Governor Carcieri announces his plan at a State House news conference yesterday.

The Journal / Connie Grosch

PROVIDENCE — The simmering labor dispute between Governor Carcieri and the state’s largest employee union erupted yesterday as the governor issued an executive order forcing members of Council 94 and other unions who rejected the contract offer to pay the same health-care co-share increases as those who have agreed to the settlement.

Union officials slammed the governor’s demands as “scare tactics” and vowed to go to court this morning to request an injunction stopping Carcieri from imposing the changes.

The governor’s order comes just a week after Council 94, American Federation of State, County & Municipal Employees — a collective of 24 smaller unions representing more than 4,000 state employees — overwhelmingly voted down the plan, calling it unfair to the lowest-paid workers.

That rejection and the order that now follows have sweeping implications for Rhode Island’s ability to balance its budget in an already precarious fiscal year.

Carcieri has flatly refused to return to the bargaining table, calling the deal his “best and final offer.” But that contract was to have saved the state $10 million this year by delaying pay raises and increasing employee health-care contributions. Without it, the state will fall far short of the savings it was counting on to help erase a $425-million budget deficit.

“Because of their unwillingness to be a part of the solution, and knowing that I am duty bound both constitutionally and by statute to balance the budget, I am forced to take immediate and unilateral actions to fulfill my responsibilities,” the governor said yesterday in his first substantive remarks on the contract.

He called the executive order “far less severe” than the alternative of layoffs and shutdown days.

The plan forces workers covered under the umbrella of Council 94’s contract to pay a percentage of their health-care premiums, instead of paying health-care costs based on a percentage of their salary, as they have previously done. The change would mean substantial increases for state workers, especially those with families, starting in next week’s paycheck.

But Carcieri’s order stops short of a rumored plan to halt the practice of deducting union dues from Council 94 members’ paychecks. He also elected not to force union officials who are regular state employees to return to their everyday jobs and stop conducting union business on state time.

The governor said he reserves the right to take either action if the stalemate continues.

Dennis R. Grilli, Council 94’s executive director, immediately denounced Carcieri’s actions yesterday as ratcheting up anxiety in an already difficult situation.

“While we want to have a contract that is fair to Rhode Island taxpayers and some of the lowest paid state employees, Council 94 will not be bullied, coerced, or intimidated,” Grilli said.

The union plans to send its lawyers to court this morning, asking a judge to stop the governor from imposing the changes on the members. Grilli said it remains unclear whether the union will need to file a new unfair labor practice suit, or whether the one filed earlier this week accusing Carcieri of violating state law can be amended. Union lawyers were still working through a game plan last night.

The state Labor Relations Board will also hold a hearing to determine whether sufficient evidence exists to issue a complaint against the governor.

Carcieri maintains that Council 94 is no longer operating under the bounds of a valid bargaining agreement and therefore has no contractual rights, leaving him on solid legal ground. In an unprecedented move, the administration issued letters in June officially terminating the recent union contract, which expired July 1.

“The executive order is still a huge violation of contract law,” said Council 94 lobbyist James Cenerini. “Taking terms not agreed upon and unilaterally trying to impose them on people who have not voted for a contract is a way of trying to stuff it down their throats.”

Council 94 and Carcieri do agree that this dispute has now officially entered “uncharted territory,” where questions are plentiful and answers are few.

The last time Council 94 members rejected a contract was under the Almond administration in 1996, when union leaders and state officials solved the problem by returning to the table.

National Education Association Rhode Island executive director Robert A. Walsh, who helped broker the deal, said last night reopening talks seems the fastest and least expensive way to resolve the current impasse.

“Even if a deal gets rejected, you normally go back to the bargaining table,” Walsh said. “The only way to get an agreement is if they sit down and talk.”

But the governor says his administration has already fulfilled its duty to conduct negotiations. Through dozens of meetings over the course of six months, he said, he and union leaders brokered whatever everyone felt was a fair deal given the state’s tight economy.

The fact that 94 percent of the Council 94 membership then rejected the agreement, throwing the state’s savings plan out of whack was a sign of obvious infighting within the union, Carcieri said yesterday.

Meanwhile, non-union employees in the executive branch, the lieutenant governor’s office, the secretary of state’s office and the general treasurer’s office have all agreed to accept the terms of the much-disputed agreement.

The attorney general’s office and the legislature, however, have thus far refused to go along with that plan. Spokesmen for both departments said they have traditionally piggybacked on the Council 94 deal and thus plan to await the results of the current dispute before committing to any agreement.

Beyond the health-care increases, the four-year agreement gives no cost-of-living increases in the first year, but an 8.5-percent increase over the final three years. Though Council 94 as a whole rejected the deal, at least 7 of the state’s 13 independent unions have voted in favor of it.

cneedham@projo.com