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A Double-Whammy: Lamont’s 33% Wage Hike for State Employees Means $1.1 Billion In Higher Annual Payroll Cost AND $9 Billion In Extra Pension Liabilities – Talking with Lee Elci on News Now, 94.9FM


Talking with Lee Elci on News Now, 94.9FM

Lee Elci: Sitting in that seat of honor each and every week we bring him on the same bad time. And you can find all of this video on his website. The-Red-Line.com. It’s our good pal and national and local columnist, Red Jahncke. Red. Good morning. How are you, sir?

Red Jahncke: Hey? Good morning, Lee. How are you?

Lee Elci: We’re doing Okay. So up on your website, is your latest piece. Lamont is paying state employees a billion more than Malloy, and we talked a little bit about this last week, but you want to jump back into it again.

Red Jahncke: I want to jump right back in. I will repeat my mantra, which is Lamont has awarded state employees a 33% wage increase. That means some employee making $100,000 when he took office at his first inaugural is now making $133,000. That is unfair and unsustainable. Those wages are far in excess of what’s being paid in the private sector. It is unsustainable for the State. This state is not growing. Real economic growth is less than 1%. You can’t sustain that kind of pay for State employees with the anemic economy that we have.

There’s this debate in Hartford, right? The nonprofits are beating the drum that they are $450 million dollars behind, because their funding has been squeezed over the last decade, and they’ve lost ground. Workers in the nonprofits who provide many of the social services that the State extends to the needy are vastly underpaid compared to State employees who also deliver the same services. So, they want that $450 million put in the budget this year so that they can catch up. What they don’t understand is: in going after the fiscal guardrails, they’re going after the wrong problem.

Lee Elci: All right. Well, what’s the right problem?

Red Jahncke: Well, the problem is when you increase wages by 33%, wage costs skyrocket. When Lamont took office, the aggregate pay for unionized State employees was $3.4 billion. This fiscal year, it’s $4.5 billion. The cost today is $1.1 billion dollars more. That’s where the nonprofits should be banging the drum, they should be calling for a state employee wage freeze. It’s not only current cost but when you increase wages, you increase the base off of which pension benefits are calculated. The result of the 33% wage increase that Lamont has lavished on state employees is a $9 billion dollar increase in estimated future pension costs. It’s a double whammy.

The nonprofits and progressives are going after the wrong target. The fiscal guardrails are not the problem. The problem is lavish wages that Lamont has dished to state employees. It’s unconscionable. He holds himself out as a fiscal conservative. He is anything but.

Lee Elci: So, in the negotiations coming up, which again, that’s right around the corner. Do you think he’ll backpedal a little bit, I mean, I’m curious what your thoughts are on that.

Red Jahncke: The rumor is that he’s trying to strong-arm Democrats in the General Assembly to approve a 2 ½ percent wage increase on the theory that 2 ½ percent will sound reasonable.

Lee Elci: Right.

Red Jahncke: And the public will not be aware that the 2 ½ percent on top of the 33% in 2 years will calculate to a cumulative 40% increase in state wages under Ned Lamont. It is unsustainable. We need a wage freeze, no increase whatsoever. Republicans are calling for just that. Senate leader, Stephen Harding, has announced that he is going to push for a  2-year wage freeze.

Lee Elci: Right. We’re talking with Red Jahncke. You can find him at The-Red-Line.com. Columns are up there. He has been on top of this topic for the better part of 2 or 3 months. In the past, we’ve talked about that fiscal cliff eventually, that will, you know, stand before the State of Connecticut, and depending upon what year, you’re a legislator, you have to deal with some of that stuff. Is that fiscal cliff coming this go-round, next go-round, Red, in your mind? Give me a sort of a timeframe when you think that the blank is going to hit the fan.

Red Jahncke: Well, if I had a good answer for that, I’d be a Titanically rich man. I would be investing in the stock market, knowing where it’s going. I can’t give you any answer. I can set the conditions. If we have a sell-off in the stock market that will hasten the reckoning in this State. This State is, of all 50 States, perhaps the most dependent upon stock market gains in terms of income tax revenue, which is the second-largest source of revenue for the State.

The first is the sales tax. If we have a recession and a stock market reversal, then all bets are off, because you lose all the income tax revenue from the stock market that the Progressives are complaining about going into the pension funds. If we have a recession, we’ll have to draw down the Rainy Day fund to meet unemployment claims. The sales tax will swoon, because no one’s going to be out buying, if they’ve lost their jobs or are fearful of losing their jobs. This state will be in a place of real hurt, if there’s a stock market reversal and/or a recession.

Lee Elci: Red Jahncke. There you go, Red. Anything else we leave on the table today?

Red Jahncke: Well, yeah, I think I need to give myself a nickname.

Lee Elci: Okay.

Red Jahncke: Mr. Broken Record.

Lee Elci: Mr. 33. I want to call.

Red Jahncke: It’s a 33%.

Lee Elci: There it is!

Red Jahncke: Either one. Mr. 33%, or Mr. Broken Record.

Lee Elci: Well, I got to come up with something. 33 records, you know. We used to play those on the record player. So, something with that. You know. All right, have a good week. We’ll talk about this and some other stuff next week.

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