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Connecticut employees ratify labor deal, move state closer to budget

NEW YORK (Reuters) - Connecticut state employees ratified a new labor deal late on Monday, setting the stage for nearly $1.6 billion of concessions over two years that could help bring the state closer to finalizing a budget.

Connecticut Governor Dannel Malloy speaks at the Democratic National Convention in Philadelphia, Pennsylvania, U.S. July 25, 2016. REUTERS/Lucy Nicholson

The state missed its July 1 deadline to pass a biennial budget for the current and next fiscal year, leading Governor Dannel Malloy, a Democrat, to take over state spending and slash costs.

A huge revenue slump in April, coupled with increased economic weakness, led all three credit rating agencies to downgrade Connecticut in May.

Labor costs were one sticking point in budget talks as lawmakers differ with each other and Malloy over how to close a $5.1 billion shortfall over the next two years.

The State Employee Bargaining Agent Coalition (SEBAC), which covers about 42,000 members in 15 different unions for public employees, agreed to increased pension and healthcare contributions and furloughs, among other changes.

Malloy said in a statement the deal would save taxpayers more than $20 billion over the long term and provide short-term savings that would help balance the budget.

“They agreed to historic concessions that will put the state on a sustainable path,” he said. “Now, it’s up to the legislature to do their part and approve this agreement.”

There is no guarantee that state lawmakers will sign off on the deal.

Although Malloy’s fellow Democrats dominate the House of Representatives and are evenly split with Republicans for control of the Senate, the legislature has not been able to agree on a budget plan or reach compromise with Malloy.

Jan Hochadel, president of AFT Connecticut, noted the potential struggle with lawmakers in an internal memo to her members on Tuesday announcing the ratification of the master agreement. The AFT, representing school teachers and staffers, is a SEBAC member.

“After a legislative session marked by an unprecedented number of anti-union proposals, we would be foolish to assume we won’t need to advocate for lawmakers to support them,” Hochadel wrote.

Reporting by Hilary Russ; Editing by Peter Cooney