Legislative leaders raise labor cost concerns

JUNEAU — Alaska legislative leaders are urging Gov. Sean Parnell to negotiate no raises in union labor contracts amid concerns about state budget costs.


Senate President Charlie Huggins, House Speaker Mike Chenault and the leaders of the House and Senate Finance committees signed the letter. It comes as the administration is involved in negotiations affecting nearly two-thirds of the state workforce.

The lawmakers said in the letter they will consider the private sector, the state’s ability to pay, and the best interests of all Alaskans as they prepare to vote on the contracts and write the budgets that will be affected by them.

They asked Parnell to convey to the state’s employees that they value their service.

“However, in this fiscal environment we are concerned that increases in wages and benefits may necessarily squeeze budgets and put employees’ jobs at risk,” says the letter, dated Feb. 18. “The loss of any job, public or private, is a tragedy. For this reason, we encourage you to hold the monetary terms of the contracts at zero.”

Even if oil prices remain high, the state likely will still be forced into deficit spending — “even under a disciplined budget plan,” the lawmakers noted. And overshadowing all long-term budget issues is an unfunded state pension liability estimated at about $11 billion, they said.

The lawmakers said they appreciate the value of Alaska’s public employees but must balance the input from other constituents, who say wages, benefits and other terms of state employment “are often quite generous compared to their counterparts in the private sector.”

The contracts will be considered in the context of “our duty to provide education, infrastructure, public safety and some level of health care,” the lawmakers wrote. The governor and legislative leaders have discussed the need for fiscal restraint amid declining oil production. The state relies heavily on oil, but higher prices in recent years have helped mask the decline’s effect.

The finance committees, which deal with the state operating and capital budgets, have heard presentations from the administration on labor costs as part of their deliberations.

Republican Rep. Alan Austerman of Kodiak, co-chairman of the House Finance Committee, said the letter’s objective was to bring focus to the state government’s overall cost of operations.

“That’s the whole gist of what we’re looking at over the next few years, is how we get total government costs under control,” he said Thursday. “We can’t just leave one part of the cost out of the picture.”

Parnell had no comment on the letter, his spokeswoman said. Nicki Neal, director of the state Division of Personnel and Labor Relations, said she couldn’t disclose what has been discussed as part of negotiations.

Jim Duncan, executive director of the Alaska State Employees Association/AFSCME Local 52, said he respects lawmakers’ right to express their opinion but said the union negotiates with the administration and is doing so in good faith.

The union is aware of the state’s concerns about the budget and personnel costs.

“We are taking that into consideration as we offer proposals and as we consider the state’s position,” Duncan said. “But we’re also aware that in order to deliver services in this state, you have to adequately compensate the employees.”

Duncan said he’s hopeful the two sides will reach a fair agreement in the next few weeks.

Curtis Thayer, a deputy commissioner of administration, recently told the Senate Finance Committee that the department’s bargaining priorities and concerns include “fiscally prudent” cost-of-living increases and reducing the cost of things like “leave liability.” He said the unions are aware of this.

Merit increases and pay increments for the general government unit next fiscal year could be about $15 million, but cumulative over three years $105 million, according to Thayer’s presentation. Employees can bank leave, and there was a leave liability of $164 million in fiscal year 2012, up from $140 million in 2009, he told the panel.


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