State Hiring Freezes Underscore Budget Woes

Iowa state workers will see smaller paychecks because of a budget squeeze that worsened after the Sept. 11 terrorist attacks, but state hiring freezes – not pay cuts — are a more common budget fix elsewhere.

Hiring freezes or restrictions have taken effect in California, Illinois, Kansas, Maryland, Nevada, North Carolina, Rhode Island and Virginia, according to the National Conference of State Legislators (NCSL).

Working for the state traditionally has meant less money but greater benefits and job security. But in states such as Alaska and North Carolina, an increase in out-of-pocket expenses for health benefits is accompanying pay raises.

Job security is uncertain in Minnesota, Florida, South Carolina, Ohio, and Nebraska where layoffs are looming.

In Iowa, the largest union for state employees gave up four months of a pay raise in October to avoid layoffs because the state is facing a $158 million budget shortfall. Gov. Tom Vilsack negotiated the deal, expected to save 800 jobs and $6.6 million, to postpone until November 2002 the three percent cost-of-living raise that was scheduled for next July.

In Arizona, Gov. Jane Hull met boos and jeers from a thousand employees Nov. 13 because of her plan to cut their raises from 10 percent to three percent over the next two years.

State government workers elsewhere are banking on fatter paychecks or the status quo next year.

About 23,000 striking state workers in Minnesota won bigger pay raises last month— a 3.5 percent raise, up from 2.5 percent initially offered by the state.

“That does show there’s money out there,” said John Enagonio, spokesman for the American Federation of State, County, and Municipal Employees. “Times are tight but when workers present a compelling case about the needs, they can still achieve some wage increases.”

AFSCME members have completed bargaining on pay raises for fiscal years 2002 and 2003 in most states, said Steven Kreisberg, AFSCME associate director for collective bargaining. Exceptions are in California, Connecticut, Maine, and Maryland, Kreisberg said.

“The bad news keeps on coming for state budget officers, but there hasn’t been an immediate hit at the bargaining table,” Kreisberg said. “Times were very good, and there were no rainy day funds waiting for the inevitable downturn. Now when the money is needed, it’s not there.”

The troubled economy’s impact on pay raises will be calculated when many state legislatures meet again in January. In Kansas, legislators are already warning state employees they won’t get the three percent cost-of-living raise next year that they received this year, said Betty Vines, president of the Kansas Association of Public Employees.

In Indiana, Gov. Frank O’Bannon announced a wage freeze for state employees in September.

Linda Ard, executive director of the AFSCME local that represents 8,700 Indiana state workers, said, “Anytime there’s an economic problem, they start cutting state employees’ salaries, laying them off, and not filling vacancies. It doesn’t solve the problem of an economic crisis. The reason they do it is because it’s good publicity. State employees are pretty fed up; they’re pretty angry.”

Only Florida legislators have been willing to point the knife at their own salaries. Florida Rep. Mike Fasano asked legislators to lead by example in the face of a $ 1.3-billion budget deficit, and both houses voted to give up their $708 raises last month as a symbolic statement on deeper cuts expected to trigger layoffs. But the salary-slashing attempt died in a contentious special session.

Even as the economy has slowed down, private sector workers have continued to see modest pay gains, according to figures from the U.S. Bureau of Economic Analysis. But a survey of 194 employers by Organization Resources Counselors, a consulting firm, found more than 25 percent of companies lowered salary increases for 2002 or froze salaries after Sept. 11.

Hamline University Law Professor Joseph Daly, a state and federal mediator and arbitrator, said public sector employees’ pay has lagged the private sector for years but “there is going to be a renewed respect for public employees, and that will increase the amount of money we’re willing to pay them. That has come about because of September 11th.”