Gregoire, workers in contract talks

State employee deals could tie hands of next governor

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OLYMPIA — Gov. Chris Gregoire will leave office in eight months, but the state worker contracts she’s negotiating now could tie the hands of Washington’s next governor for three years.

The governor’s office started bargaining with the Washington Federation of State Employees, which represents about 37,000 state workers, on Wednesday and already has talks under way with the Washington State Ferry unions.

Neither Gregoire nor the federation would comment on what they hope to get out of negotiations, but the governor noted the state has been whittling away at pension and health care benefits for state workers since the recession hit, and there haven’t been pay increases for years.

“The idea of giving back to your community, the calling of John F. Kennedy and so on, just goes so far,” she said. “We need to be careful.”

Republican gubernatorial candidate Rob McKenna has offered several proposals that would affect government employees, including shrinking the state workforce through attrition, contracting out more state work and increasing how much public employees pay for health insurance.

He called on Gregoire to not agree to any contracts that would create a shortfall in the next two-year budget.

“I don’t think the next governor or next Legislature should be left with a big hole in the budget as a result of these negotiations,” McKenna said, adding, “I’m not predicting that’s what will happen.”

However, McKenna, the state attorney general, did not recommend pushing for additional concessions from state workers, saying he didn’t have enough information to make that call.

Although the federation says it’s worried about his campaign proposals for state workers, McKenna said government employees have no reason to fear him if he’s elected governor.

State employee unions traditionally have been big supporters of Democratic candidates.

“The union leaders are politicians themselves, and they are working hard to create an atmosphere of fear and distrust because it serves their political objectives,” McKenna said. “The fact is, I’ve been a very successful leader of a large state agency for the last 7 years. I respect state workers.”

McKenna’s Democratic rival, former U.S. Rep. Jay Inslee, had no advice for Gregoire as she negotiates the contracts.

“This is one of those moments that it’s probably best for candidates to not try to make political hay out of negotiations that are hard enough already,” said Inslee, who has been endorsed by the federation.

There are about 57,000 full-time equivalent positions in general state government. About three-quarters of the workers are represented by unions. They are the folks who guard prisoners, collect taxes, issue licenses and perform myriad other services.

Pay and benefits for general government and higher-education workers totaled about $2.8 billion in fiscal 2011, or about 18 percent of the state budget.

The Legislature has suspended state worker cost-of-living increases for the past four years. Government employees also took a 3 percent pay cut in the two-year budget that runs through next June, and many have had to take unpaid days off as well.

In addition, the Legislature made changes forcing higher health insurance co-pays and deductibles for state employees. And, in 2011, the Legislature required workers to pick up 15 percent of their health care premiums, with the state paying 85 percent. The state used to cover 88 percent of the costs.

The Legislature that same year eliminated automatic cost-of-living increases for retired workers in the state’s older, closed Plan 1 pensions. And lawmakers in the past session scaled back pension benefits for future employees who retire early.

Under state law, the governor is responsible for negotiating general government-worker contracts that cover pay, benefits and working conditions. The deadline for getting an agreement is Oct. 1.

If Gregoire successfully negotiates contracts with the unions for the 2013-15 budget, the Office of Financial Management has to certify that the state can afford them. If the contracts clear that hurdle, they go to the Legislature early next year for approval.

The Legislature can take an up-or-down vote on the agreements but cannot tinker with details.

Democrats have controlled the Legislature since the collective-bargaining law for state workers went into effect in 2004.

To date, lawmakers never have rejected a contract. However, the governor’s office in 2010 negotiated agreements with the unions that reduced pay and benefits.

If the Legislature approves a new contract next year, it essentially could tie the hands of the next governor for three years.

After two years, the governor would be required to negotiate a new contract. But if those talks fall through, the existing contract would remain in place for a third year.

After that, the Legislature could unilaterally decide pay and benefits for workers.

McKenna said that, if elected, the current round of contract negotiations would not affect his proposals to shrink the state workforce through attrition or to farm out more work to the private sector because that can be done without union permission.

His proposal to increase the share of health care premiums state workers pay -- from 15 percent to 25 percent -- would have to be negotiated. McKenna said that’s something that could be done over time as part of an incentive to encourage workers to move to consumer-directed health plans with lower premiums and higher deductibles.

Inslee has not come out with proposals directly affecting state workers, other than saying he would like to see state government embrace a preventative-based health care system to lower costs.

His staff said details would be released later but that it’s similar to the health care system put in place by King County that rewards employees for changing their habits, such as losing weight and quitting smoking.