The Red Line

Lee Elci: That's right, I forgot. Mr. 33 percent. I'll take care of that for you… your regular reminder that Connecticut state employees have received a 33% wage increase under Governor Lamont compared to a 23% increase for private sector workers. So how about a little more details for those of the listeners that are joining us for the first time?

Red Jahncke: I think the key here is the the misunderstanding and the dysfunction at Hartford, that surrounds this whole issue. So Governor Lamont, in his budget proposal issued in February, laid out all the evidence any would one would need to appreciate the calamitous impact of these wage increases and benefit increases for state employees.

So let me roll out a couple of a numbers. the Office of Fiscal Analysis,tumbled the numbers, and they came out with the following. The governor put $500 million in what's called the Reserve for Salary Adjustments. That is an account where money is put for future wage increases for state employees. And OFA also pulled the numbers together on the fringe benefit increase under the governor's budget. That is $740 million in his proposed budget. Together, that's $1.2 billion going to state employees.

Also in the governor's budget proposal is the required calculation of the constitutional spending cap. Only $2.1 billion of an increase in spending. So you have $1.2 billion going to state employees [out] of the $2.2 billion. Very little left over to spend on services for citizens.

Lee Elci: I'm doing okay. So I was going to start this, the ghost of Malloy, fiscal discipline, and a haunting legacy. So your columns, you've you know, you've contrasted that, Governor Lamont's lavish 33% wage hikes, again, with the former governors imposition of three wage freezes as a rare act of fiscal courage. Where where are we with that now?

Red Jahncke: If we went back in a time machine -- what is it, seven, eight, nine years now? The concept that you and I would be praising Dannel Malloy, an arch Democrat, would, would seem as if we were Rip Van Winkle coming back from 20 years sleep with no idea what was going on. But the fact is Malloy took the action that was required at the time. Lamont is ducking and dodging and bobbing and weaving and will not take responsibility. It's really quite amazing. The Democrats are in this incredible intraparty battle over what's getting squeezed out of the budget and what's not. Lamont is taking one item after another off budget, which is a violation not only of the fiscal guardrails, but it's a violation of good budgeting practice. I mean, what's the point of a budget if every time you want to spend more, you just go off budget and spend it off budget?

Lee Elci: You also mentioned that the pensions are ballooning nine billion dollars under Lamont.

Lee Elci: All right. Where did you want to start today?

Red Jahncke: With what I call the 12 point indictment of our governor. As you know, I've been writing about state employee compensation for over six months now. Calling for a two year wage freeze. All been going on, you might say, somewhat in a vacuum. Everybody knows that Lamont has been negotiating a new contract with the state employees. He has not released it yet. Since the contract has not been announced, there hasn't been a news event around which to query the governor about the 33% wage increase he's already given state employees over the six years that are in the books. There hasn't been any real focal point for this issue until last week, when he granted an interview to the CT Examiner. The Examiner asked him point blank “After a 33% wage increase, would you consider a wage freeze such as your predecessor, Democrat Daniel Malloy, imposed?” when confronted directly with the question, Lamont revealed himself to be completely unprepared and had no answer. He revealed his ignorance in what I have classed a 12 point indictment. State employee compensation is the largest cost in state operations. It's over ten billion dollars a year. How can anyone be ignorant in his position of the largest cost of operation?

Lee Elci: Your recent column discusses Governor Lamont’s quiet implementation of a hiring freeze on state employees. You describe this as a stealth move. Why is he doing this silently?

Red Jahncke: Well, I think he's been caught off guard. State employee compensation has skyrocketed, consuming a large portion of the budget and squeezing out other spending. The question becomes: What do you cut? Lamont is under significant pressure from progressives in his party, so he halted hiring within the state workforce for the remainder of March, April, May, and June to remain within the budget—at least temporarily. However, this is just a preview of a much larger impending problem.

Lee Elci: You have to admit, this seems like a small victory. You've been addressing the 33% wage increase over the last five or six years. This hiring freeze appears to be a win.

Red Jahncke: Yes. Labor costs are determined by two factors: the pay rate and the size of the workforce. We've criticized the state for both significantly increasing pay rates (a 33% raise) and simultaneously expanding the workforce. That's the classic double whammy. Over the past two years, the cost of the unionized workforce has risen by 18%. Many people are confused about fiscal guardrails, particularly the volatility cap. However, the key issue here isn't the fiscal guardrails themselves but rather the excessive compensation of state employees crowding out other spending.

Lee Elci: Lamont has a Yale background he often references. Still, he didn't seem to anticipate the combined impact of pay rates and workforce size on labor costs. What does this suggest about his fiscal acumen?

Lee Elci: All right, so I have a question for you. You were mentioned at the Yankee Institute for adding to the massive body of evidence of favoritism by Connecticut Democrats toward government employees and unions. Could you elaborate on some key pieces of evidence from that body that you found most compelling?

Red Jahncke: Well, I think what you're referring to is noteworthy. A couple of weeks ago, this issue of state employee compensation and how extraordinarily generous it is broke into the news cycle. I'm happy that last week, Hearst newspapers ran two editorials of their own suggesting that state employee compensation should be reviewed and a wage freeze considered.

To answer your specific question, this began back in the 1930s and '40s when Franklin Delano Roosevelt went on the record saying that unions had no place in government. The function of a union is to negotiate across the table from an employer, which works in the private sector but not in the public sector, where both sides are on the same side of the table.

Lee Elci: All right. Red Jahncke is with us, and we're chatting again. He's been a major driving force behind conversations about employee wages, Governor Lamont, and everything associated with that. So let me ask you this. One of the editorials in Hearst was about Governor Lamont’s decision to offer special treatment to employees affected by DOGE reductions. What's your take on this?

The Cost of State Employee Compensation

Lee Elci: What’s the simplest answer as to why Governor Lamont has rewarded state employees with six consecutive annual wage increases?

Red Jahncke: I think he doesn’t care. He sees it as a distant problem. If he even pays attention, he has this wonderful little mantra: “I have to pay our state employees these wages and benefits so I can hire the best and the brightest.” Well, does that mean the other 49 states are hiring only dim bulbs and deadbeats?

The real issue is that state employee compensation is by far the largest component of the budget—over $10 billion a year. You can have an enormous impact simply by holding the line on state employee pay. If you institute a two-year wage freeze, you free up money that the governor claims he doesn’t have.

This isn’t just an accounting problem—it’s a political one. The administration is making a deliberate choice to prioritize public-sector raises over fiscal responsibility.