The Malloy deal with the Unions

Facing the layoff of over 4000 workers, the government employee unions made a deal with governor Malloy that will supposedly close the budget gap for the state. What is the deal? In exchange for a no layoff pledge from the state, workers will accept a freeze on wages for two years and then three years of 3% pay raises annually. In addition, there will be unspecified changes to health and pension benefits that will lower those costs over time. Two problems remain, however. First, the plan needs to be approved by the union memberships of 14 different units. Since this is quite a good deal for the unions, approval ought to be reached. Second, because of the way that the pension changes are structured (at least to the extent they have been disclosed) there will be a major incentive for senior state employees to retire at once before the new rules take effect. That will lead to much higher current pension expenses than would otherwise have been the case. Indeed, the extra expense may be enough to use up a big chunk of the savings from the whole deal. Malloy needed to make the changes retroactive to yesterday when the deal was struck. No one should benefit from a quick retirement now.