Governor Chet Culver accepted a tentative deal today on a new two-year contract with with largest union representing state employees. The contract would increase the pay of all state workers covered by AFSCME by 2 percent in fiscal year 2012 (from July 2011 through June 2012), with another 1 percent wage increase in fiscal year 2013. Some employees would qualify for other pay increases as well.

Iowa Republicans immediately denounced the deal.

AFSCME moved quickly to strike a deal before Culver’s term ends:

Three days after the election, AFSCME negotiators submitted an initial contract offer that was a 10-page proposal requesting only one change – an increase in base wages for each of the next two fiscal years that raised prospects for a swift conclusion in a collective bargaining process that must reach a voluntary agreement by Feb. 28 or a binding arbitration award by March 15.

AFSCME’S proposal called for a 2 percent increase in base wages on July 1, 2011, and a 1 percent increase on Jan. 1, 2012, in the first year of the agreement, and a 2 percent increase on July 1, 2012, and a 1 percent on Jan. 1, 2013, in the contract’s second year. The proposal would not change the current 4.5 percent “step” increases in wages for state workers who are not at the top of their pay scales.

Governor-elect Terry Branstad wants to finish the union negotiations:

He pointed to the 1998-99 transition from his fourth term to Gov. Tom Vilsack’s new administration where his team started the negotiating process and then handed the talks over to Vilsack’s administration to finalize a deal that stretched two years into his first term.

“I’d like to have that same courtesy in this because I think there are some critical changes that we would like to be involved in,” Branstad said last week. During the 2010 campaign, Branstad – who previously served four terms as governor from 1983 to 1999 – said he was interested in revamping employee health insurance benefits and “step” wage increases for employees during contract talks as part of his goal of reducing state government by 15 percent over five years.

I don’t blame AFSCME leaders for wanting to cut a deal with Culver. When Branstad was governor, state employees had to sue to get the wages they were promised in their contract. This year Branstad campaigned on making state employees pay more for their health care coverage.

AFSCME’s state president Danny Homan said it was the first time in his career that the state accepted the union’s first proposal. By asking for very few changes in the contract, the union increased the chance of reaching an agreement before Branstad’s inauguration. Culver’s official statement on accepting the deal alluded to sacrifices AFSCME members agreed to during the state’s budget crunch in late 2009:

“Like all hardworking Iowans, state employees have struggled through a historic recession. They agreed to take unpaid furloughs and suspension of employer deferred compensation contributions in Fiscal Year 2010 so the State could better adjust to economic conditions and lower revenues. These people are on the front lines of delivering vital services and information to the people of Iowa and deserve to be paid in accordance with their qualifications and efforts.”

Branstad is vacationing in France today, but his future chief of staff Jeff Boeyink slammed the deal:

“Taxpayers are the losers in this backroom deal.

“Governor Culver’s decision to rush through a collective bargaining deal with state employee unions before he leaves office is reckless and irresponsible. This will cost Iowa taxpayers $103.5 million the first year alone, and hundreds of millions in subsequent fiscal years.

“At a time 113,000 Iowans are out of work and thousands more are seeing significant pay reductions, it is the wrong time to ask taxpayers to pick up the enormous cost of these pay raises.

“Iowans elected Terry Branstad on a promise to reduce the size of Iowa’s budget and Governor Culver has taken the unprecedented step of effectively removing to voice of the taxpayers from this process.

“This is unaffordable, and we will review all of our options.”

Incoming House Speaker Kraig Paulsen immediately raised the prospect of layoffs:

“Governor Culver should have permitted Governor Branstad to complete those negotiations just like Governor Branstad showed Governor Vilsack that courtesy 12 years ago,” Paulsen says. “Regardless, what’s done is done and we’ll have to move forward.”

That likely means state employee layoffs, according to Paulsen, who says the state can’t afford the more than $100 million price tag for the pay-boosting package.

“I think it’s going to lead to layoffs in certain areas,” Paulsen says.  Some of those layoffs may be sooner rather than later, as Paulsen says Republicans are plotting up to 300-million dollars in cuts in the current year’s budget.

Several Republican ideas for reducing spending aren’t realistic, so I won’t be surprised if they move to cut the state workforce instead.