Looming contract renegotiation adds to Pa. budget murkiness

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    You can add another thing to the list of reasons drafting Pennsylvania’s next state budget won’t be a cakewalk. Most state worker contracts are up for renegotiation in 2015.

    In recent years, new governors have had to revisit contracts for most of the state’s roughly 73,000 employees within their first year in office. The same is true this time.

    Most contracts will be up next July, and renegotiation means pay raises and potentially higher costs for employee health care and leave.

    Labor costs have been steadily rising for the past several years, said Dan Egan, spokesman for the Office of Administration.

    “There’s no reason to not expect them to continue on an upward trajectory,” said Egan. “It’s just a question of by how much.”

    That’s not welcome news to Gov.-elect Tom Wolf, who could face a nearly $2 billion spending gap next year.

    Administrations can temper the rate of rising labor costs. The negotiations of 2007, before the Great Recession, set most pay raises at 10 percent. Four years later in 2011, raises were trimmed to 4 percent.

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