Martin OMalley - Nick Wass AP - banner.jpg

Maryland Gov. Martin O'Malley speaks at a labor rally. credit: AP Photo/Nick Wass

In what has become an increasingly familiar sight, thousands of union members gathered this week outside the Capitol in yet another state. Public employees protested the governor's plan to shift more money from salaries to pensions in an effort to reduce the state's deficit. They weren't enthused about his plan to cut public-school funding by $94 million, either.

Were they in Wisconsin, where demonstrators have faced off for weeks with conservative Republican Gov. Scott Walker? Ohio, where newly elected GOP Gov. John Kasich has attracted labor's ire? Neither. The protests unfolded in Maryland, where Gov. Martin O'Malley--the chairman of the Democratic Governors Association--is facing union resistance to his cost-cutting measures. "I'm asking for many of the same concessions they're asking for in Wisconsin," O'Malley told National Journal.

With all of the attention given to Walker and Kasich (not to mention New Jersey's Chris Christie) as they mix budget-cutting with bombastic proposals to end collective bargaining and privatize state assets, Democratic governors have mainly flown below the radar as they've sought similar concessions from labor on spending cuts in public services, while avoiding fights to limit unions' bargaining power or sell state assets.

Governors from both parties face the same brutal math after a severe downturn that battered state revenue and swelled demand for Medicaid and other public services. The squeeze compelled governors of all ideological stripes to pursue savings from state employees, such as rollbacks in pension benefits.

But unlike Republicans Walker, Michigan Gov. Rick Snyder, and Florida Gov. Rick Scott, who advocate large corporate tax cuts that would widen deficits, some Democrats are offsetting spending cuts with tax increases. With more revenue, Democratic governors can move toward fiscal balance without resorting to cuts as severe as their GOP counterparts are advancing. In Connecticut, for instance, Gov. Dannel Malloy is offering a package of spending cuts and a $1.5 billion tax increase, while asking union leaders for $2 billion in concessions.

Democratic governors are also separating from Republicans by echoing President Obama's argument that responsible cost-saving must be matched with investments in economic development and job creation. Yet their determination to protect such priorities as education may also inexorably force these Democrats into greater conflict with public employees, whose benefits represent a competing claim on constricted state dollars.

New York Gov. Andrew Cuomo, for example, plans to take up pension reform after his budget passes; he is already feuding with the state's teachers over a plan to eliminate $1.5 billion in school aid, and he is resisting efforts to reduce the cuts by extending a millionaire's surtax that expires this year.

Democrats contend that they are ahead of their GOP peers because they put everything on the table early. O'Malley pushed through a package of tax increases three years ago that he says has Maryland in a stronger position than most other states. In his view, Republicans seized the spotlight--O'Malley calls Christie "the best stand-up review in American politics today, hardy-har-har"--without doing much. Countering conservative arguments that the only way to win concessions from labor is to limit collective bargaining, Democrats are largely trying to negotiate cooperatively with the unions.

"Christie has raised taxes and hasn't gotten any concessions out of labor, on pensions or anything," DGA spokeswoman Elizabeth Smith says. "We have Democratic governors who have gotten concessions out of labor on pensions--[Jay] Nixon in Missouri, [Christine] Gregoire in Washington, O'Malley working on it now."

For his part, O'Malley ventured out to meet with the protesters who thronged Annapolis, the state capital, this week. "My message was that I appreciate the hard work that public employees do, that I understand that they did not bring about this national recession, and that I'm committed to staying at the table," he said a few days later.

Labor seems willing to stay at the table with their political allies, too. AFL-CIO President Richard Trumka joined the demonstrators in Annapolis but lauded O'Malley for his willingness to engage with unions.

"Governors like Martin O'Malley, [Illinois's] Pat Quinn, and [Montana's] Brian Schweitzer have been willing to sit down and work with us to come up with real solutions to real problems," American Federation of State, County, and Municipal Employees President Gerald McEntee said in a statement. "Our members understand the current fiscal situation and have made enormous concessions."

The pressing political question is whether these Democratic governors and their public employees can find a path to stabilize state finances while protecting bargaining rights and avoiding a Wisconsin-style fracas. That may turn on whether voters will accept at least some tax increases. Republicans might argue such a move is simply siphoning money from taxpayers to public employees, but the same could be said in reverse of the corporate tax cuts that GOP state executives are proposing.

More to the point, the concessions that Democrats and Republicans are demanding are roughly comparable: Kasich and O'Malley, for instance, are both asking public employees to contribute 2 percentage points more of their pay to their pensions. Malloy is seeking $2 billion in savings over two years, more annually than the $2.8 billion over five years that Scott is requesting in Florida.

If the Democratic governors succeed in steadying their budgets without nasty fights, they'll have bragging rights on their Republican counterparts heading into 2012; that would provide a potent argument for O'Malley, who is charged with electing more Democratic chief executives. If the Democrats fail, Walker, Kasich, and Christie will have the last laugh--hardy-har-har.

This article appeared in the Saturday, March 19, 2011 edition of National Journal.

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