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Unions, state agree on contracts

Contracts include pay increases that may face rough road in Legislature

Posted: Thursday, February 24, 2000

The state has reached tentative labor agreements with all 12 of its employee unions.

Now the nearly $25 million bill for extra pay and health benefits for union and non-union workers is in the hands of the Legislature.

``These packages are all essentially the same packages,'' Department of Administration Commissioner Bob Poe said Wednesday.

All contracts provide $1,200 bonuses this year, 2 percent raises next year and 3 percent raises the following year. In addition, all provide more money for health insurance. The tentative contracts still must be ratified by the membership of 11 of the 12 unions.

The same basic deal will be applied to non-union employees in the executive branch, the court system and the Legislature, Poe said. When all those employees are considered, the cost adds up to $24.8 million this year.

Just $13.8 million of that comes from the state's general fund, according to Office of Management and Budget Director Annalee McConnell. Federal funds and other sources would pay for the remainder.

The increases may be tough to sell to the Legislature, where the Republican majority has set a goal of cutting $30 million from the next fiscal year's budget.

``We're still trying to find $30 million to reduce spending with,'' said Speaker of the House Brian Porter, an Anchorage Republican. ``We're not saying no, but we're going to take an awfully hard look'' at the contract costs.

Sen. John Torgerson, co-chairman of the Senate Finance Committee, said his personal reaction is not favorable, although he's not speaking for the committee as a whole.

The state is looking at an $850 million deficit in the next fiscal year, the Kasilof Republican said. ``It's just not time to go out and give pay raises with that big a deficit.''

McConnell said Gov. Tony Knowles' administration had identified $7.7 million in savings and other sources of funding that would help cover part of the additional cost.

For instance, the state will spend less than anticipated reimbursing schools for bond debt and paying for out-of-state prison beds and will be able to spend $2.3 million in settlement funds from an early 1990s lawsuit dealing with employee retirement fund investments.

But Torgerson was skeptical of much of the purported savings.

``I think he (Knowles) is reappropriating stuff from here or there,'' he said. ``That's just shuffling papers. That's not hard dollars on the table.''

Over the next three years the pay and benefit increases will cost an estimated extra $122 million, with about $67 million coming from the general fund, Administration Commissioner Poe said.

University employees are not included in the total. Their raises are already included in a $16.9 million increase the university is seeking in its budget for next year, administration officials said.

Poe said the increased cost is justified because state employees' pay has not kept up with inflation for several years and the state is finding it difficult to compete for employees with the private sector and the federal government.

``If you look at the last four years, state employees have really held the line,'' he said. They received base pay increases of just half the inflation rate for three years, and last year received no cost-of-living raises.

``This package only helps state employees keep up with inflation,'' Poe said.



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