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Latest News - February 2015

February 20, 2015
Budgeters look for $10 million in labor cuts
By: Neal P. Goswami

MONTPELIER — The Shumlin administration is considering a range of options to present to the Vermont State Employees Association as part of its effort to secure $10 million in labor savings, including the elimination of scheduled pay raises.

With a gap of at least $112 million in the 2016 fiscal year budget, the administration — and legislative leaders — insist that at least $10 million in labor costs must be trimmed as part of the effort to balance the budget. Administration officials say they hope to obtain the savings without resorting to measures such as furloughs that would take money from workers that is already in their paychecks.

But avoiding furloughs would require the union to renegotiate its existing labor contract, the administration says.

Eliminating a 2.5 percent cost-of-living pay increase scheduled for the 2016 fiscal year would save about $5 million. 

Additional measures would be needed, however.

The administration may also reduce the mileage reimbursement for state workers by more than 50 percent, down to 23.5 cents per mile. That would provide about $1 million in savings for the general fund, according to sources within the administration. It would affect only employees who use personal vehicles rather than the state’s fleet.

Restructuring so-called step increases in pay could also help reduce labor costs. State workers are grouped into various pay grades, each containing 15 steps. The first five step increases occur in successive years. The next few step increases come every two years, and the remaining step increases come every three years. The pay raises average out to 1.7 percent annually.

If the step increases are adjusted, the state could achieve significant savings that would continue in future years, according to the administration. Details of how the steps would be adjusted are not known.

Imposing five furlough days for state employees, another plan under consideration, could achieve a 2.5 percent reduction in total salaries paid out by the state. That idea is less desirable, however, because it would involve cutting pay that workers are already receiving.

Secretary of Administration Justin Johnson said last week that if the union does not work with the administration to achieve $10 million in labor savings, more than 400 state workers could be laid off.

Vermont State Employees Association Executive Director Steve Howard and Johnson said Thursday they are working to schedule discussions. However, the union is not interested in any talk about opening the existing labor contract, according to Howard.

“We’re happy to hear what they have to say. We have some ideas on how they can raise revenue from the folks who have had all the income growth,” Howard said.

Howard said union officials will make public next week several ideas about where revenue could be raised.

“I think our position remains that before you take money out of the paychecks of state employees who are regular working-class Vermonters who are struggling to pay their bills, the administration needs to work on raising revenue from Vermonters who have had all the income growth in the last decade,” he said. “For some reason they are putting all their energy into how we can take money out of the pockets of people who are serving the public and protecting with all their strength the wealthiest people in the state.”

Gov. Peter Shumlin, speaking at an unrelated news conference Thursday, again ruled out tax increases as a way to forgo the labor savings that budget writers are seeking. House Speaker Shap Smith and Senate President Pro Tem John Campbell also have said the labor savings must be a part of the effort to close the budget gap.

Shumlin said the state must lower the growth rate in state spending, which has been about 5 percent, to the growth in revenue, which has been about 3 percent.

“I would caution us from thinking that we can turn to Vermonters when they’re struggling to pay their bills, when they’re frustrated that their incomes aren’t going up despite the recovery. I would caution us from believing that we can tax our way out of this problem,” Shumlin said. “Revenue will not solve our problems. We’ve got to make the tough choices … of actually matching our appetite for spending with the money that’s coming through the door.”



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