Gov. Jay Inslee’s budget office on Friday certified that more than $583 million in labor contract agreements for 2015-17 are financially “feasible.”
That determination frees Inslee to include the contracts in his proposed two-year budget, which is due for public release during the week of Dec. 15. The Legislature convenes Jan. 12 and the budget is the major challenge it faces with a potential revenue shortfall of $4 billion, depending what lawmakers do about financing public schools in light of a Supreme Court ruling and voters’ approval of a costly class size reduction measure in November.
David Schumacher, director of the Office of Financial Management, issued his feasibility letter late Friday, sharing it with budget writers in the Legislature.
The $583 million is the cost of extending terms of about two-dozen contracts to represented and unrepresented workers alike in agencies and the higher education system. The costs include contracts for home-care workers who are not state employees but are paid out of the Medicaid program.
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House Majority Leader Pat Sullivan, D-Covington, and Sen. John Braun, R-Centralia, both indicated the contracts are not guaranteed funding.
“Nothing is an automatic,” Sullivan said. “It’s our job to scrutinize the agreements, and we’ll do that – but also recognizing the fact that state employees have been asked to do a lot more without making a lot more.”
Sullivan said workers’ actual take-home pay has eroded due to inflation and growing costs of pensions and medical insurance coverage since the last cost-of-living raises in 2008.
Braun said the estimated contract costs, which include the state’s 85 percent of health-insurance premiums, are roughly in line where he and other Senate budget writers expect.
Although he said it is OFM’s job to determine feasibility, he said, “I think our caucus would say that (determination) is interesting. I’m not sure we’ll come to the same conclusion.”
With potentially $1.5 billion needed to answer the state Supreme Court’s school-funding ruling in the McCleary case and other court demands to improve mental health financing, Braun said adding “another $600 million, that’s a challenge. … I don’t think we are ready to make any type of commitment with the direction we are going to go with (contracts) yet.’’
At the same time, Braun said members of the GOP-led Senate Majority Coalition Caucus “want to take care of state employees.”
But he said there are questions about details of some contracts, including language in contracts for non-state employees such as home care workers. Questions deal with the rights of workers to opt out of representation and new pension benefits.
In his feasibility letter, Schumacher says the more than two dozen contracts are modest and come after a six-year stretch of “stagnant” wages for public sector employees.
“At the same time, health care and pension contributions increased as well as inflation, meaning employees have experienced a net loss of wages since 2008,” Schumacher’s letter states, adding: “These modest increases are important in order to maintain a quality workforce, be able to recruit talent, stem the workforce turnover within state government, and continue to provide vital services to the public.’’
The contracts for general-government agency workers call for across the board raises of no more than 3 percent on July 1 and roughly 1.8 percent in the second year. There also are additional targeted increases for specific job classifications to address inequities or problems retaining skilled workers. And there are step increases of 2.5 percent to 5 percent for workers in their first half-dozen years on the job.
Teamsters representing Department of Corrections workers won higher pay adjustments totaling 9.8 percent over the two year period.
The state general fund is expected to receive roughly $3 billion more in revenue during the next biennium than in the current two-year budget cycle that ends June 30. But other costs for state government also are going up as demand for services grows and the costs go up for expensive medical programs, pensions, debt and other programs that were cut during the Great Recession.