Delivering his first budget address as Connecticut governor in February 2011, Dannel P. Malloy described the principle that would guide his policies: “shared sacrifice.” It aimed at convincing taxpayers that state employees would suffer along with them during the nastiest recession in decades. Malloy was certainly asking taxpayers to suffer: his $1.9 billion tax increase for the 2012 fiscal year was the largest in state history.
A few months later, Malloy announced an agreement that would renegotiate state-employee contracts. The deal would save the state $1.6 billion over two years and $21.6 billion over 20 years. State employees initially balked, but they finally agreed after an emergency bylaw change reduced the threshold for union approval. While the union was deliberating, Malloy talked tough. He announced thousands of layoffs and even flirted with collective-bargaining reforms milder than those initiated in Wisconsin. The layoffs didn’t happen—a few state troopers lost their jobs but were soon rehired—and the governor soon abandoned his talk of labor reform.
Malloy’s agreement with the unions would purportedly save Connecticut taxpayers some money over two years: $485 million from pension reforms, $448 million from freezing wages, $391 million from changes to state employee health-care plans, $180 million from implementing cost-saving suggestions from state employees, and $90 million from using money-saving technology. In exchange, the agreement promised state employees no layoffs for four years, locked-in retiree health-care and pension benefits until 2022, a favorable adjustment to the formula for calculating pensions, and a guarantee not to revise downward those pensions incorrectly calculated in the past.