How quickly and cooperatively a closely divided Legislature deals with the state worker pay plan for the coming two years will go a long way toward setting the tone for the upcoming session, in the view of one Helena lawmaker.

"I think that will be a bellwether of what's going to happen with the politics of the session," said Rep. Dave Gallik, D-Helena, whose district includes the Capitol complex and a thick concentration of state employees. "If we get into an early partisan scrap on that, I think that's going to tell you the way the rest of the session's going to go down."

With some 6,000 state workers living in the Helena area, the employee pay discussions are always closely watched here. Because the contract is pre-negotiated, it's often one of the first major issues addressed by the Legislature.

Gallik and other local lawmakers are generally supportive of the negotiated plan that's included in Gov. Brian Schweitzer's budget. The plan calls for across-the-board raises of 3 percent in each of the next two years, with an additional six-tenths of a percent available for departments to reward on a discretionary basis.

In addition, the state's share of the health insurance premiums will go up $33 a month in the first year and $36 more in the second, and the longevity raise for 10-year employees will increase to 2 percent from the current 1.5.

The 3 percent pay hike is less than the raises state workers enjoyed in the current biennium, which were approved by the 2005 Legislature after two years of what was essentially a wage freeze.

"State employees got a fairly good raise two years ago, and it was long overdue," said Sen. Mike Cooney, D-Helena, incoming Senate president. "We've got to be careful moving forward and understand that we have to pay our people competively, otherwise we can't keep them."

Sen. Christine Kaufmann, D-Helena, said she's inclined to support a plan that was negotiated by the governor's office and employee unions, and was pleased that the negotiations "haven't been contentious, at least in the public square."

"It's obviously been better for state employees to have Democrats in charge," she said.

Rep. Jill Cohenour, D-East Helena, noted that even though the Legislature will convene with a projected budget surplus approaching $1 billion, excessive raises to bring Montana's state pay in line with surrounding states may not be prudent.

"A lot of that could turn out to be one-time funds," she said. "We have the money today, but we may not have it tomorrow. Steady raises and being sure we have the money to maintain them over the years are the way to go."

Rep. Hal Jacobson, D-Helena, agreed that "ideally we'd like to give them more," but that he'll support the 3 percent raises.

"We in Helena will benefit from that," he said. "Those raises will tumble lots of new dollars into our local economy."

Down the road

While local lawmakers seem pleased with the basic state pay package, there's disagreement over a proposed cutting of the public pension guaranteed annual benefit adjustment from 3 percent to 1.5 percent for anyone hired after July 1.

Supporters say the move won't affect any current state workers, who will keep their 3 percent annual increase, and the cut will, along with a proposed $100 million infusion from the surplus, bring the pension accounts closer to balance.

Detractors say trimming retirement benefits will make it harder to attract good workers and may create inequity and hard feelings among colleagues.

Sen. Dave Lewis, R-Helena, who spent three decades in the state budget office and was budget director under Gov. Marc Racicot, said trimming the benefit guarantee is necessary to protect the long-term viability of the retirement system.

"There's no impact for several years, but actually it brings us into balance," he said. "I think it's a fair compromise. It protects the people who are in now, and says to new hires, 'You're going to get the same thing teachers get.'"

Rep. Scott Mendenhall, R-Clancy, agrees with spending some of the surplus on the pension fund as well as cutting the benefit for future hires.

"Those won't completely solve the problem, but we will make some significant strides toward soundness there," he said.

Cohenour, though, said she doesn't like the benefit cut, even though it won't affect current state workers.

"I think it's a bad deal. We already have a problem recruiting and retaining employees," she said.

"I understand what they're trying to do, and I'm not supportive. You're going to have class warfare (between older and new employees)."

Jacobson, too, agreed with the $100 million cash outlay but doesn't support cutting the guaranteed future benefit increase.

"I'm inclined to leave things where they are for the time being, see if this additional infusion of capital will help and put some faith in our investments," he said.

John Harrington can be reached at 447-4080 or john.harrington@helenair.com.