Connecticut avoids layoffs by reaching union accord
6:07pm EDT

NEW YORK (Reuters) - Connecticut has avoided having to lay off public workers under a new labor accord that saves $1.6 billion that otherwise would have been spent on wages, healthcare and pension benefits, the governor said on Friday.

Connecticut will now rescind layoff notices to 4,742 workers that it began mailing earlier this week though its nearly 50,000-strong workforce still must ratify the new accord, Governor Dannel Malloy and the labor coalition said.

The labor accord preserves job security, does not rely on furloughs or reduce the 40-hour work week, according to the governor and Matt O'Connor, a spokesman for the State Employees Bargaining Agent Coalition.

Malloy and the coalition said they agreed not to release more details until union members have been informed.

Around the nation, Republican and Democratic governors who must close huge deficits spawned by the recession, are eager to wring savings out of their public workforces.

Some governors have sought to curb collective bargaining rights. This strategy prompted heated clashes in states such as Wisconsin, and has led to drawn-out battles in New Jersey and elsewhere.

Connecticut's governor, a Democrat, said his approach was noteworthy for observing collective bargaining rights and avoiding confrontations. "We respected each other, negotiating in good faith, without fireworks and without anger," Malloy said in a statement.

The freshman governor, who inherited a deficit of over $3 billion, bucked the anti-tax policies that are a legacy of last November's election results by combining spending cuts with tax hikes on everything from income to cigarettes.

Still, the new labor accord is $400 million short of the total amount of two-year savings that Malloy had sought.

As a result, keeping the new $40 billion two-year budget balanced will require "a mix of additional spending cuts and existing budgeted revenues," Malloy said, pledging not to raise taxes any further.

The union spokesman said: "This is an important step in a much larger process...getting a budget in place so that we can begin to rebuild Connecticut, begin to construct a fair economy for the working and middle-class families in this state."

Malloy's budget requires him and the union to reach an agreement by the end of May, shortly before the legislature adjourns on June 4th, the union spokesman said.