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A fight over state employee pay raises interrupts the Legislature’s COVID-19 comity

Minnesota State Capitol
MinnPost photo by Peter Callaghan
On Wednesday, legislation approving the contracts passed on a party line vote in the House Ways and Means Committee. But the vote came only after a partisan debate that has become rare since the outset of the coronavirus crisis.
A confrontation between legislative Republicans and DFLers over pending contracts for Minnesota state workers not only puts a scheduled July 1 raise at risk but could lead to pay cuts for the affected employees.

Though it’s been secondary to discussions at the Capitol around the state’s response to COVID-19, the fight over the contracts has brought out something that had been mostly dormant since the coronavirus crisis began: partisan finger-pointing.

The contracts at issue in the House fight were negotiated last year between the Walz administration and 11 different unions and associations covering almost 47,000 state employees. 

While each agreement has unique aspects, most gave a 2.25 percent raise last July and another 2.5 percent raise this July. The contracts also include increases to employees’ share of health insurance costs.

Under state bargaining law, the Legislature must approve the new contracts before this July. If it does not, the contracts are nullified and employees revert to their previous contracts. If that were to happen, most state workers would not only forgo a raise this summer, they would lose the pay bump they received in 2019. (Employees’ contribution to their health care costs would also go back down to what it was under the previous contract, meaning the state would need to increase its share.)

Senate Majority Leader Paul Gazelka
MinnPost photo by Peter Callaghan
Senate Majority Leader Paul Gazelka
Republicans want the governor to renegotiate the agreements in light of expected budget shortfalls brought on by the economic fallout from COVID-19. One suggestion, made by GOP Senate Majority Leader Paul Gazelka, is to keep the 2019 pay hikes in place but cancel the raise that would go into effect this summer. “I’m suggesting the governor and his team have a conversation about renegotiating those contracts,” Gazelka said. 

On Wednesday, legislation approving the contracts passed on a party line vote in the House Ways and Means Committee. But the vote came only after a partisan debate that has become rare since the outset of the coronavirus crisis.

“We shouldn’t be punishing our hard-working state employees that negotiated in good faith,” said Rep. Michael Nelson, DFL-Brooklyn Park, who noted the cost of the contracts are contained within current budget allocations and any future shortfalls would have to be made up by agencies themselves, not the Legislature.

Committee Chair Lyndon Carlson, DFL-Crystal, said not ratifying the contracts would be especially unfair to workers who have been on the front lines in the state’s response to the coronavirus. 

But Rep. Pat Garofalo, R-Farmington, said the new contracts will add $750 million to the costs of the two-year budget the Legislature will begin writing in 2021. “The opposition to these contracts has nothing to do with penalizing or hurting people or sanctioning them for a behavior,” Garofalo said. “The opposition to these contracts is that they’re mathematically impossible, given the current fiscal situation we’re in.” 

He added that if the meeting had been held in the Capitol rather than via video conferencing, he would offer an amendment “to give remedial math lessons to the DFL caucus.”

State Rep. Pat Garofalo
State Rep. Pat Garofalo
Noting that the state currently has an unemployment rate of 20 percent, Garofolo said the negative impact on state tax collections means deep and unpopular budget cuts will have to be made now or next year or both.

DFLers defended the contracts, while putting GOP opposition in a broader context. “Rep. Garofalo loves to do this sort of personal, partisan thing,” said Rep. Tina Liebling, DFL-Rochester. “We know the GOP wants to cut government anyway. In the best of times the GOP doesn’t want government. The GOP, generally speaking, doesn’t like government.

“And now is a great opportunity to cut, cut, cut,” she said. “The idea that we should preemptively be cutting the budget, preemptively start tightening belts, I don’t agree with that. We will be inflicting worse harm on our economy if we do that.”

Rep. Jim Davnie, DFL-Minneapolis, said Republican lawmakers always oppose new state employee contracts. And while he said he too worries about the impacts of COVID-19 on state finances, he said it should become “the latest reason” not to treat workers fairly.

Garofalo responded by pretending to reach into the screen. “Part of me wants to grab this laptop … and say ‘DFL, pay attention,’” he said, shaking his computer. “We don’t have any money. We’re broke.”

For its part, the Walz administration is supporting ratification of the contracts it negotiated. “We think they are really good contracts and we have decided we will not make any changes in our position until the budget projections come out on Tuesday,” said MMB Commissioner Myron Frans. “At that point we’ll see what the nature of the problem is and we’ll see what we would propose if anything differently.”

State Rep. Tina Liebling
State Rep. Tina Liebling
Frans also said the state has imposed a hiring freeze for any jobs that aren’t part of the state’s response to COVID-19 or in corrections or the state patrol. Hiring is about half each month what it would normally be.

“We’re taking some steps to control the workforce number,” he said. “We have said we will look at everything and the contracts are part of our budget and we have to examine that. But what is not acceptable from our point of view is to have people who are working in direct care and treatment or corrections or our troopers take a pay cut. It turns into a pay cut if we don’t ratify.”

It wasn’t just members of the House bickering like old times. A debate over state finances also played out in the Senate on Thursday, though with a switch in partisan roles. On a party line vote, the GOP-controlled Senate passed a bill, Senate File 3843, that makes a series of changes to state tax law. 

Many of those changes would extend deadlines for people to pay taxes without incurring late fees or fines. But they also make changes to the way the state taxes purchases of equipment by farmers and small business owners. That provision, known as Section 179, would reconcile federal tax changes that if unchanged would cost Minnesota taxpayers several hundred million dollars. All told, the tax bill will reduce state tax collections by around $330 million, a change that led DFLers to warn that it could make the state’s upcoming budget woes even worse. 

Comments (22)

  1. Submitted by Betsy Larey on 05/01/2020 - 11:02 am.

    30% unemployment and government workers still expect their pay raise. Tone deaf. I think they should be happy they have a job left. Cancel the damn raise. If they don’t like it let them go on strike. Lots of unemployed people in the private sector would be happy to take their job at last years’ pay.

    • Submitted by Barbara Skoglund on 05/01/2020 - 12:51 pm.

      Yes, I’m sure there are thousands of people laid off from food service jobs with high school diploma’s qualified for professional positions in state government with salaries far below comparable positions in the private sector. After 25 years I have NEVER had a COLA at the rate of inflation. Most years I have had a pay cut because the 0-2% COLAs are far below the health care increases. Do you realize MN has one of the leanest state governments in the US? Do you realize the private contractors are a significantly larger part of Minnesota’s budget than actual state employees. Our salaries are crap, even with a 2% COLA. Private contractors earn far more. How about cutting those? How about cutting the favorite slush fund for GOP legislators – the per diems? No they prefer hating on state employees. Please avoid the usual, “change jobs if you don’t like it.” Like all jobs, there are tradeoffs. Yes, I earn far less with my masters than I could in the private sector, but I love serving Minnesotans. I’m also 57 and job discrimination is very real. I trade job security over salary. My private sector husband has lost his job and I am the only one working.

      • Submitted by John Sloan on 05/01/2020 - 08:32 pm.

        You claim that you are trading job security for salary.

        Then you argue against the claim.

        • Submitted by Edward Blaise on 05/08/2020 - 08:32 am.

          She has traded salary for job security. That is historically established. That precedent is best highlighted by a 2% raise. Not exactly a King’s ransom.

          This issue is the bright shiny object distracting the easily distractable (Pat Garofalo, Chair) from dealing with real problems in a meaningful way.

      • Submitted by Don Casey on 05/05/2020 - 03:01 pm.

        The suggestion about cutting legislative per diems is a good one, albeit too modest. Eliminate them — permanently. Along with cushy housing allowances. Reimburse (within limitations) actual vouchered expenses.

        Minnesota has one of the largest legislatures in the nation. When legislators received a very healthy pay increase, members of the commission that recommended the new rate also questioned continuing the per diems.

        Per diems aren’t a Republican gimmick, by the way. When it comes to taking care of themselves, the bipartisan spirit of legislators is strong,. But I do Recall Republicans cutting the per diems when they had legislative control a few years ago.

        • Submitted by Edward Blaise on 05/08/2020 - 08:36 am.

          If you recall, a great Governor and man of the people strongly suggested a Unicameral Legislature.

          The “Rainman” of executive leadership: Jesse Ventura.

          Definitely one house, definitely….

    • Submitted by Dennis Litfin on 05/01/2020 - 02:21 pm.

      The article says 20% unemployment Betsy. I question why the contracts were not acted on earlier.

    • Submitted by Mike Rose on 05/08/2020 - 12:28 am.

      Sign on up we are always taking applications.

    • Submitted by Kimberley Ruedy on 05/12/2020 - 08:06 am.

      Last year’s pay is what the argument is about. State employees have been working without a contract since July of 2019. This legislation merely ratifies the contract that supposed to run July 1 2019 – June 30 2020. Look at your calendar – it is nearly June. Our fiscal year ends June 30. That means ratification of this contract costs the state only a single month of money that wasn’t already spent. A freeze for July 1 2020- June 30 2021 is not unreasonable. Here is the other news – if the contract isn’t ratified, the state employees go back to their contract from July 1, 2018 – June 30, 2018. Lower salaries, but also lower health care premiums set in the contract. The State will have to cover the difference between the higher costs for insurance this year for each employee, essentially negating any savings the State will accomplish. Sad, but true

  2. Submitted by joe smith on 05/01/2020 - 11:29 am.

    GOP will cave and the unions will get raises for the 47,000 State employees. Once you are a State employee, all you have to do hold on for annual raises and a taxpayer funded retirement. This silly play by GOP “conservatives “ is a joke.

    • Submitted by Michael Milligan on 05/01/2020 - 01:35 pm.

      Taxpayer funded retirement? Do you have any idea how the state pension plan is funded?

    • Submitted by Sean Taylor on 05/02/2020 - 06:01 pm.

      Really? Tell that to my 32 colleagues at Minnesota State Moorhead who are loosing their jobs next year. They all have PhDs in their fields and work tirelessly to educate your kids. The consistent underfunding of higher education in Minnesota means the Minnesota State system is ready to collapse with firings occurring at at least three state universities in the system this year. And of, by the way, few if any will get another job in academia because while Minnesota is bad, other states are a disaster.

      So save your “state worker leaning on a shovel” idiocy and get educated about what is happening out there.

  3. Submitted by Barbara Skoglund on 05/01/2020 - 11:36 am.

    A pay cut and return to the old health insurance rates is actually break even for me. The below inflation COLA is actually a pay cut each year as our health insurance and parking rates continue to climb. They won’t take away the two increases in parking from last year or refund us for paying for parking while telecommuting, otherwise I would be better off with the loss of the crappy COLA and return to last years health care rates. Garofalo is the one who needs basic math lessons.

    • Submitted by John Sloan on 05/01/2020 - 08:33 pm.

      Welcome to the real world. Thousands of the private jobs lost
      are not going to be temporary furloughs unfortunately.

  4. Submitted by Joel Stegner on 05/01/2020 - 12:18 pm.

    Ultimately, Republicans want to cut state employee pay to fund their addiction for tax cuts, often focused on wealthy individuals who continue to control more and more of our nation’s wealth. As it is, many of those who owe their fortunes to living in a highly effective and productive state flee to Florida on retirement to avoid state income taxes. Our dedicated workers deserve to be treated fairly. If you want to redo the contract, extend it, deferring this year’s increase to 2021 and 2022.

  5. Submitted by Ray Schoch on 05/01/2020 - 12:20 pm.

    Republican interest in fiscal responsibility would be more credible if it were less selective. Let’s see what the revenue projections are before leaping onboard any effort to cut the pay of state workers. Changing the fiscal terms of the debate may turn out to be necessary if state revenues are in as much of a free all as it appears they might be – at which point serious objections to sticking with the contract would be worth noting and taking into consideration. At the moment, however it’s just another anti-worker ploy from a political party that generally dislikes workers, as shown by repeated tax breaks for owners and the upper 10% – paid for by all taxpayers.

  6. Submitted by Mike Schumann on 05/01/2020 - 01:07 pm.

    Are we seriously going to give public employees a pay raise this summer, when 30% of state workers (taxpayers) just got laid off, and a significant number of the rest, who are still employed, are seeing significant cuts to their own pay? What kind of la la land are the Democrats living in?

  7. Submitted by Tom Crain on 05/01/2020 - 03:33 pm.

    Ratifying the negotiated raise may or may not be prudent, but clearly it’s not “mathematically impossible”. It’s less than 2% of the budget. The trade off may require temporary furloughs of some state employees, however.

  8. Submitted by Andy McCormick on 05/02/2020 - 06:59 pm.

    Minnesotans aren’t all as ignorant as some of these commenters seem to be.

    We’re just being thoughtless, forgetting that we, too, rely upon state funded perks like road upkeep, first responders, decent schools, public offices staffed by competent people, businesses being regulated by an AG so we can’t be overcharged, monitoring of toxins in water we & our families drink..

    Pay raises exist for a good reason, & we do realize that. We’re not all afraid or unable to pay for good government workers here. Just some of us.

  9. Submitted by Jim Tingsdale on 05/04/2020 - 06:43 am.

    In 2008, we were called to an all hands employee meeting at work. We were informed there would be an across the board, 10% cut in salary. I don’t think there was one of us that didn’t leave the meeting with a great weight off of us; we had been sure the company was folding, or that everyone was going to be laid off.

    The economic fallout of this lock down will be much worse than the ’08 recession. The unemployment rate is already higher. It seems unlikely that government employees could be so naive as to believe they will not be effected.

    • Submitted by Mark Snyder on 05/05/2020 - 11:37 pm.

      State employee contracts are for two years. We are already halfway through the one that still needs Legislative approval. State employees are well aware that we will be affected by this crisis, but the time to do that is not with the already-negotiated contract, but with the next one that would go into effect in July 2021. That way the 2021 Legislature will have their say in setting the state government operations budget. Trying to reopen negotiations on this contract is an extremely shortsighted idea, which is probably why the MNGOP favors it.

  10. Submitted by Daniel Shaw on 05/04/2020 - 11:46 am.

    G-men (Garofalo, Gazelka, GOP in General) essentially have nothing new or helpful to say. They know how to cut – worker wages, business taxes, but that’s really the only tool they seem to have in their tool box. Follow the comments and see if you can avoid the sense of mean-spiritedness in the comments and suggestions that state workers should consider themselves lucky to have jobs.
    It is no secret that state employees across the board tend to make less than their peers in the private sector. In times of crisis they have a level of security that is some reward for choosing to serve Minnesotans. Raises for workers are some protection from the fiscal hardships encountered by tens of thousands of hard-working Minnesotans in our current challenging environment. Let’s address the inequities that so vastly separate the rich and poor and not grub for nickels and dimes from the “getting by” and “not getting by” who are the vast majority of Minnesotans.

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