State workers in Minnesota's two largest public employee unions won't be required to take unpaid furloughs under a tentative two-year contract reached Wednesday with the state, according to the unions.

However, Brian McClung, spokesman for Gov. Tim Pawlenty, said that although the agreement is silent on the issue of furloughs, state government retains the right to impose them in the event of a fiscal crisis.

The organizations -- the American Federation of State, County and Municipal Employees (AFSCME) Council 5 and the Minnesota Association of Professional Employees (MAPE) -- said the deal would "preserve public services, save jobs and prevent furloughs."

Furloughs had become a prominent issue as Pawlenty talked about them as a possible way to achieve savings without resorting to layoffs.

McClung said the agreement includes a two-year wage freeze with step increases in the second year. "We appreciate the willingness of the state employees unions to work with us under these difficult circumstances," he said, adding that Pawlenty believes the freeze sets a good example for other unions.

The 32,000 public employees represented by MAPE and AFSCME Council 5 will vote next month.

In a prepared statement, Minnesota state officials didn't necessarily take issue with the unions' take on furloughs, but said the contracts preserve the state's "existing ability to furlough employees if necessary."

The current contracts expire June 30, and the new ones would begin July 1 and run for two years.

According to the AFSCME website, the agreement protects union members from furloughs or pay cuts and gives them so-called "step" pay increases in the second year. Workers' health-care premiums would be frozen in the first year, with a $125 state contribution to offset a 6.7 percent premium hike in the second year.

The MAPE website said furloughs were dropped during the talks when union negotiators showed they would cost the state $4.3 million rather than save more than $66 million as state negotiators had contended.

Pawlenty, grappling with a $4.6 billion projected two-year budget deficit, had raised the concept of furloughs earlier this year. Just last week, he said that he would like to be able to order workers to take up to 48 days of unpaid leave over the next two years and freeze their pay for that period as well.

But the MAPE website said union negotiators presented research showing that furloughs would cost the state $71 million in uncollected income taxes and money lost when federally funded jobs and services were cut.

Furloughs are becoming more common in the private sector, but states have turned to them in recent months to help close budget gaps.

Democratic Gov. Martin O'Malley of Maryland issued an order in December requiring executive-branch employees to take at least two days off this year without pay. O'Malley himself agreed to a five-day furlough. In California, Republican Gov. Arnold Schwarzenegger imposed furloughs on state workers in February.

Last month, MAPE executive director Jim Monroe said that the furlough proposal had not been well received by his union's members.

Kevin Duchschere • 651-292-0164