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A legislative panel on Thursday rejected contracts that cover 30,000 people who work for the state of Minnesota.

The Subcommittee on Employee Relations voted 6-4 along party lines, with the six Republicans voting to reject the contracts with the Minnesota Association of Professional Employees (MAPE) and AFSCME Council 5.

The contracts call for raises of 2 percent in 2017 and 2.25 percent in 2018, but are too lucrative, the subcommittee said. The deals also include cost savings on health care and are within the operating budgets approved by the Legislature.

The move drew sharp rebukes from both labor and management.

"The chair of the subcommittee [Rep. Marion O'Neill, R-Maple Lake] is somebody that got a 45 percent raise last year," said Richard Kolodziejski, public affairs and communications director for MAPE. "The speaker was not going to implement those raises. She personally filed a lawsuit against the speaker to make sure she got that raise.

"It's being perceived as disrespectful," Kolodziejski said. "You allocate that money, then you say it's too lucrative."

Lawmakers got a pay raise earlier after Minnesota voters approved the formation of a citizen's panel to set lawmaker pay. That panel recommended the 45 percent pay increase; when House Speaker Kurt Daudt initially balked at enacting those pay increases, O'Neill and a DFL lawmaker filed a lawsuit seeking to force his hand. Daudt extended the raises soon after

Kolodziejski called the move "a political pawn between the Legislature and the governor's office because of the governor's line-item veto defunding the Legislature. ... It has been alluded to on many occasions."

The subcommittee will pass its recommendation to reject the contracts on to the full Legislature when it convenes in February 2018. The Legislature is not bound by the subcommittee's recommendation. The subcommittee has rejected contracts twice since 2010, and the Legislature approved those deals.

The subcommittee approved a motion directing negotiators for the unions and management to return to the bargaining table.

"We're not going back to the bargaining table," Kolodziejski said. "Ninety-eight percent of our members voted in favor of the contract. This contract really moves the state into the 21st century. It brings them back to being an employer of choice."

Members of MAPE and AFSCME, the two biggest state-employee unions, will continue to work under the terms of the previous contracts, which expired June 30, until new contracts are approved. If and when that happens, the pay raises would likely be retroactive, said Eric Hallstrom, deputy commissioner of Minnesota Management and Budget (MMB).

"I'm concerned that what we have here is increasing the payrolls of people who happen to work for government at the expense of people who don't work for government," Rep. Steve Drazkowski, R-Mazepa, told Minnesota Public Radio.

Edwin Hudson, deputy commissioner of enterprise human capital for MMB, spoke strongly in favor of the labor contracts.

"This is a bit of uncharted waters for us," he said. "From a management perspective, it's a contract less than all market data. For a union to agree to less than market data, that's very good terms."

He said county employees are being given 2.5 percent increases and private companies are giving 3 to 3.5 percent increases.

"This contract is loaded with tons of value that I think the private sector would just clamor to have," Hudson said. "We're always encouraged to be like the private sector. And here we are like the private sector, and exceeding what the private sector was doing, and yet it was rejected.

"We're looking to appeal to the full Legislature and we've got to go back and sell the value. Our hope is they will see that and pass these contracts."

MAPE represents about 14,500 nonsupervisory professionals in various state agencies; AFSCME represents about 15,500 workers in the groundskeeping, clerical and maintenance areas.

Members of the subcommittee voting to reject the contracts were Reps. O'Neill; Drazkowski, and Jeff Howe, R-Rockville, and Sens. Michelle Benson, R-Ham Lake; Mark Koran, R-Stacy, and Scott Newman, R-Hutchinson.

Members voting to approve were Sens. Chris Eaton, DFL-Brooklyn Center, and Erik Simonson, DFL-Duluth, and Reps. Debra Hilstrom, DFL-Brooklyn Center, and Leon Lillie, DFL-North St. Paul.

Pat Pheifer • 612-673-7252