National Grid lockout costing state millions, Baker admin. says
The four-month lockout by National Grid of more than 1,200 union gas workers has cost the state millions in lost tax revenue and triggered more than $13 million in unemployment benefits, according to a Baker administration analysis conducted at the request of House Speaker Robert DeLeo.
Administration and Finance Secretary Michael Heffernan responded to the Democratic leader last Friday with a breakdown of the costs of state services being accessed by locked out gas workers and the impact on tax revenues from lower wages and less spending.
The cost analysis, which was requested by DeLeo earlier this month alongside his call on National Grid to end the lockout, was based on the 1,235 National Grid workers who filed for unemployment insurance after the June 25 lockout.
While the labor dispute has dragged on into a nineteenth week, leaders on Beacon Hill have begun to ratchet up the pressure on National Grid to resolve the contract impasse, or at least let the gas workers back on the job while talks continue.
According to the Department of Unemployment Assistance, those union workers received more than $13.3 million in unemployment benefits through the first week of October. That money comes from a trust fund paid through contributions from Bay State employers.
"Thank you for your inquiry regarding the costs to the Commonwealth as a result of the labor dispute between National Grid and United Steel Workers Locals 12003 and 12012," Heffernan wrote. "As you noted, this is an unfortunate situation and I share your concern."
Hefferan told the speaker that in addition to the lockout's impact on the unemployment insurance trust fund, 100 households representing 340 clients were receiving food stamps in October at a cost of $9,000 a month and 200 families, representing 530 individuals, were enrolled in MassHealth this month at a net cost of $70,000 a month.
Another six households with locked out gas workers were signed up for unsubsidized health insurance coverage through the Health Connector, and 28 households were enrolled in subsidized coverage at cost of $4,580 a month.
"These are avoidable costs"
Last week, the House referred a bill to committee that would force National Grid to restore health benefits to all locked out workers until contract talks are resolved. The bill filed by Rep. Jim O'Day back in July was referred to the Telecommunications, Utilities and Energy Committee, and both DeLeo and House chairman Rep. Thomas Golden said there will be a hearing next month.
"These are avoidable costs to the Commonwealth. The Speaker won't be satisfied until the workers are back on the job," DeLeo's spokeswoman Catherine Williams said.
In addition to the safety net program costs, Heffernan said that the Department of Revenue estimates income tax collections have fallen off $1.5 million to $1.8 million since the end of June when the workers' salaries were cut.
Sales tax revenue is also estimated to be between $400,000 and $500,000 lower due to the workers having less income to spend, and other tax revenue streams are estimated to be off by another $600,000 "due to indirect impact of less economic activity from the workers earning and spending less."
The Department of Revenue analysis did not account for the tax impact of National Grid hiring and paying replacement gas workers during the lockout.
In his Oct. 2 letter to Heffernan, DeLeo also asked the administration to project out the potential cost to the state should the lockout continue into 2019.
"These costs will undoubtedly change going forward," Heffernan said, depending on when the labor dispute ends and whether some workers obtain other sources of income.
Heffernan said his office will work with the House Committee on Ways and Means "to continue to monitor the costs of the labor dispute and welcome any further input or questions you may have."
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