PROVIDENCE –– Rhode Island’s largest state employees’ union has formally accused Governor Carcieri of violating state law by refusing to negotiate a new contract, the latest move in an escalating labor dispute that threatens tens of millions of dollars in taxpayer savings.

The clash centers on a key legal question: have the two sides already “negotiated” or simply “discussed” a new deal?

The controversy will be investigated by the state Labor Relations Board, which received the complaint yesterday from the state’s dominant public employees’ union, Council 94, American Federation of State, County & Municipal Employees.

The issue has broad implications for Rhode Island’s finances and the salary and benefits of more than 10,000 state workers.

The governor thought he had secured a deal with labor unions to save $35 million to $40 million this year alone. But Council 94’s rank-and-file rejected the agreement last week, exposing a divide within organized labor in the state and throwing Carcieri’s budget plans out of whack.

Because state labor law requires a formal “collective bargaining” process, union leaders argue that the Republican governor must return to the bargaining table to negotiate a new deal.

Carcieri has refused.

“If it walks like a duck, quacks like a duck, looks like a duck, it’s a duck,” said Carcieri communications director John Robitaille. “They can try to play silly games with semantics if they so choose, but as far as the governor is concerned, we negotiated in good faith for a long period of time, and it’s incredulous that they could be making these statements right now.”

Both sides acknowledge there was a series of closed-door meetings — as many as 30 — between January and mid-June that produced a memorandum of settlement outlining a four-year contract that included no pay increase in the first year and increased employee health-care contributions.

The memorandum was signed June 20 by top Carcieri officials and two Council 94 leaders — state Vice President Johnathan Braddock and Executive Director Dennis Grilli.

Grilli, who joined other Council 94 leaders in California this week for AFSCME’s national convention, maintains the meetings that led to the settlement were not negotiations.

“What we agreed to in the beginning of these talks back in January was that they were considered discussions, not negotiations,” he said late last week. “Everybody understood that if they didn’t produce an agreement, that wouldn’t preclude us from going through formal negotiations.”

An e-mail exchange obtained by The Journal reveals that the governor’s office was trying to arrange formal negotiations with Council 94 the same time that Carcieri officials were holding meetings with union leaders.

An e-mail sent May 20 by Carcieri negotiator Michael F. Kraemer urges Grilli to meet later that month to negotiate. Ironically, Kraemer makes the same argument for meeting that labor leaders are making now:

“Council 94 has a contractual obligation to meet with the state, as well as a statutory obligation,” Kraemer wrote. “Refusing to meet and bargain in good faith is an unfair labor practice under Rhode Island law.”

The timing of Council 94’s formal complaint is unclear.

The state Labor Relations Board will first hold a hearing to determine whether sufficient evidence exists to issue a complaint against the governor. If so, the board will initiate a formal hearing process.

Either side can appeal the ultimate finding to Superior Court.

Time is of the essence. The new contract, as outlined in the settlement, was supposed to take effect by tomorrow.Robitaille dismissed the rationale behind Council 94’s argument as “insanity.” Further, he said it wouldn’t stop the governor from taking unilateral action against union members who rejected the contract.

Council 94, which is a collective of 24 local unions, represents 4,100 employees, roughly one-third of the state’s work force. The rest are represented by 13 independent unions. So far, at least seven have voted to ratify the new four-year deal. Three have joined Council 94 in voting no.

“There are some things the governor can do and he is reviewing those things right now as we speak,” Robitaille said. “I know that the governor’s goal in all of this is to get a signed agreement and to balance the budget. That’s what he’s focused on and he will take whatever steps he can lawfully take to make that happen.”

Robitaille would not be more specific. He said the governor would likely outline a course of action later in the week.

Council 94 President Michael Downey said he refused to join other Council 94 leaders in signing the settlement because it required members to pay a percentage of their health-care premiums, instead of a percentage of their salary. The change disproportionately hurts lower paid workers, according to a union analysis.

Over the course of the four-year deal, an employee who makes $40,000 would gain a total of $938, taking into account the increased health-care costs and a cumulative 8.5 percent pay hike. A worker who makes $80,000 would gain $4,248 over the four years, however.

“I never agreed to this in my life. The president of the council never signed anything,” Downey said. “I would never sign this.”

speoples@projo.com