By Dan Balz
Republican New Jersey Gov. Chris Christie blasted public employee unions here Friday, arguing that states must scale back scheduled pay increases and health benefits for state workers to avoid a long-term fiscal crisis.
Christie used the opening press conference at the summer meeting of the National Governors Association to bring a battle he has been waging in his state to a national forum.
With state budgets wrecked by the recession, governors and legislators in some states have begun to confront the sizeable long-term liabilities of public employee contracts.
Christie, who was elected last November and faced an $11 billion deficit, said it's time for significant changes in the compensation and benefits of public employees. "The public-sector unions need to become part of the shared sacrifice and they're refusing to," Christie said.
Other governors have taken steps recently to confront the unions. In California, Gov. Arnold Schwarzenegger (R), who is dealing with huge budgetary problems, has taken the lead by renegotiating contracts with several smaller unions in an effort to reduce long-term obligations to public-sector employees.
Christie said private-sector unionized workers in his state are enduring high rates of unemployment while being asked to pay higher property taxes to fund, in part, salary increases and free health care for public sector employees.
"Should there be one specialized sector of our society that is sheltered from the recession?" Christie said to reporters at the statehouse in Boston. "My view is they shouldn't be. I'm not asking them to do any more than the private sector folks have already been enduring for the last 18 months or so."
Christie's new budget includes reforms for future public-sector employees and he said he and legislators have agreed to take on the issue of the costs for current employees between now and this fall. "The time has come to bend the benefit curve," he said.
Pennsylvania Gov. Ed Rendell (D), who is not in Boston this weekend, said his legislature is considering legislation, with his strong support, to restructure pension benefits for public employees. "That's the good news," he said in a phone interview. "The bad news is it can only be done for future employees."
He said public-sector unions are due a 4 percent pay increase this year, at a time when the state faces furloughs or layoffs. Rendell said he has proposed that the unions accept no pay increase, which would prevent any furloughs or layoffs. "There is virtually no chance of that going through," he said.
Governors will spend much of their weekend discussing their severe fiscal problems. One urgent problem is the failure by Congress to pass an extension of Medicaid assistance at a time when an estimated 30 states, including a dozen with Republican governors, have already built those anticipated funds into their new budgets.
Many governors have been lobbying Congress to act, but concerns about the federal deficit have so far blocked action. Rendell said he would have an $850 million hole in his budget if Congress does not approve the extension, necessitating significant layoffs. "It's brutal," he said.
But it was not clear what the governors would do collectively on the issue this weekend. "NGA is a consensus-based organization," said Vermont Gov. Jim Douglas (R ), the outgoing chairman. "We need to find common ground."
"There's a growing sentiment of the citizens of this country that the rate of spending, the rate of growth in spending at every level of government, is unsustainable," said Virginia Gov. Robert McDonnell (R).
Tennessee Gov. Phil Bredesen (D) said that his state is in better shape than some and that the pressures brought on by the recession have forced states to make some necessary changes that might have been impossible in more prosperous times.
"We've used it as a way of trying to get done some of the business like things that are difficult in government in good times," he said.
Friday's opening session was devoted to the challenges of implementing the new health-care law. The meeting will end Sunday with an appearance by the co-chairmen of the new national deficit commission, former Wyoming senator Alan Simpson (R) and Erskine Bowles, who was chief of staff in the Clinton White House.