State labor deal cuts wages
Toolbox
By Peter Hirschfeld Vermont Press Bureau - Published: December 4, 2009
MONTPELIER — In what Gov. James Douglas called a "critical step" toward resolving the state's budget woes, the administration Thursday announced a two-year labor agreement with the state's workers that will cut union salaries by 3 percent.
In addition to pay cuts, the tentative settlement eliminates pay raises and annual cost-of-living adjustments in a deal that will result in about $2 million in general-fund savings in fiscal year 2011.
Douglas said the agreement should set a new precedent for all public-sector salaries as school districts and municipal governments look to shave costs from their operating budgets in difficult economic times.
"In this economy, as thousands of Vermonters are unemployed and tens of thousands more have seen their pay, hours and benefits cut, and as our state faces massive budget shortfalls in the coming years, it is appropriate that public employees share in the sacrifice," Douglas said in a statement. "This contract is a critical step towards bringing state spending in line with declining revenues."
Jes Kraus, head of the Vermont State Employees Association (VSEA), called the tentative deal a difficult but necessary concession that acknowledges the scope of the state's fiscal problems. More than 6,000 state workers in the three bargaining units affected by the contract still have to vote to accept the deal before it will go into effect.
"It's a difficult pill to swallow," Kraus said. "But ultimately we hope that members realize this isn't a factor of what they deserve, but rather a factor of an economic crisis the likes of which we have not seen in our generation."
Secretary of Administration Neale Lunderville said the administration had sought even more significant payroll savings – according to a fact-finder's report, administration officials wanted a 7-percent pay cut.
With both remaining at loggerheads after prolonged contract negotiations that began in February, the union and administration agreed to bring a mutually selected fact-finder in to help mediate a deal.
The settlement is based on the work of that expert, who took testimony not only on the dispute between the union and the administration, but also on the economic conditions facing the state and how wages earned by VSEA members compare to others.
The report by Ira Lobel underscores not only how unusual the fiscal difficulties facing the state are, but also how uncommon it is to have an agreement by a union to cut wages.
"All of the witnesses in this proceeding, including the Association's economist, were pessimistic about the economy and its future," Lobel wrote.
"These are unique times, to say the least. In my 35-plus years working in the field of labor relations, I can count on one hand the number of times that I have seen a union propose a wage freeze," Lobel wrote in the settlement report. "I can remember only one situation in which a union proposed a reduction in salaries."
Lobel had some criticism of both sides in his analysis.
The union's suggestion of gaining savings through furloughs, unpaid days off, was considered unworkable by Lobel.
"I am convinced that furloughs are not a viable option. Furloughs, while saving the state immediate cash … have some basic problems," Lobel wrote. Productivity would be lost and restoration of furlough days later is expensive, he noted.
But the administration did not completely get a pass, either, with Lobel pointing out that state criticism that VSEA salaries are high compared to salaries in the private sector is disingenuous, when it springs from contracts negotiated in the past, Lobel wrote.
"Finally, despite the state's protestations that salaries and benefits are excessive, the reality is that these were agreed to by the VSEA and the state over a period of years," Lobel concluded.
Lunderville said the payroll cuts are more significant than the net general fund savings indicate. Without the cuts, Lunderville said, labor costs could have risen as much as $15 million in the next fiscal year. Anticipated increases in health-insurance benefits, however, mean the net impact will be only about $2 million.
While pay cuts for state workers represent an important measure on their own merits, Lunderville said the agreement also sends an important message to public-sector employees around the state, particularly school teachers.
"This agreement today does provide a blueprint for school districts and municipalities to follow as they try to find savings and keep taxes low," Lunderville said. "This is a new standard for public employees, and one we hope folks around the state will look to."
Darren Allen, spokesman for the Vermont-NEA, rejected Lunderville's assessment and said the administration is trying to using the bad economy as a "weapon" against public employees.
"Gov. Douglas has made it very clear he's after the livelihoods of every member of the public sector," Allen said. "We believe that using an economic downturn as a weapon against people who provide essential public services is a very dangerous step to take and a real threat to Vermont's quality of life."
The contract agreement could mark the end of a long-running labor dispute between the union and administration that has involved more than 100 layoffs and even more empty positions not being filled.
Staff writer Louis Porter contributed to this story
71