We’ll Know Jodi Is Serious When …

December 18, 2008

So far, it’s been easy.

Governor M. Jodi Rell has taken the least controversial steps possible to address Connecticut’s ocean of red ink. A $157 million settlement with the feds and unilateral budget cuts were her first moves. Then came winning legislative approval of deeper expenditure reductions and amnesty for tax delinquents. Rell has called for another deficit-mitigation session early in the new year, just prior to the opening of the regular session. More cuts are on the table, as is the seizure of $25 million worth of unclaimed deposits of bottles and cans.

Next up will be the inevitable drawing-down of the state’s reserve fund, which now tops $1.3 billion. (In 2002, state politicians emptied the fund in a single withdrawal.)

Then the real work begins.

Unless the economy experiences a dramatic turnaround, it will not be possible for Rell to balance the books without broad, sweeping changes to Connecticut’s fiscal policies. There’s debt as far as the eye can see -- in addition to this fiscal year’s deficit, the shortfalls for 2010, 2011, and 2012 add up to over $7 billion.

The governor claims that “no program, no constituency, no project can be held sacred.” That’s a stirring sound bite, but Rell’s record shows that making government less costly is not a task she relishes.

We’ll know Rell is serious about right-sizing Connecticut’s expenditures when she tackles two monster cost drivers: personnel and taxpayer-subsidized healthcare.

The Nutmeg State has perhaps the best-paid bureaucrats in the nation. A Bureau of Labor Statistics analysis released in March revealed that average state- and local-government pay is nearly $10 an hour more than it is for private employment. Service employees enjoy the biggest edge -- $21.68 an hour, vs. $11.06 in the real world. The high wages government managers and professionals “give up” by choosing careers in “public service”? They’re nonexistent -- $36.96 vs. $33.89. Using the latest data from the U.S. Census Bureau, the state’s annual payroll cost is $3.7 billion, comprising 20 percent of the budget.

Benefits are more generous than wages. Healthcare coverage is wildly generous, and pensions are defined-benefit, not defined-contribution. In total, the cost of health and retirement benefits for current and former employees drains another $1.9 billion from the treasury.

So what’s the problem? Simply tell state employees that due to economic realities, they’re taking a 10 percent cut in pay, being shifted to 401(k) plans, and will need to start making at least a 25 percent contribution to their healthcare premiums.

Er ... it doesn’t work that way.

State bureaucrats are unionized -- a privilege bestowed on them by lawmakers and Governor Ella Grasso in 1975 -- and thus, their pay and benefits are secured by legally binding contracts. The contracts can’t be changed by management when the economy stumbles. They must be “renegotiated.” The only alternative is layoffs, and forced dues give union bosses million-dollar PR warchests to demonize a governor who dares to terminate a “brother.” (Ask John Rowland.)

At least Rell has been AWOL on the issue of fairness in public/private compensation. When it comes to the state’s socialized healthcare complex, she’s consistently sided against fiscal prudence. Like any liberal, the governor believes government “compassion” is getting people on the dole, not off. Her budget office boasts of “substantial investments in health care,” including “the implementation of the Charter Oak Health Plan, eligibility expansions for the HUSKY managed care program, and increased reimbursement for Medicaid providers.” Medicaid costs alone are now $3.7 billion, a figure that is sure to rise as more citizens seek subsidized healthcare due to falling economic fortunes. (Only half of Connecticut’s Medicaid costs are reimbursed by the federal government.)

Several governors have launched attempts to harness the power of the marketplace to make Medicaid in their states less costly. Rell isn’t one of them. Even more ambitious ideas for reforms are regularly churned out by think tanks. Connecticut is a ripe environment for many of these proposals, if its governor would be bold enough to embrace them.

There are dozens (maybe hundreds) of budget items that deserve scrutiny as Connecticut confronts its multi-year fiscal crisis. Runaway bonding, failed corporate-welfare programs, unaccountable subsidies to municipalities, and a costly and inefficient university system all merit attention. But personnel costs and taxpayer-subsidized healthcare need to be addressed, yesterday.

An administration flack recently boasted of Rell’s willingness “to make the tough fiscal decisions.” We haven’t seen any evidence of that claim yet. When she confronts both public-employee unions and the socialized-healthcare lobby, we will.

D. Dowd Muska is a writer, commentator and lecturer. His website is www.dowdmuska.com.

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