From listening to the outraged talk of Republican lawmakers, you’d think that Gov. Chris Gregoire and Democratic legislative leaders could readily close the $2.6 billion budget deficit without new revenues if they’d just eliminate scheduled pay hikes for unionized state employees.
“Those things should be rescinded,” Sen. Curtis King recently told the Yakima Herald-Republic. It’s the only way to close the budget gap without tax increases, Rep. Charles Ross told the newspaper, which obligingly editorialized in favor of cutting state employee compensation.
“What does it say to the average Washingtonian who is fearful of becoming unemployed that his or her taxes are going to pay 5 percent annual salary increases for state workers?” wrote Sen. Joseph Zarelli, ranking Republican on the Senate Ways & Means Committee.
That argument made limited sense when the state Office of Financial Management roughly calculated last month that step-pay increases for about 21,000 state workers would cost $83 million in fiscal year 2011. The cost to the state general fund, where the deficit problem lies, was estimated at $38 million.
But now OFM has come up with what it says is a more precise cost estimate for step-pay increases, which hasn’t been previously reported. Are you ready for this? Those hikes will cost $9.5 million out of the total budget, and just $6.6 million out of the general fund. That $6.6 million represents a whopping 0.2 percent of the projected $2.6 billion general fund deficit for 2011.
“There’s not a whole lot of money there,” said Glenn Kuper, spokesman for OFM.
That didn’t change the position of Sen. Zarelli’s office. “Regardless of $6.6 million or $600 million, we’re talking principle here,” Zarelli spokesman Eric Campbell said Wednesday. “A lot of people aren’t getting pay raises, yet state employees are getting them.”
The step-pay increases are given for length of service, and frequently go to employees who are hired at a lower step and are bumped up as they gain experience. Non-management workers generally can receive two, 2.5 percent increases in a year until they reach the top step.
The practice pre-dated state employee collective bargaining and was included in the latest two-year contract, signed in July. That contract contained no cost-of-living increases for the state’s 110,000 employees.
Kuper said it’s tricky to calculate the total cost of step-pay increases because state agencies pay them out of their budget allocation; there’s no line item for them in the state budget. His office refined its rough December estimate by removing all non-classified employees (mostly non-union), whose pay was frozen by the legislature. OFM also prorated the increases throughout the year, and factored in the reported 7 percent decline in employee costs for state agencies.
Sen. Zarelli and other Republicans have demanded that Gregoire and the Democratic-controlled legislature invoke a state law allowing them to renegotiate union contracts if there’s a severe decrease in revenue. About 25 unions would be involved; they’ve expressed unwillingness to return to the bargaining table.
Zarelli also insists the state renegotiate health benefits. He argues the state’s agreement to pay 88 percent of employee premiums is out-of-line with the private sector, where employers often pay 80 percent. He suggests that the state could save another $140 million by reducing its premium share.
But those potential savings also appear overstated. Actually, Kuper said, even if the state did renegotiate its premium share down to 80 percent, the total cost savings would be $48 million. That amount probably would not all accrue to the general fund, depending on the legislature’s decision how to book the savings.
Another factor is the legislature already raised employee out-of-pocket health spending significantly for the 2009-2011 biennium. It appropriated just a 3 percent increase for health costs. Since these costs typically rise 7 to 9 percent a year, Kuper said, the difference was passed along to employees. Now Gregoire, in her supplemental budget released this week, has proposed further hikes in employee contributions for co-payments, deductibles, and other point-of-service costs. Over the two years, Kuper said, state workers will pay $60 million more.
“Even though we haven’t changed the 88-12 split, employees are paying more to get health care,” Kuper said. Asked about that, Campbell said Sen. Zarelli hadn’t yet had time to digest Gregoire’s supplemental budget.
So, should the state go through the volatile process of declaring a budget emergency and reopening union contract talks to claw back $6.6 million in step-pay increases and the $48 million or so in health premium contributions? “It’s not my call,” Campbell said.
Given their staunch opposition to new revenues and taxes, will the Republicans now offer their own detailed proposal on how to close the budget deficit, including more realistic numbers on how much their various measures would save?
“Republicans are prepared to work with the governor to buy back the proposed service cuts without needing new revenues,” Campbell said. “I don’t know if they’re going to prepare a dollars-and-cents alternative.”
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