Hartford - The labor concessions agreement between Gov. Dannel P. Malloy and state employee unions was pronounced dead Friday, provoking disbelief and some hand-wringing from area legislators.

While 60 percent of the unionized work force of 45,000 voted for the agreement, union bylaws set the minimum threshold at 80 percent. In addition, 14 of the 15 unions had to vote to accept the agreement. But as of Friday, two unions had already said no.

"It will not be ratified under the coalition's strict rules," said Matt O'Connor, a spokesman for the State Employees Bargaining Agent Coalition, which represents the unions in negotiations.

A final round of voting continued Friday for about 1,900 workers, but their votes would not affect the outcome.

Coalition officials said there are no plans to rewrite their bylaws to change the result of their ratification effort; it was unclear whether such a scenario would be technically possible.

"We have to accept the vote result and the rules as they stand now," said Larry Dorman, a SEBAC spokesman.

The failure to pass the agreement opens a $1.6 billion hole in Connecticut's two-year, $40.1 billion budget set to begin July 1. State legislators are scheduled to return to Hartford for a special session Thursday to consider the governor's "Plan B" for rebalancing the fiscal plan.

The governor has yet to release details on his alternate plan, but he says it must cut about $700 million in the first fiscal year and $900 million in the second.

At a news conference in the Capitol Friday, Malloy said his administration will begin issuing 7,500 layoff notices "immediately" to state employees. Aides said the first batch of notices could go out as soon as Monday.

The governor has said he wants most of the layoffs to be in effect by Sept. 1. He has also ruled out any do-overs on the agreement's ratification.

"I don't want to be laying off 7,500 or more people. I think it's bad for the economy, and I think it's bad public policy," Malloy said. "This agreement would have been far better than what's going to happen."

The governor was joined at the morning news conference by the mayors of Connecticut's five largest cities - Hartford, New Haven, Bridgeport, Stamford and Waterbury. He said cities and towns can expect some reductions in state municipal aid in the coming fiscal year but noted that the bulk of the cutbacks would follow in the second year, which starts July 1, 2012.

Malloy said he will seek greater rescission authority from the Democratic-controlled legislature. This would allow him to make larger budget cuts without step-by-step General Assembly approval.

The governor's previous rescission request in February was rebuffed. At the time, he sought to increase his authority over cutting appropriations to 10 percent from the current 5 percent and to increase his limit on cutting any budgetary funds to 5 percent from 3 percent. He also proposed removing the current restriction on cutting municipal aid.

State Sen. Andrew Maynard, D-Stonington, said Friday he would likely vote to grant the governor's rescission request.

"I think at this stage of the game we have to give the governor the latitude to do what he needs to do," Maynard said. "I'm comfortable that he'll be judicious. He was a mayor, he understands the constraints that the cities and towns are under."

But state Rep. Diana Urban, D-North Stonington, was less comfortable handing over control.

"I understand where he's coming from as the CEO of the state, but I feel strongly that we as a legislature have a responsibility, and I'd be reluctant to give up that responsibility," she said.

The fatal blow to the concessions agreement came late Thursday when the third correction officers' local in the AFCSME Council 4 union voted no.

AFCSME Council 4 represents about a third of the state's unionized work force, and the correction officers' rejection put the union tally at 6,781 to 5,545 against ratification.

SEBAC leaders are scheduled to meet Monday morning to cast their own final votes on the agreement and discuss what to do next. As of Friday afternoon, two of the 15 unions had rejected the deal and 11 had accepted it.

Many legislators from southeastern Connecticut have expressed disappointment that the labor deal fell apart. The governor's administration and union leaders reached the agreement in mid-May after more than three months of negotiations.

"I think many people feel that the deal was not only fair, but was beyond fair," said state Rep. Betsy Ritter, D-Waterford. "I have not had a single person tell me it was too harsh."

The agreement called for a two-year wage freeze followed by three years of 3 percent raises. It also promised four years of no layoffs for union workers. The agreement also would have raised the retirement age from 60 to 63 for non-hazardous-duty employees with 25 years of service, and from 62 to 65 for employees with 10 years of service.

A sizeable number of state correction officers voiced objection to the deal's new value-based health care plan, which would have required workers to get regular checkups and tests to qualify for the least expensive rates.

The correction workers said they disliked the idea of being told how to care for themselves. Their bargaining unit within AFCSME ultimately voted 2,646 to 1,158 to reject the deal.

State Rep. Ernest Hewett, D-New London, said he understands why workers wouldn't feel good about giving back benefits but wishes they had accepted the concessions to avoid layoffs.

"At the end of the day it's important to have a job in this economy because things are not good right now," Hewett said. "To just have a job should have weighed out more important than anything."

Urban remains puzzled as to why so many workers voted no.

"I can't believe that they think they can possibly get a better deal than what they had," she said. "Are they unaware of what's going on in this economy?"

SEBAC officials told reporters they knew of some non-union managers in state agencies, particularly in the Department of Transportation, who urged rank-and-file union members to vote down the agreement. The union officials also blamed chain emails and the conservative Yankee Institute for Public Policy for spreading misinformation about the agreement.

The Yankee Institute vigorously denies the allegations and says that SEBAC officials are using the institute as a scapegoat to distract attention from their failure to persuade members to accept the deal.

j.reindl@theday.com