State Sen. Joe Zarelli disagrees, but Gov. Chris Gregoire says it’s wrong to ask state employees or teachers to sacrifice more than they already are to balance the state government budget next year.
The Democratic governor is set to put out her supplemental budget today to bridge the remainder of a $1.1 billion budget deficit through June, and no further demands from state employees are expected. She expects pay reductions and higher health payments by workers in her two-year budget that starts July 1.
“Candidly, enough is enough,” Gregoire said in a news conference this week. “I would ask you to compare the sacrifice of state employees to any other public sector’s people.”
She pointed to agreements her negotiators reached with three labor unions earlier in the week that require pay reductions of about 3 percent beginning July 1 for the vast majority of general government workers. The cuts would last two years.
Under the agreements, workers in effect are being furloughed. They’ll see their nominal pay cut by 3 percent every two weeks, but they’ll also get time off in compensation – about 5.2 hours a month, or eight days a year, for each budget year through June 2013.
That alone will save about $330 million in state payroll costs, more than half of it in the state’s general fund. And, Gregoire and union leaders say, it spares 3,700 jobs from elimination.
But Zarelli, a Ridgefield Republican, said today he thinks Gregoire did not look far enough into the future to lock in lower costs for running government beyond 2013. He thinks the state should be lowering its base payroll and resetting it at a permanently lower level.
Zarelli would have lowered workers’ pay by perhaps 2.5 percent across the board in the two-year contract.
“They’ve permanently given up nothing on the costs of labor, and the governor found a way in that discussion to look like we got some savings,” Zarelli said, adding that the pay-cut plan is confusing. “I think you’re going to end up going back to the agencies and work it out with their employees how to get these savings.”
The labor agreements reached this week involved about 48,000 workers with the Washington Federation of State Employees, Service Employees International Union 1199NW and the Teamsters. Gregoire’s bargaining team is expected to seek the same reductions for more than 20 other smaller unions for the same two-year period, and the terms of those agreements are to be applied to most state employees.
Exempted from the pay cuts are those earning less than $30,000 a year, statewide elected officials, and workers in unions that have contracts that already locked in their pay for the next budget cycle. Statewide officials’ pay is set by a citizens commission.Gregoire has also reached agreement on health care with about two dozen unions. It raises workers’ share of premiums to 15 percent, up from 12 percent, and lets the state keep a lid on its contribution of $850 per worker on average for health, disability, life and other insurance coverage.
Gregoire sees that as another hardship for public-sector workers and said employees will see a $61-per-month increase in premiums in 2012 and 2013.
But Gregoire’s health care agreement with labor requires the state to tap potentially $100 million in Public Employees Benefits Board reserve accounts that Zarelli expects taxpayers to have to replenish some day in the future.
“At this point, I’m not sure anybody is sure what we have” in real savings, he said.
Gregoire’s budget director, Marty Brown, said similar pay-cut offers will be made to other unions, including higher education. “We’re going to negotiate union by union and probably workplace by workplace,” Brown said, suggesting the same 3 percent cut will be on the table.
Gregoire said state workers have sacrificed in other ways: They went without cost-of-living pay raises since 2008. Their health care costs are up this year and next and will go up again in 2012 and 2013. And many also are adjusting to 5 percent pay cuts due to furloughs this year or are working with fewer staff members in work units.
State employees also are seeing their pension contributions in the state’s Plan 2 and Plan 3 systems go up from 3.9 percent of salary today to about 4.59 percent of salary for the two-year period starting July 1, according to the governor’s Office of Financial Management.
“For an average employee, that’s about $30” per month, OFM spokesman Glenn Kuper said. “It’s going up from about $181 on average to about $213 on average” after July 1.
“The other thing we have to be mindful of is I don’t know how we expect them to work their hearts out if I break their backs,” Gregoire said. “There comes a point when they are so demoralized they can’t do the job.”
Brad Shannon: firstname.lastname@example.org/politicsblog