideration to the long-term consequences. I thank the state employees for what they have been willing to do, but I do think that their willingness was underestimated by their own leadership. I believe in the good will of the state employees, and I believe they would have been willing to do even more if presented in a proper way, and I do thank them for their service to the state.
So, in closing, I want to urge all of you not to reject the state employees but to reject a deal that's an untannable deal, a deal that sets us up for failure. And, then let's get back to the table and put together a deal that really does benefit the state of Connecticut and does allow us a balance to the budget without the destructive consequences of this deal and sets us up for a long-term future that's bright for not only everyone in Connecticut and the state employees themselves a healthier state financially speaking is in everyone's interest. The state employees and every citizen of this state. Therefore, I urge my fellow colleagues here in the Senate to think long and hard about the dire consequences of approval of this agreement. Thank you, Madam President.
Thank you. Will you remark? Senator Doyle.
SENATOR DOYLE (9TH):
Thank you, Madam President. Senator Suzio just closed and asked all of us to think long and hard about this important vote on the SEBAC resolution today. Trust me, Senator Suzio, I have thought long, long, and hard on this vote today. This process to me is really a process of pressure, but it's self-imposed pressure, not pressured by anyone else just about by myself on my responsibilities as a state Senator for the 9th district and as the state Senator in the state of Connecticut. I have had to, over the past several weeks, begin an extensive education process with other colleagues in the chamber learning more and more about our budget process. I've been in the state House and the state Senate for many years; many people would say too long, but that being said I've never served on the Finance and Appropriations Committee for a reason. I'm a lawyer and I know my limitations.
Nevertheless, over the past weeks, I know some of my colleagues, members of the public, and friends are frustrated with how we got here and whether my work on this frustrated people in the sense that they felt like I was dragging out the process, I was playing games, playing to the press. I assure you, over the past several weeks, I made the deliberate decision to work hard, learn as much as I can about the budget and the implications of the SEBAC agreement but to do it behind closed doors. So, over the past several weeks, I've worked very, very hard against the best interest of my law firm and my personal life, but I'll point out there's many other people in this chamber that do that also. So, I'm not taking credit for that, but I'm just saying I've learned how others sacrifice in both parties in the budget process. This education process has been remarkable to me, and again I will just apologize if my colleagues and others are frustrated how it appeared that I may have been delaying the process and it certainly was an education process and no intent to delay things.
Now this education process that I've gone over the last four or five weeks, of course, is a review of the actual SEBAC agreements and the prior contracts and it was a labor law seminar, which I have no background on. But, to me, it was much more than that. It was an analysis of the budget process and what is the future of the state of Connecticut. With the help of some others and an international corporate and municipal reorganization firm came into our state capitol. They donated to the state of Connecticut two days pro bono five individuals that are certainly much smarter than me, and I can only be in awe of their fiscal prowess. This firm, again, it was remarkable that they were pro bono, came in and analyzed the income receipts, the past receipts, and the future anticipated receipts and the expenditures of the state of Connecticut and our state budget. This process was joined by our Office of Fiscal Analysis and OPM cooperated to provide these expert a view on our state budget, where the state is going to be in the next five years.
Unfortunately, what we learned was over the next five years things are extremely bleak in the state of Connecticut. It's anticipated in the next five years, this is not by me, this is not by anyone else, it's by objective experts, numbers people that we're going to have at a minimum a $ 2 billion-dollar deficits over the next five years. That's with the window of their forecast and Secretary Barnes said it is longer than that, but their focus was five years. So, it's crystal-clear, that we are today at a crossroads of the state of Connecticut. You know the doomsday people are out there, but again it's my responsibility to try to put my head down and try to figure out what's best for the state of Connecticut.
We didn't get here in two years, three years, we got here in 50 years. Unfortunately, it was a bipartisan effort. You know there's no party that's holier than thou. Both Governors in the past underfunded our pension costs, and I voted on some of these budgets, so I'm as to blame as anyone else. But the bottom line is concessions were made. It seems to me today, and I wish I had appreciated years ago, but to get a benefit from a union to allow us to not make our pension costs were significant mistakes that both parties made in the past. That's where we are today. The truth of the matter is we're not going to get out of here in one year or two years. It's going to be a long process for whoever wins the elections next year. But, from my narrow focus, I think where we can start make progress is to seek systemic reforms, and I will admit systemic has been a joke that I have trouble pronouncing but systemic reforms. What these mean are long-term changes to how we do state government and how spend our money. There have been lists of them by both parties, both caucuses, both chambers, and I began to review them with others and certainly not alone but after much time, and others who are very frustrated that the list was not done in a prompt, immediate matter, but I with the help of others came up with an opinion or a suggested list of systemic reforms that we believe could help begin turn the fiscal ship of the state of Connecticut. These are not a panacea. They're not going to solve all our problems, but the question is can we get some of these passed to help future generations, future legislatures, try to solve our budget? Some of these issues, two of them Senator Fonfara authored, he educated me, and I appreciate. The volatility cap, many of you heard about, and then the expenditure cap. I thank Senator Fonfara for his heard work on these two caps. Are they going to solve all of our problems? No. But, I think they could make a significant benefit to the state of Connecticut when and if things get better in the remaining legislative career that I may have. Some people are ready to throw me out at this point. And that may happen, who knows, but this volatility cap down the road could help us. If we ever have good times again, if it's passed, I'm hopeful that future legislatures will force and actually deposit any such revenues above the volatility cap into the rainy-day fund or almost more importantly our long-term pension obligations. I also think a good idea, and again others have, I think the Republicans had it, everyone had it, trying to seek a bonding cap for the state of Connecticut.
I honestly think we've been spending too much bonding, and we have to get that under control. I hope we can pursue in the near future. I also think both parties again, a bipartisan situation but our SEBAC agreements have been extended out far too long. I would like to try to advocate for to limit the duration of our future SEBAC agreements to four years, rather than 20 years or six years or five years, whatever. I'm hoping we can seek a limit to four years to future SEBAC agreements. I also think, as I previously mentioned, one of the big problems is of course our long-term pension liability and I'm hoping that we can all come together to create a pension legacy depth commission that I will not be part of. This will be other people outside of the capitol. It's certainly not me, but I think it's appropriate we get experts from outside of here to try to take a look and try to give us real-world recommendations of where we are. I also think we need to create a teacher's retirement system viability commission along the same lines. It's not as a hot ticket item yet because our pension, state employee pension issues arose before this, but this is another significant liability that again I hate to say it but we need to get minds from outside of the Connecticut capitol dome to advise us how we do it. If we don't do it, everyone's worried about where our money is. The fixed costs are strangling our budget. We're struggling today; all of us, with terrible cuts to the neediest residents of the state of Connecticut. If we don't get a handle of our fixed costs, we will continue to make significant cuts and/or make tax increases but neither choice, anyone in this chamber supports, or enjoys doing.
Now, today, of course, before us you say why am I talking about all of this for? Today, of course, we have the SEBAC agreement resolution before us. The SEBAC agreement before I spent a lot of time learning about it. Yesterday I spent two hours listening to a labor laws seminar on it. I didn't appreciate every word but I do know there is some good in it and there's some bad in it. I think people in the chamber have referenced both, but it's clearly not a document that is 100% bad or 100% good. And, I will say it's clearly better than the 2011 SEBAC agreement. I think both parties can agree that it is certainly better than that.
The question is, today how do I vote on this SEBAC agreement? I came in today uncertain how I was going to vote, but the process is, which is frustrating to me, I'm a member of the legislative branch, and the Governor and his staff negotiated this agreement. We can make no amendments to it. We can't touch it. It's truly an up or down vote, so the question is what do I do? I'm struggling with do I vote no or do I vote yes today. And I struggled with it. Do we, is it time to say no and vote against it? My main thought and concern if I were to vote no today upon reflection is the $ 1. 5 billion-dollar paper savings of SEBAC. However, you look at it, if you think it's a valid number or an invalid number. It's a number for the budget, and there are significant savings in SEBAC. But we also, probably the second or maybe even more important component is if we were to reject SEBAC today what do I do about chaos? Am I willing to risk the potential chaos of rejecting the SEBAC agreement? Now, I've spoken to many people with different opinions on this. After my many weeks of analysis I am concerned about the potential chaos from this. Will the unions come back to the table, nobody knows? And you hear they wouldn't. Would they if we defeated today? No one truly has the answer. But you hear from our local communities. What are you going to do to my state aid? Will this blow it up and you know certain communities will be significantly cut. And the truth of the matter is, at some point, all of us need to try to come together and pass a budget. We have a responsibility to. I certainly am not minimizing the difficulty of achieving a budget. I have strong opinions just like all the other 35 members of the Senate chamber. We all have our own opinions and we're all going to have to decide at what point are you willing to accept it. At what point are you willing to compromise?
So, today I do have to vote, and I'll be honest I wish we were not voting today. I wish today we would vote on the SEBAC when I have the full budget before me and I have a complete picture of what the budget solution is. However, this is not to be. Today we are voting on SEBAC in isolation. That's the reality and that's what I have to vote on today. So, for me in light of the significant potential chaos of rejecting the SEBAC agreement how could I feel comfortable in voting for SEBAC today? What came to me is I have to take a leap of faith and all of you in this chamber to work with me and many others of this chamber to try to achieve the systemic reforms that we need in our budget process for the history of the state of Connecticut. These, yes, I've been involved with coming up with a list of 12. We have to get beyond any personality. These are not about me or anyone else. These reforms and if other people have better suggestions than me, we have to come together because if we don't begin to turn this ship, every program that all 36 of us advocate in the state Senate is going to be further threatened. We all have our favorite budget items. DDS people are the most sacred funding in my eyes. Everyone's taking a haircut, but things are only going to get worse if we don't begin to turn the corner. I think systemic reforms of the budget process can get it.
Now I spent time today discussing this budget with my leadership and I want to apologize to the members of the circle who were disappointed that the business didn't start on time, but I personally was struggling with this decision. Yes, maybe I should've done it last week, and again I apologize, but I spoke to my leadership. They assured me that they would do their best to advocate for systemic reforms for the state of Connecticut not for Paul Doyle, not for anyone else. The future of this state is working to achieve some of these reforms. So, with that in mind, I am prepared today to vote yes. Am I certain it's the right vote? To be honest, I'm not certain, but when I weighed it all and I've been weighing it for the past five weeks I came to the conclusion this afternoon that I will support the SEBAC agreement this evening. Thank you, Madam President.
Thank you. Will you remark further? Senator Hartley, good evening.
SENATOR HARTLEY (15TH):
Good -- yeah, oh my goodness. Good evening, Madam President. And thank you for always presiding over this chamber with such dignity, grace, and patience, Madam.
So, yes, I rise to comment on the resolution, House Resolution 202, before us otherwise known as the SEBAC Agreement. But, before I do, Madam President I would first of all like to recognize all the parties who have worked on this agreement and worked fervently. You know there was a time when I was in the Appropriations Committee and the Chairlady will remember my questions asking that will we have this before us before our final action date, and of course that was the goal, but living in the real world we recognized that didn't happen and so fast forward many months to this day. And, the parties who worked so diligently in this incredibly challenging time, I want to especially recognize Lisa Egan, Attorney Egan, who was absolutely incredible in being available coming in, working with us, sharing documentation, giving us the history, and really the no-nonsense answers. When they were in her favor, yes, she shared them with us. When they were not, she was clear about that. And, I'm grateful that. In particular, I want to recognize those individuals who are the subject of the agreement at hand, the state employees, the face, the state of Connecticut, the people who protect us on the roads, who take care of our elderly, who teach our children, and make this state the state that we're so proud of and make this state the special place that it is. And, I don't think there's few who would ever argue with that.
But, Madam President, if I may let me frame this discussion with a few facts. Currently, our fixed costs are 51% and perhaps even greater than that in the general fund and they are exponentially growing since last year, 2016, our fixed costs were 42% of the general fund. Those are numbers that are clearly unattainable. In fact, they give us the dubious distinction of being the highest in the country with regard to our fixed cost. And you all know in May within a period of three days, four rating agencies downgraded the state of Connecticut. The Hartford Business Journal reported 6 downgrades over the past 12 months. I quite frankly lost track of them and I rely upon what their reporting was. And, of course, how many, just how many deficit mitigation packages have we worked with and had to deal with? This year, this fiscal year, we were up and down, kind of like the ping-pong ball, and we closed the fiscal year with a razor-thin margin of $ 30-million dollars to close the year. Currently, we're sitting in this room, and very shortly we will begin to put fresh pen to paper as we face a $ 5-billiion dollar deficit in this biennium. You all recall, I believe it was a House Resolution, House Resolution 7, which we started the year off in February and it was the restructuring of the sirs, the state employee retirement. And, at that time, I said very clearly that it was my position that proposal was the beginning of the solution. It wasn't a complete solution, but it was the start to the solution of where it is we have to turn this state.
Now, before us today, we have the SEBAC agreement and it is showing us and we have validations. My colleague has shared with you the extensive process that a number of us embarked on to use every resource possible and then some to bring in outside experts to get new viewpoints, to get additional validations. PEW Institute, in fact, validated the savings of $ 1. 75-billion dollars in savings are represented in this agreement. And, as far as I can recall, there is not one budget proposal that I am familiar with that did not recognize and embed those savings. However, they are arrived at. And then there were some that went beyond that. And, when I dug in on this and quite frankly had some humorous times when I was getting tweets about I know you're in hiding, do you want some pizza? Or what are you doing with that bowl of chocolates to survive on? But, anyhow in that arduous process using every tool we had and with the indulgence of the leadership that allowed us extended time in order to do that and of course on the floor I'd be remiss if I did not recognize those outside experts who came in and performed the pro bono work. These were folks, many of them from outside of the state, but most of them who had allegiance to the state because they lived her in the state and they were very vested, but all had verified the savings that were represented.
With regard to how we capture those savings, that's a pivotal question. You know, there's that saying that goes something like past is prologue and it was just about 18 months ago, maybe 24 that we settled a $ 100-million-dollar law suit that was brought in 2003 with regard to an impairment of contract case against us. It was commonly known as the Rowland Case. So, I was bound to deal only with the facts and with the numbers. And in view of the fact that we had numerous entities verifying the $ 1. 57 billion and it was embedded in all budgets it obviously was not to be dismissed. The other fact is that we know that those savings are triggered almost immediately. The initiation of a Tier 4, which is an entirely different dynamic, the transition to the Medicare Advantage, actually a program which my own city adopted. We saved about a million dollars a month, and as a result of that actually in my hometown we were upgraded by the rating agencies because of that change and the stability it brought to our fiscal ledger. The fact is, we can't deny the 1. 7 billion. We also have to recognize the triggers and the start of it and that the change for the Medicare advantage must be initiated by September by virtue of federal regulations or we won't meet the enrollment periods and we will lose those savings.
But, even in view of all of that, it is not the solution. It is, however, a very important part in the continuum of the solution because as all of you know and have recognized, this is going to be a path and it's going to take some time. We do not turn around $ 5 billion dollars and projected long-term deficits in a year in a biennium. The risk, the risk is that we react to immediately solving our fiscal crisis without dealing with the looming fiscal problems that are there and clearly will come about. So, my goal in working with colleagues was to develop workable initiatives. Initiatives using just plain old hard numbers and facts. Where are we going and how do we realistically do this? This is not about politics. It's not about -- it's only about the facts. And, so dealing with the budget crisis at hand, recognizing that we have to initiate a path forward essentially and a lot of people have used whatever terms and analyses just to turn the curve.
I am also, as indicated by my colleagues before, working with and on the assumption of going forward with the pension restructuring, the SEBAC that's before us, and systemic reforms, which will serve to achieve a better and more workable and long-term equilibrium -- let me just and one of the other members referenced a few and I would just like to add a few onto that list with regard to what we are talking about in terms of systemic reforms. I think an important one was that agreements shall not extend longer than four years. The history is we had a 20-year-agreement in 1997 and then we went onto another agreement which was 10 years. And now we're talking about another one. That has to stop. It has to end. We cannot continue to do it. It's just untenable.
Then we are talking about clearly identifying in statute what does it mean by this nebulous phrase which is not used and is an important tool in our deliberations, which is known as the state's ability to pay. What we are talking about is establishing a very definitive metric, which assesses the financial capability of the state including its fiscal health, which is determined by an independent financial entity looking at the balance of the budget reserve fund. Short-term and long-term state liabilities. The state's average revenue over the previous past five years, revenue projections going forward during the term of the proposed contract at hand and before them and assessing capital markets, and so with very clear definitive parameters that becomes an important tool. There are others, and I will not belabor the point because I know this has been a very long discussion. But, I will just end Mr. Speaker by saying that I do believe that the SEBAC with systemic changes will help to make a path forward to put in equilibrium and will be, for me personally, pivotal in adopting a budget. Thank you very much, Mr. Speaker.
SENATOR WINFIELD (10TH):
Thank you, Senator Hartley. Will you remark? Will you remark? The chamber will stand at ease. [brief pause]
SENATOR DUFF (25TH):
Thank you, Mr. President. Good to see you up there today. Mr. President, I rise to support the resolution today. There's an old saying that says no one was ever criticized for voting no, and you know that may be true. There's another saying that says it takes courage to say yes, and I reject that since we are leaders and we are supposed to be courageous in our votes. But, on this resolution, I would say it takes common sense to vote yes because what other single vote will we take this year that saves $ 1. 5-billion dollars over two years and $ 24 billion dollars over 20 years? Senator Osten did a great job summarizing the agreement with the structural changes that will impact the state in the years to come. This is the second agreement that Governor Malloy has made in his terms, twice, in seven years. It kind of goes against the notion that agreements are locked in for the long term. But it's important to understand the history of our pension system as to why we are here today. And we all know that back in the 1930s to the 1990s we had a pay-as-you-go system which massively underfunded our pensions and didn't pay into the system that we have today.
We know that Tier 1, the most expensive system, the most expensive tier that we have of classification of state employees ended in 1984 and since then we've created Tier 2, Tier 2A, and Tier 3, and hopefully with today's vote we'll create Tier 4. There was a very long agreement made back in the late 1990's with Governor Rowland who then compounded the problem and squandered surpluses because compounding problem by systematically and purposely underfunding our pension payments at a time when we had record surpluses here in the state of Connecticut. Now, a know a lot of people don't like to go back down memory lane, but those are very important aspects as to why we are here today.
I think we had the vote in January on the flattening out or the smoothing out of the pension payments that we have I joked that back in 1984 when we ended Tier 1 and we were still massively underfunding our pension payments, when I was in elementary school I should've written my state Senator and said you know you really ought to be funding those pensions because one day we're going to be in a real heap of trouble. And, here we are today. Plus, on top of that, thanks to Governor Rowland and his illegal layoffs in 2002, we now are paying $ 100 million dollars for those layoffs after we lost in court based on what his actions of that time. And, again, all through that not making the proper investments in our pension and our health has lead us to this point today while, at the same time, squandering surpluses and not making the proper investments in housing, education, and transportation, which means that on top of now paying in to our pension system, we now have to make those investments to grow our tax space, keep our residents here, and to make sure that we are providing for the future.
Governor Malloy came in and negotiated an agreement in 2001 creating Tier 3 and setting up higher co-pays for health and pension payments and that agreement is still projected to save $ 21-billiion dollars over 20 years. Then we have today's agreement that will save another $ 24-billion dollars over 20 years with a new tier of employees and higher pension and health co-pays. While I know there's people who disagree with the agreement today, I will say that I don't know if there's another governor who has made two agreements in seven years with state employees, both coming to the table and bargaining in good faith.
Plus, those of us who have voted for the last few budgets have had a hand in the fact that we've actually shrunk government over 13% over the last seven years.
And, finally, and this is really important. Finally, actuarily fully funded our pensions for the first time ever. So, I'd like to remind people that Tier 2 employees, Tier 2A, and Tier 3 those pensions are 95% to 97% funded. Tier 1, which ended in 1984, which I referenced just a minute ago, is our problem. And that's what we are working continually to get under control to pay and to make sure we have an ongoing fiscal situation with predictability and stability. And with this new agreement, we'll have a new Tier 4 for our employees, things that people around this circle have been asking for for years, a hybrid pension 401K system and higher contributions for pension and health for state employees but yet that's still not enough. We have this system that is going to dramatically lower costs for the state of Connecticut if we pass this here today. We have to do it. We have to get these costs under control, and we've had executive branch and labor leaders come together in good faith to bargain for a new agreement.
There are two issues I want to talk about that have been raised today. The first is the no layoffs. We have thousands of employees who will most likely retire with this new agreement coming into effect. Connecticut, as I mentioned earlier, we have shed about 13% of our jobs. We are smaller today than we were seven years ago. We're smaller today than we were eight or ten years ago. Government has not grown. We are literally down to our foundation and layoffs are really not the issue. It's the care we take rebuilding the house and hiring our new employees. I think about the fact that about 300 state police could retire at any moment and that would take us way below the full strength that we need to be. So, by hiring Tier 4 employees, not only would we get new state police officers, which would now be on our roads to make sure that we had adequate patrols protecting us on the street, on the highways, and ensuring that public safety is upheld, but it would cost us far less than even Tier 3 state employees and far less than Tier 1, 2 or 2A.
And, this 10-year-agreement, people say it's going to lock us in for the next governor, two governors, or many legislators; it's going to bind our hands. But, I don't think that's the case either. It's really only extended for five years, so let's be truthful about the facts as they are on the table. I spoke to a state employee today who said he has worked for the state for 25 years, and this is the sixth time his contract was opened.
So, I think the facts, again, speak for themselves. But, I also want to remind folks who are watching or listening today. I think they've heard some negative things about our state. Businesses are leaving, people are fleeing, leaving, and our state is in a downward spiral. I'm really tired of hearing, really tired of hearing that. Do we have our challenges? Yes, of course we do. That's why we're here today. We have challenges, and we're here today to face those challenges. But, let's face those challenges head-on and not create an environment of gloom. The microphones that we have as state Senators are larger than the average citizen. We have the opportunity to create the story and the perception of our state. So, let's start rooting for our state's success and not our failure. Here's some recent news just this month that came out in the media. Connecticut is now in the 83rd consecutive month of private sector job growth. We've now recovered 102% of our private sector jobs from the recession. Now, some will say we're only at 80% of our jobs recovered, and that's because of the fact that the other 20% are the government jobs that we in towns and cities have shred over the last many years. So, I think most people would say they're pleased that government has gotten smaller and hopefully leaner and it's gotten more efficient. But, our private sector job growth continues to move.
Last month we posted 7,000 new jobs and 5,000 the month before. The company, Indeed is adding 500 jobs to their Stamford office. Charter Cable needs new space because of their fast growth. Remember they came in a few years ago from another state. Henkel is bringing 400 new residents from Arizona and looking to add another 250 jobs right here in the state of Connecticut, and they're not just in one spot, but they're hiring all over the state of Connecticut. Pratt & Whitney and Electric Boat are in a hiring frenzy and Pratt & Whitney just recently said they only want to be in the state of Connecticut. And manufacturing last year grew in Connecticut for the first time in 20 years. So, there are good things happening in the state. Do we have challenges? Yes. We're meeting them head-on, but let's also remind ourselves that we're leaders here and we need to make sure that we're speaking of both our challenges and our successes at the same time.
This is a critical moment in our state and I thought I'd close by some comments by U. S. Senator John McCain when he gave his speech last week during the healthcare debate in Washington D. C. , and if I could take a moment with permission of the body to read his comments I'd like to. It's from his speech.
“I've known and admired men and women in the Senate who played much more than a small role in our history, true statesmen giants of American politics. They came from both parties and from various backgrounds. Their ambitions were frequently in conflict. They held different views on the issues of the day, and they often had very serious disagreements about how best to serve the national interest, but they knew that however sharp and heartfelt their disputes, however keen their ambitions, they had an obligation to work collaboratively to ensure the Senate discharged its Constitutional responsibilities effectively.
Our deliberations today, not just our debates, but the exercise of all of our responsibilities authorizing government policies, appropriating the funds to implement them, exercising our advice and consent role are often lively and interesting. They can be sincere and principled but they are more partisan, more tribal more of the time than any other time I remember. Our deliberations can still be important and useful, but I think we all agree they haven't been overburdened by greatness lately and right now they aren't producing much for the American people. Our system doesn't depend on our nobility, it accounts for our imperfections and gives an order to our individual shriving's that has helped make ours the most powerful and prosperous society on earth. It is our responsibility to persevere, that even when it requires us to do something less satisfying than winning even when we give a little to get a little. Even when our efforts manage just three yards and a cloud of dust while critics on both sides denounce us for timidity, for our failure to triumph. What a great honor and extraordinary opportunity it is to serve in this body. It is a privilege to serve with all of you. ” From Senator John McCain.
I couldn't agree, Madam President, with more of that. In the spirt of bipartisanship and what's best for the long-term health of the state of Connecticut, I urge my colleagues to support this resolution. Thank you, Madam President.
Thank you. Will you remark further? Senator Fasano, good evening, sir.
SENATOR FASANO (34TH):
Good evening, Madam President. Madam President, as we've heard from almost everybody in the circle, we all agree on one thing, that we need to make a change in the state of Connecticut. I think universally that is agreed to. The question is that change? What is that course and conduct? What other structural changes that we need to move us in a different direction? And I've heard some people in the circle say the best thing about the deal that's in front of us is a $ 1. 5-billion-dollar savings over the two years and some have argued how could you turn that down? How could you say no to that when it's a savings? And, I'm so puzzled because for at least six or eight weeks we have shown a way to get $ 1. 9-billion dollars in two years of savings. We have shown that you can accept the wage concession, do some other insurance items, furlough days for non-union employees, and then make other statutory changes that take effect in 2022 after the SEBAC ends and save this money. So, I'm shocked when I hear people say there is no avenue. There is. Now, for those who then saw that, they turned and said a-ha! You're walking into litigation.
I heard the word fear come across this chamber. Fear? People look to us for leadership. People look to us for strength, and we're afraid to take an issue and go forward with it? Fear will eat you up alive and spit you out. We're here not because we're afraid, and if we're going to make a change we're going to be bold. Fear should not be an obstacle. And let's look at that fear. The only thing that Attorney General's opinion said was this, if there is an existing contract that government has it cannot use its legislative authority to interfere or impair that existing contract.
Somebody please identify in the Senate Republican budget what contract we interfered with? Because I don't know of any. And I re-read it again. There are no contracts we interfered with; therefore, that lawsuit doesn't exist. Others have thrown up Rowland, that case which cost the state millions of dollars. Those who threw that case up haven't read it, don't understand it, haven't spent the time that it takes to appreciate the argument that they advanced. Rowland's case stood for one proposition, you cannot make a unilateral change against union state workers, a concept I agree with. Our proposal doesn't interfere with any contracts and affects non-union and union in the exact same regard. So, you can't use the Rowland case and say that somehow that's an impediment. You can't use the Attorney General's opinion and say we violate the Attorney General's opinion cause it's simply not so. It may fit with the narrative, I appreciate that, but it's not so. Others have said how could you turn down a deal that saves $ 24-billion dollars over 20 years. Well the Senate Republican Caucus paid $ 5,000 dollars to OPM so we can have an actuarial study done of our union savings and pensions and healthcare. And we save $ 7-billion dollars more than the Governor's plan over the same period of time. That's what we save. That's what we save. So, when we look at what we did, there is not an argument other than I don't like it, which I can appreciate. That's your discretion as legislators but don't say it's because of Rowland and don't say it's because it's illegal and don't blame on the AG's opinion because none of that is accurate.
I've heard some arguments to say that the deal in front of us gives us flexibility. I've heard folks say that the layoff provision does not tie our hands. Then I have to ask one simple question. Why did the Governor change his budget? Why did the Governor say he was going to close two prisons and when he realized that he would violate the four-year no layoff clause he only closed one prison? Why did he have to take out the technical high school system where he had a reduction of expenses? Why did he have to change these Southbury Training School Fire Department? And the answer is because there is not that flexibility with a four-year no layoff deal. You don't have that flexibility even if you have the retirements. So, you don't have the flexibility. You have tied the hands of this legislature and future legislatures as well as whoever the next Governor may be. That's a truth. We saw it in 2011, four-year no layoff. In 2013, Governor Malloy says I cannot do anything except cut expenses to municipalities, social services because I have tied the hands of us being able to make consolidations in government. You just simply cannot do it.
I've heard some folks around this circle talk about the fact that there's a $ 5-billion-dollar deficit and $ 1. 5-billion is 30% of that savings. And, again I ask we have $ 1. 9-billion dollars. What is wrong with our budget? I have heard people saying that move retirees to the Medicare Advantage Plan. That's going to save. That's a good idea. Well, that's what our budget does. We do that. I've heard people say that COLAs for Tier 1 and Tier 2 bother them. Well, our budget says after 2022, I agree and we remove the COLAs. In fact, what we've done is made it a little bit more fair. We say that until 80% of our pension is funded COLAs are out but once you're at 80% they're tied to inflation. You do that by statute. So, we have addressed that issue.
I've heard some folks say about structural changes, so let's talk a little bit about structural changes. First, there's an issue about state of Connecticut arbitration statutes and the ability to pay. I've heard that discussed. We, unlike municipalities are not subject to mandatory or binding arbitration. If we reject a contract and they go to arbitration they can come back and we can say no. That's our ability, which brings me to another point. There are folks in this building saying it is bad faith if we reject the contract. What? We are the legislator. It was approved by the -- or negotiated and accepted by the executive branch. Those are two separate branches of government. In our own statute, we say we get to vote on it. Does that mean we only get to vote yes? Is that the only way you could possibly vote because if you vote no it's bad faith? And if it's bad faith why do we let the union employees vote on it? They would have to vote yes because if they'd vote no we'd say hey that's bad faith. That's a crazy concept. It doesn't even pass the laugh test and the fact that it's tossed around this building just shows the desperate status it is to make this deal go through because it's not founded in logic or law. It's made up!
So, let's look at some of the proposals we're talking about, the ability to pay. It doesn't matter. It's what we think the ability is to pay. It's what we say as legislators. We dictate policy. We get to say that's not right. We get to say 10 years from now it's not going to be good for us. It doesn't matter what the arbitrator says. We stick it on the municipalities. We're good with that, but for us we're not subject to that. We say that after the expiration of the SEBAC agreement in 2027 no COLAs for pensions are to be negotiated to SEBAC. Well, that's what we said in our budget. Chalk another one up for our budget. We said that. After the expiration of 2027, overtime should not be included in the pension. Chalk another one up for the Republican Senate budget; that's what we've done.
Teachers Retirement System Viability Commission to ensure sustainability of TRB. If we study that thing one more time we've got 100 studies out there. Everybody knows what the issue is. There's a report that's sitting on my desk that's a year old that's got to be 40 pages that talks about exactly what the debt is, what it is in the future, how it's going to hurt the state. We don't need to look at that anymore. We have it. Pension Legacy Debt Commission Management Plan. I'm not exactly sure what all that means, but we had Boston College, the Governor's office study the pension system. They did a full study. The PEW Foundation a month ago came out with a study of the pension. You know what the PEW Foundation said? We're one of only four states that has the pension in collective bargaining. Correction, how do you fix it? You don't need to study it. How do you fix it? You take it out of collective bargaining, like Rhode Island and like the other 46 states. And, oh by the way, if that is destroying collective bargaining, then 46 states have destroyed collective bargaining. I don't believe that's a definition. That's in our budget as well. Vote on all union contracts -- in our budget. Establish a cap on state of Connecticut bonding -- in our budget. After the expiration in 2027, no SEBAC agreement can be longer than four years -- in our budget. Voting for the SEBAC agreement to extend another five years so its 10 years violates the very principle that's put out there to say they don't like. The very principle! Create a mechanism to review certification of 2017 SEBAC agreement. I think that's called OFA.
In 2011, OFA came out and said you are not going to achieve the billion-dollar savings that we have in there. And all of us in the circle on the Republican side and on the House stood up and said OFA says you're not going to achieve the savings. That passed on party line because it was you don't know what you're talking about OFA, we got that. So what mechanism do you want to put in? The only mechanism that works is your conscious. The only mechanism that works is looking at the numbers. The only mechanism that works is not someone telling you it's wrong but in your mind saying this is not the right thing to do for the state of Connecticut. The volatility cap on capital gains by Senator Fonfara, I think that's a great idea. It's not in our budget. I'd be happy to add it. Create expenditure cap based upon census revenue. Depending on definitions, I think that's a great idea. It should be in our budget, but I'll tell you some other things that we should be talking about, the cap on state spending. We should have a cap on bonding at $ 2-billion dollars. Make transportation a priority.
Look, the high-level budgets that we're seeing around, these big talking point budgets strip transportation, strips transportation, takes the money out of the STF and makes it go broke. We can't do that. We didn't make that a priority. Prevailing wage, something we've all talked to our towns about. Budget transparency. Let people know by May 5th annually what we're doing with the budget; at least on the municipal side. Require that when we have number of deficits in a row that we come in as a legislature; don't leave it up to the Governor. Take the bull by the horns and do the right thing, and we should be able to do that. And we should require the state comptroller to analyze budget projections.
We need to designate an Investment Advisory Council that shall establish the assumed rate of return on our pensions so we don't end up in these problems where deficit gets larger, and larger, and larger. Create an office of overtime accountability so we can watch our overtime. We just saw in the article, right? A week ago, or maybe it was over the weekend I forgot; $ 215,000 dollars of overtime. We need to enact a 90-day-turnaround time requirement for environmental reviews by DEEP. School construction efficiency plan. We should have three or four different schools that you pick from and if you want to build a Taj Mahal it's on your municipality. This is the school you get. You want to go larger you do it on your own. You could save money just by getting all the architectural and engineering done at once and then let the towns deal with it from there. A Medicaid oversight requiring that all waivers for Medicaid services be approved by committees and add result first accountability to all of our agencies.
These are real changes that we can do that are in our budget. But let me tell you what happens. We do have our budget out there. I heard someone say in this circle we need to have bipartisan conversations.
That bothers me a lot. I have given my budget to anybody whose asked for it. I have sent letters that I've never sent to the press to the leaders. I have made phone calls, e-mails, and texts to legislators in this building on the leadership side and to this day I have not had any meaningful conversation about a budget negotiation. They've come and they've asked questions and I've had Lisa Hammersley in the room to give them any answers that we have. Every number we have in our budget has a backup. Every number has a backup, and I've given them that backup. But I can't negotiate with someone who won't negotiate. You want to come and pick our brain, we'll give you anything you want. There's legislators in this circle who've called me up and asked me for A or B or C on both sides of the aisle and without question I've given that information. Why? Because I think the best thing we can do with the state of Connecticut is get a bipartisan budget. I honestly believe that.
But if you pass this deal, if you take better than a third of this budget and pull it off to the side, you have trapped yourself in an economic condition which has to result in three things; has to, the math says it. Has to! You have to raise the sales tax or the income tax, number one, you have to. You have to cut municipal aid, you have to! And you have to cut social services. Now, it's a combination thereof but those are all in play and those must be in play. That's it. That's the reason why I am suggesting a no vote doesn't do anything. A no vote holds the deal to the side, as I mentioned. This deal by the Governor saves $ 1. 5 billion dollars, $ 200-million is related to SEBAC and SEBAC only, $ 200 million. That's a sneeze compared to $ 5 billion. So, forget about $ 200 million. You vote no, everything that these contracts do, everything that these contracts do you could do in a budget. You could take the entire deal that most of the folks on the other side of the aisle are going to vote for and put all those into a budget two weeks from now after voting no on this deal. There's no difference but once you vote this deal out you are trapped. You are done. You're only left with that side of the ledger, those three items. That's what makes this such an important vote. You have cut off your options to balance the budget by taking better than a third of the budget and saying we're not going to touch this anymore. That's what you've done.
I'd just like to take a moment and say you have to learn from history. You have to learn from mistakes. Back in 2011, if you all can recall, there was a deal put together which was 11 years on the SEBAC deal and the union negotiator said now we have an 11-year-agreement I wish it was still 20, referring to John Rowland, but 11 years is still unheard of in the country. There's no one else with 11-year-pension and healthcare deal. You all, as he was talking to his members. You all, if you ratify this, had the security that no other state worker in the country has and I venture to say no other private sector has that security. The agreement you're reviewing has a four-year job security. Sound familiar? Sound familiar? Four-year job security. Nowhere else in the country could you find a four-year job security. Nowhere else in the country you'll find workers who know they won't be laid off for four years no matter what happens, so when you pick up the paper like we all did yesterday morning -- this is going back to 2011 and say oh my god job growth is down 54,000 in the entire country their talked about double-dip recession. I wonder if I'm going to lose my job next month or next year. You guys don't have to say that. Sound familiar? Sound familiar? Giving up raises this year and next year there won't be any raises, but then back then it was three years of raises, that is a win -- I'm paraphrasing, but that is a win.
Finally, if this deal gets voted down, there will be chaos. Sound familiar? I'll tell you that. There will not be a budget. It will take something 12,000 or 15,000 to balance the budget. Sound familiar? We did this in 2011. It's the same dance, and here we are in 2017 and we're doing it again. So, I ask you is Connecticut better now than it was in 2011? I don't think so. There is another way. I will guarantee that if this gets denied today, I will guarantee there is a bipartisan agreement. Further, I'll guarantee that bipartisan agreement will have most of the union negotiations in it. I will also guarantee that I believe that those union negotiations will be helpful to union employees who are being paid $ 30, $ 40 and $ 50,000 dollars. They will receive a better benefit under a deal that we can put together ourselves. That is what's going to happen. Maybe not so much for those making 120, 130 but the 30, 40, 50, 60 -thousand that will happen because there is a pathway. But, if we approve this we're going to have a budget deficit come June 2018 and here are your choices; taxes again, cuts to municipalities again, and social services because everything else is rock solid.
In closing, I'd like to say this, it would've been really easy for the Republican Caucus to sit back and do nothing, never really do a budget which we changed five times, one because the numbers have changed, two because Governor Malloy criticized our budget and we made changes to reflect that, three because some constituents came up and raised concerns and we corrected that, four because we found some money after the actuary came in and gave us $ 84-milliion dollars more than what we thought. It would've been so much easier for us to do none of those things, put out a budget, say we have a budget, and let the other side of the aisle go ahead and force their way through on this deal and sit back and point fingers.
Politically, one could make a very strong argument that that is the manner in which you proceed politically. This is not about politics. This is about saving this state. I feel very strongly about this. This is about saving this state. We saw our income in our state six years ago go from $ 600 million dollars to currently for the top 100 tax payers, actually top 15, to $ 247-million dollars; that's $ 800-millioon dollars over two years. We all could use that money for our social services, for helping out people in the union, for all sorts for helping out municipalities. It's gone. I don't know if we can get that back, but we do get it back with a bipartisan budget. So, it would be easy for us to sit back and say it's yours, you have the majority with the Lieutenant Governor. Go ahead and we're not going to do anything. But that is not the right thing to do for the state of Connecticut. That's why we've been pushing so hard. That's why we've been an open book, because it is important to do this thing collectively as a group and it's not about corporations versus unions or any of that. It's about doing the right thing for social service, the right thing for municipality, the right thing to move the state forward, a bubbling economy floats all the things we care about on both sides of the aisle.
So, politically, we should've stayed back but that isn't want we wanted to do. We made a conscious effort as a caucus that we are going to come out and present our case and be an open book and take the criticism for budgets where we did have to cut some things and listen to people get mad at us. We recognized that was a risk, but it was worth it because we wanted a budget out there so that people can look at it and say they're not floating ideas, they have a line by line, and you can disagree with the line by line, then let's have a conversation.
So, Madam President, I know I believe I can understand the way the votes going to go today. I understand that. I believe we've closed off an avenue that's going to come back and bite many of us. Those who vote for this cannot cower when a budget comes forward on that side of the aisle that has tax increases. Those who vote for this cannot cower when the municipalities have been cut. Those who vote for this cannot cower when social services have been cut because your vote today is no different than a vote on a budget. And if you think you could split that vote and say I voted for the SEBAC deal but on this budget I'm going to stand firm. That's gone. Understand what you're doing when you vote today. Understand the path that you're going down. Madam President, I'll be voting no.
Will you remark further? Senator Looney, good evening, sir.
SENATOR LOONEY (11TH):
Good evening, Madam President, and thank you. I rise proudly to support this resolution because I think it represents good policy for the state of Connecticut and is a significant contribution to our budget problem. It does, in fact, solve 30% of our projected biennial deficit and one of the main benefits of it, I think, Madam President, is that it is a negotiated agreement. And, I think that is critically important for us and that has been, I think, one of the things that's been ignored in some of the Republican comments on this. This respects collective bargaining and the right of the union leadership to negotiate on behalf of their members. They were asked by the administration to reopen their contract. They did so. They bargained in good faith. There were tough negotiations and they have, in negotiations, you have a right to ask for something when you are conceding something.
That is our process. To do anything other than that, to unilaterally impose by statutes something that is not agreed to, moves us away from the tradition of respect for collective bargaining that this state has had and moves us in the direction of states like Wisconsin and others who have undermined that or done away with it completely. So, obviously, to Senator Fasano's credit, I think the Republican Senate budget is much better than the Republican House budget, is less of a direct assault on collective bargaining to the same degree, but it has the same problems that is looking to impose by statute something that has not been accepted by the bargaining unit. And, I think we need to respect that process. It is something that defines us in Connecticut, our respect for workers, our respect for the right of workers to have a say in the conditions under which they work. And, I think that is one of the major benefits of this agreement to begin with. Also, Madam President, in terms of the Attorney General's opinion the Attorney General's opinion really is a cautionary note about going down a path that in effect seeks to override collective bargaining. And, in the first paragraph of that agreement, it points out that we conclude the principles and cautions expressed in Opinion 8911 where this issue was raised an opinion back then continued to apply.
And in a footnote it said in answering your questions in the letter from Speaker Aresimowicz and the majority leader, Ritter, said we have not evaluated or endeavored to assess the constitutionality of any particular budget proposal but rather to articulate for you the legal standards and constitutional risks, constitutional risks that apply generally to the legislative enactments that alter provisions of existing collective bargaining agreements and we have not, for instance, undertaken an analysis of whether the state unilaterally may alter wages or benefits governed by expired collective bargaining agreement. So, that statement from the Attorney General is nothing but a cautionary note about proceeding in the direction that our Republican colleagues suggest that we proceed. So, I believe that this agreement is indeed a significant contribution to our budget dilemma. It does save us $ 1. 5-billion over the biennium, more than $ 10-billion over the next decade, more than $ 20-billion over the next 20 years and it does provide for fiscal 17 and 18 a hard 0% wage freeze with no steps or wage increases and three furlough days that cost about $ 31-million dollars in fiscal 18 a delay of a longevity payment, sig savings there. Also, fiscal 19 a hard 0% wage freeze, so in fact it is three years of 0. Fiscal 17, as we remember the contracts expired back in 16, so we're still being negotiated, so we're accounting for fiscal 17, 18, and 19 with a 0% wage freeze paired with the one-time payment in lieu of an increase. So, no wage increases or steps of any kind in addition to the hard 0% and then we have modest increases in the last two years of the agreement in fiscal 20 and 21.
So, this does represent a historic wage concession. The agreement includes those three zeros and it is the first time in SEBAC history that more than two consecutive zeroes have been negotiated. That is, in itself, a very significant concession. So, because you take into account those three zeroes there's an average increase of less than 1. 5% per year over the five years, even when you factor in the raises in the last two years. So, there will also be an immediate impact on the cost of pensions. The agreement, as we said, contains no wage increases and actuarial evaluation of the service plan assumes wages increases of approximately 3. 5% per year, which are not in the first three years of this agreement. So, the three-year freeze will permanently reduce the projected pensionable salary and projected pension liability of future retirees by more than 10%. That is long-term reform. Also, in terms of pension contributions, all state employees will pay more into their pension. Pension contributions will increase by 2% of pay, and what that means is currently Tier 1 employees pay 2% and it's going up to 3. 5% fiscal 18, 4% in fiscal 20. Tier 2 employees pay nothing currently but will pay 1. 5% and then 2%. 2A employees pay 2% and they'll go to 3. 5% and 4% and Tier 3 employees will go also from 2% to 3. 5% and 4%. In effect for Tier 1 and Tier 2A and Tier 3 employees there is, in fact, a doubling of their pension contributions over in those two increments. For Tier 2 employees creates a payment where none at all existed before. So, that 1. 5% going into effect in the beginning of this fiscal year and 0. 5% in July of 2019, these are very significant changes.
Also, one of the reasons why we need to push to get this negotiation agreed to by the General Assembly is the creation of Tier 4, a new Tier 4, a hybrid pension and defined contribution retirement plan and again each of the tiers created since Tier 1 has been significantly less generous than the one before and Tier 4 is of course less generous than all of its predecessors. It will be the defined benefit portion as 1. 3% multiplier for calculating the defined benefit portion will require a 5% employee contribution but up to 7% if the return on the fund is less than 6. 9%. And for the defined contribution part, the state will match 1% of pay to employee-owned defined contribution retirement account and employees have to contribute at least 1%.
This is a radical departure from the kind of pension plans that all previous state employees have had. Again, to point out we've talked about in terms of the workforce. We have seen a declining state workforce for a number of years. As Senator Duff has pointed out the private sector jobs have generally been recovered in terms of numbers since 2007. It is in government employment that there has been a significant reduction and that is true of us. Our overall employment is about 8,000 workers less than it was in 2011 when we had the first SEBAC deal and it's about 10,000 overall if you go back a full decade. Again, the pensions and retiree COLA reforms are included in this agreement. A COLA deferment for retirees after 2022 and significant increase in the time before the first COLA would be distributed to 30 months after retirement instead of 9 to 15 months, which is current. Also, those retiring after July 1, 2022 will forgo approximately 18 months of COLA increases after they retire. And the new COLA formula after 2022 is that future COLAs will no longer be set by the current formula with a minimum of 2% per year and instead it'll match the social security COLA index that can only exceed 2%if inflation exceeds 3. 33%. That is a significant concession that's contained here.
Again, the pension impact is far-reaching in terms of looking out into the future and the impact of it will be extraordinary. As part of the December 2016 agreement with SEBAC the state's share of pension costs stabilize that an average of about $ 2. 2 billion annually but peaking at about 2. 5 billion but under this agreement the state share could decline by $ 400-500 million per year with a new peak of about $ 2. 2 billion instead of $ 2. 5 and an average contribution of about 1. 8. This is significant long-term reform.
Again, in terms of health insurance redesigned, a new tired network based on quality and cost cut criteria. Anthem's SmartShopper Program to incentivize employees to seek high-quality, low-cost care resulting in significant medical savings over time. A little more about that for members who may not be aware of that means it includes the SmartShopper Program as a program that offers patient's rebates for choosing low-cost, high-quality providers and under the section patient's are incentivized to choose those providers over others and the state will benefit not only from the immediate cost savings by paying less in certain cases for procedures but also from reducing costs when fewer employees suffer from issues such as hospital-acquired infection.
So, for example, if there is one knee replacement site for instance say hospital A where the surgical charges are maybe $ 8,000 dollars less than another site, and the hospital also has lower infection and readmission rates, the projected average cost difference might be up to $ 12,000 dollars. So, under this SmartShopper Program an individual would be issued a $ 450-dollar shopping card to entice that individual to choose hospital A. And this is something that is entirely consistent with the bipartisan healthcare reform consumer oriented reform that our state is undertaken in the last few years and it should increase transparency and greater competition for quality among healthcare providers.
So, these are all very significant elements of this agreement that will provide long-term benefits, long-term savings, and also long-term better government for us as well. Again, not subject to any threat of litigation; all negotiated and agreed to. Again, in terms of co-pays, a very, very significant increase in co-pays for emergency room use going up to 700% from $ 35 to $ 250, an extraordinary increase. Again, prescription drug co-pays increase. Many have talked about the very significant benefit that state employees have over other employees in terms of the co-pays on their prescriptions. Now, under the agreement, generic co-pays will double from $ 5 to $ 10 and non-generic drugs the increase will be from $ 25 to $ 40 dollars, a significant move in terms of co-pays. Also, premium cost sharing that new employees will start at 15% immediately and existing employees will have a 1% increase each year for three years increasing the average contribution up to about 15% that the new employees will pay from the beginning. Again, the Medicare Advantage Plan and moving all current retirees over age 65 to that plan also increasing the retiree cost share under Medicare Part B and retirees' healthcare contributions for new retirees will also increase both for retirements after October 1, 2017, and again for retirements after June 30, 2022.
So, these are all very significant changes, very significant concessions. And, in fact, also the provision for protection against layoffs of course does not apply to new employees hired after the conclusion of the agreement they will not be protected by this agreement. Also, the agreement contemplates cuts due to restructuring. Someone would not be protected in that regard or someone who refuses a transfer would not be protected either. These are all very significant concessions.
So, again, Madam President, I think that this is a very hopeful contribution to our overall budget problem. It resolves 30% of it going forward in a way that reflects the willingness of our state workers to contribute to the solution to this problem that they know is major and severe. A negotiated agreement is always better than one which is forced down people's throats and creates the possibility of litigation as well as lingering resentment and a threat to state employee morale. So, I would like to thank first of all our majority leader Senator Duff for all of his work in this, Senator Osten for all of her wonderful work on this, as well as the budget and Senator Fonfara for his contributions in coming up with a number of creative ideas; a couple of which have been mentioned already. So, we have again this idea of continuing to move forward and find additional ways to build in additional savings into our future budgets. And, these will all certainly be part of the budget negotiations going forward and they need to be because we are looking at a lot of continuing problems that we know that will not end with this biennium but we are changing the arc on these provisions to recognize that we are moving in a way that provides us with a sense of where we need to be heading toward to head off those deficits that might otherwise threaten us. We are moving in a productive way here but in a way that reflects the consensus rather than an arbitrary effort by the General Assembly to assert its will and to undermine the spirt of collective bargaining, which has served us well in the state for many decades.
Some of the things that were mentioned earlier by speakers previously wanted to commend Senator Fonfara for the provision of a volatility cap for the capital gains portion of the income tax, which of course has been our major problem in recent years in terms of raising the income tax and not seeing the benefits from that we had anticipated. So, capping the amount of expected revenue from that portion of the income tax and putting any balance above that into either debt retirement, pensions, or the budget reserve fund is good public policy providing a protection against that kind of spiking behavior in that volatile portion of our income tax. Again, the idea of creating an expenditure cap based upon consensus revenue is done already in a few other states and it means that you don't budget the last penny of consensus revenue but hold back some portion as a further cushion against downfalls in the revenue.
Other things that have been talked about, obviously there are things to be considered after the expiration of SEBAC in 2027. Several Senators in prior comments mentioned the issue of whether or not after 2027 there'll have to be a hard look at whether the state can continue to afford any COLAs for pensions negotiated in SEBAC but set by statute. Given our financial situation it may not be possible to provide for COLAs beyond that point. Also, after the expiration of SEBAC, looking at advocating the budget negotiations that overtime not be included in pension calculations, except for mandatory overtime required for public health or safety purposes. And also, as mentioned by Senator Doyle that no future SEBAC agreement be long term. Perhaps a term as short as four years to prevent the idea of locked into something where circumstances might change. Again, other issues in terms of the issue of impairment of contract.
What does that actually mean? The Attorney General's opinion also grapples with that in terms of distinguishing a substantial impairment of contract from a less severe impairment of contract. We need to grapple with and come to a better understanding and definition of that issue as well as the term of ability to pay. What does that actually mean in practice what can or cannot be included. There are some cases that indicate that the state's capacity to tax means it always has the ability to pay, but there are other cases that indicate that is not the -- you have to take an overall look at the state's economy to factor in what it means to have the ability to pay. And, I think that issue needs to be resolved, as well.
Again, in terms of teacher retirement, we do need to have a Teacher's Retirement Viability Commission to ensure its sustainability of the teacher's retirement fund and a Pension Legacy Debt Commission to develop a liability asset management plan. And in this we'd also have to include a way to look at the future of the UConn Health Center and find a way to make sure that is financially stable going forward. Voting on all union contracts, that is something that has been discussed in many ways and ought to be part of our process going forward and establishing a cap on state bonding as we all know that we do need to have discipline in that area of our budget as well. And also, a mechanism for the review and certification of the savings to be achieved from this SEBAC agreement.
So, all of these are issues that will continue to be raised and advocated in the budget negotiations that go on. But, today, Madam President, I believe for the good of the state and the good of our entire process here we need to approve this agreement as one of the fundamental pillars of our budget going forward. We still obviously have a $ 3. 5-billion-dollar problem to deal with and that is, of course, still remaining and that will be the thorny issue that will be going forward. But, at least, today we will have adopted a substantial pillar to get us toward that budget and it will be a substantial pillar that is not subject to litigation, not subject to constitutional challenge in any way, not subject to the vagaries of what might happen when the issue gets thrown into the courts, and is not resolved in through negotiation and by consensus here in the General Assembly. So, again, Madam President I want to thank everyone who has worked so hard toward this result, and I hope that the vote today will allow us to go forward in a productive way to get to the final resolution that we all want, which is a balanced, sustainable budget for the next biennium with changes incorporated that will also help us in the years beyond. So, Madam President, thank you very much. Thank you for your leadership in this area as well and your help and advice. So, I would urge the members strongly to vote for this agreement today as a constructive pillar in the final resolution of the problem that we face. Thank you, Madam President.
Thank you. Will you remark further? Will you remark further? If not, Mr. Clerk will call for a roll call vote and the machine will be opened.
Immediate roll call has been ordered in the Senate. Immediate roll call has been ordered in the Senate.
Have all members have voted? Have all members voted? If all members have voted the machine will be closed. Mr. Clerk. No don't call a tally yet. And I have to just say something that this time. I believe that the negotiations were the toughest one I've ever seen from either side being elected in the legislative branch or in the executive branch and the decisions that were made were very difficult for everybody. I want to thank everybody that did the negotiations. I do respect all of the Republican's comments today, but I do hope that we will go further, and I do think that this is the right step in the right direction. So, I will be voting yea.
At this time, I close. Mr. Clerk.
Senate Resolution Number 51.
Total number voting 36
Necessary for Adoption 19
Those voting Yea 19
Those voting Nay 18
Those absent and not voting 0
[gavel] The Resolution is adopted. Senator Duff. Senator Duff please. Ladies and gentlemen, please, thank you very much. Please Senator Duff.
SENATOR DUFF (25TH):
Thank you, Madam President. That concludes our business for today. I would like to yield to any points of personal privilege or announcements please?
Are there any points of personal privilege or announcements? Seeing none, Senator Duff.
SENATOR DUFF (25TH):
Thank you, Madam President. We do have a birthday in the chamber today. I can't say who it is, but it's somebody many of us know and adore. Maybe holding a certain coffee mug or something like that but anyway I can't say who it is, but wish her a happy birthday if you see her.
SENATOR DUFF (25TH):
Thank you, Madam President. And with that I move that we adjourn subject to the call of the chair.
So ordered, sir.
On motion of Senator Duff of the 25th District, the Senate adjourned at 7: 16 p. m. subject to the Call of the Chair.