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

A confrontation between Republicans and DFLers at the Minnesota Legislature over contracts for almost 47,000 state workers not only puts a scheduled July 1 raise at risk, it could lead to pay cuts for affected employees.

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.

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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.”

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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.