Washington’s state employee unions are on the hot seat this week as Gov. Chris Gregoire searches for ways to keep the state from going off a budgetary cliff.
State negotiators reopened contract negotiations with some of their unions Tuesday and will resume talks with others today. Among issues on the table is the state’s proposal that state workers pick up a larger share of their health insurance benefits.
Under terms of their current contracts, most state employees pay 12 percent of their health care premiums; the state pays the remaining 88 percent. In August, Gregoire asked unions to increase their contribution to 26 percent over the next two years, enough to cover inflation-driven increases in health benefit costs.
Unions rebuffed the proposal. But now, in a deepening budget crisis, it’s back on the table.
That concession would be worth about $500 million to the state in the 2011-13 budget cycle.
The state faces a projected $5.7 billion deficit in a roughly $33 billion budget in 2011-13. It also faces an unexpected new $385 million shortfall in the current budget, which expires June 30.
“The financial situation for our state is significant and will continue to require all of us to work together,” Gregoire said in calling the unions back to the bargaining table Nov. 19.
State employee unions “need to be a part of the solution,” said Sen. Joe Zarelli, R-Ridgefield.
Zarelli is working closely with Gregoire to get a special legislative session scheduled this month to deal with the immediate budget crisis.
Union leaders say they’re being unfairly targeted. They note that they agreed to a two-year wage freeze beginning in 2009, accepted several unpaid furlough days, and also absorbed hefty increases in health insurance co-pays and deductibles at the beginning of 2010.
“We have taken significant cuts, over a billion dollars and counting,” said Tim Welch, spokesman for the 31,300-member Washington Federation of State Employees. “We’ve had pension fund money diverted, we’ve had pay cuts because of the furloughs, we’ve had layoffs, and our members have had increased workloads. We do feel a little miffed that we still get pressure from editorial writers and some politicians who kind of ignore everything that we have given up.”
Under the state’s proposed increase in employee contributions to health benefits, the typical worker with full-family coverage would take a pay cut of $2,316 a year, nearly an 8 percent reduction for a low-paid custodian, Welch said.
The call to reopen negotiations became necessary after Gregoire’s budget director, Marty Brown, determined that existing collective bargaining agreements and arbitration awards “are not feasible financially” and can’t be included in her 2011-13 budget proposal.
In plain English: The state can’t afford them.
Demands for further concessions are likely.
In future negotiations, the state must go beyond bargaining pay freezes and seek across-the-board pay reductions from workers, Zarelli said. “I believe that has to be a part of the solution, an actual reduction in what we are already paying,” he said.
It’s not an unreasonable request in a time of persistent high unemployment, he contends.
“A lot of people are just happy to be employed.”
Welch dissents.
“We have sacrificed a whole lot,” he said. “Wholesale wage reductions are not something we’re interested in.”
Under the state’s collective bargaining law, if the state and its unions can’t agree on new contract language, the terms of current contracts will remain in place for another year. But on June 30, 2012, those contracts will expire and the state will be free to implement its final best offer.
“Realistically, we want to come to a reasonable settlement and have a new contract in place on July 1, 2011,” Welch said.
Wage and benefit concessions won’t make much of a dent in the immediate crisis: Finding enough cuts to make up that unexpected $385 million shortfall in the current budget cycle. Washington is prohibited by its constitution from running a budget deficit.
On Monday, Gregoire notified legislators that she is prepared to eliminate the Basic Health Program, which provides subsidized medical insurance to tens of thousands of low-income Washington residents not covered by Medicaid, and do away with cash grants and medical care for childless adults who are unemployed and disabled but not eligible for other assistance.
The governor said the state may also have to reduce levy equalization payments, which help K-12 school districts in property-poor taxing districts fund basic education.
All those steps require legislative action.
“At this point, (Gregoire) is looking for help,” said Zarelli, who declared himself to be on the governor’s team. “The governor has indicated there’s no way she can balance the budget for this biennium on her own.”
Immediate cuts will be the hardest to make, in part because the law requires the state to provide notice to clients who are about to lose benefits.
“If we don’t do something soon, it’s going to be difficult if not impossible to get things worked out,” Zarelli said. “From my perspective, we don’t have to eliminate programs. It really means that for this biennium, we have to stop writing checks to some programs. But we can resurrect some of those programs for the next biennium.”
Gregoire is pushing for a special session this month to enact the drastic cuts in Basic Health and other programs. But majority Democrats have been cool to the idea. Incoming House Majority Leader Pat Sullivan, D-Covington, said his caucus would prefer to adopt a supplemental budget in the first week of the regular session, which convenes Jan. 10.
Kathie Durbin: 360-735-4523 or kathie.durbin@columbian.com.
