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November 25, 2024 Politics & Policy

As he prepares for his 7th year as governor, Lamont determined to maintain budget restraints

HBJ PHOTO | GREG BORDONARO Gov. Ned Lamont sitting in his office inside the state Capitol during a Nov. 13 interview with the Hartford Business Journal.
By David Krechevsky
Gov. Ned Lamont
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As the Connecticut General Assembly prepares for its 2025 legislative session, Gov. Ned Lamont says he has one overarching goal for legislators.

“Priority No. 1 is an honestly balanced budget,” he said recently.

“We didn’t have an honestly balanced budget for decades, and we went from boom to bust,” Lamont said. “We didn’t pay our bills. We stuck a lot on the credit card — that was everything from bonding to pensions — and it was terrible. So, I do not want to go back to those bad days, and I think we’ve done pretty well with six balanced budgets in a row.”

The budget was just one topic Lamont discussed in an exclusive interview with Hartford Business Journal. Seated at his desk, dressed casually in pants and a collared shirt with no tie, the governor offered his candid thoughts on issues likely to be raised in the next session.

This January, when he will also celebrate his 71st birthday, Lamont will kick off his seventh year in office and the second half of his second term.

Asked what he’s learned during his tenure, Lamont said he now understands the importance of getting out of the Capitol.

“I think this building has a perspective, but doesn’t necessarily reflect the perspective of the greater state,” he said. “Maybe as a first-time governor you’re spending all your time inside this building and perhaps not enough time listening around the state.”

Post-election challenges

The 2025 legislative session opens Jan. 8 and will convene amid some notable changes, both in Hartford and Washington, D.C.

Former President Donald Trump has regained the White House, while Republicans also took control of the U.S. Senate and retained control of the House of Representatives.

Closer to home, Democrats in Connecticut added seats in the General Assembly, giving them a veto-proof majority in each chamber.

For Lamont, a moderate Democrat who doesn’t always march in lockstep with his party, it could make for a challenging year.

That’s especially true in regards to the state budget’s fiscal guardrails, which include a spending cap, annual limits on bonding and a “volatility adjustment” that requires saving a portion of tax receipts above a specified level.

Lawmakers this session must approve a new two-year state budget, but some legislative Democrats want to at least loosen the spending restrictions, which will require the legislature to save $2.5 billion in estimated tax revenues over the next two fiscal years.

House Speaker Matt Ritter (D-Hartford), who supports easing the guardrails, said recently there’s a “compromise here that’s easy to strike.”

Lamont, though, continues to support the fiscal restraints, even though he expects to get some pushback from both parties.

“I think they’ve worked,” he said. “I mean, I can tell the fiscal conservatives this worked because of what we’ve been able to accomplish (with the balanced budgets and surpluses), and I can tell the progressives it’s worked because six straight years in a row we’ve been able to increase funding for K-through-12 and higher-ed and child care and housing. So, it’s not like it shackles.”

Lamont is concerned about Medicaid costs, however, calling them the “new cancer in our budget.”

“Everybody’s going into the hospital. The hospitals are filled up,” he said. “Our utilization is still very heavy and pharma is still very expensive.”

As a result, the state’s Medicaid program was running a $220 million deficit as of October, according to the governor’s budget office.

RELATED STORY: Lamont to decide on reelection bid after legislative session ends 

Also on the healthcare front, Lamont said he’s supportive of the concept of association health plans, but any bill would need to mandate coverage of benefits required under Obamacare.

The business community last year lobbied heavily for such plans, which would allow chambers of commerce and other associations to offer their members health insurance as a combined group to increase their purchasing power and potentially lower costs.

The bill was blocked by some progressive Democrats.

Economic update

The governor also said he believes the state has already provided significant support to address the lack of affordable housing, noting that Connecticut built “more housing last year than we have at any time in the last 10 or 15 years.” He also cited the $800 million toward housing included in the last budget.

“I don’t have to keep upping the ante every year,” he said. “Let’s make sure I’m putting in the money or putting in the work and it’s making a difference.”

As for the state’s economy, Lamont noted that for the first time in his life “we have more jobs than people looking for jobs.” He said he believes the transition from President Joe Biden to Trump “will be seamless” for defense contractors like Pratt & Whitney, Sikorsky and Electric Boat.

Lamont offered comments on a variety of other issues expected to be addressed during the coming session, as well as on what a new Trump administration may mean for Connecticut.

The following is a portion of HBJ’s interview with him, edited for length and clarity.

Q: Does a Trump administration change what to expect from the federal government, such as for Medicaid or other types of funding?

Lamont: Hell yeah. … Two years ago we had tax credits for wind power. Wind was still pretty expensive, but we had tax credits.

Now it’s going to be tax credits for nuclear and natural gas. That’s okay. I can live with that. (Trump has expressed opposition to the offshore wind industry and ending incentives for it.)

Health care is going to be tough, because we’ve got wind in our face on healthcare costs right now. I think that President Trump is going to probably dramatically cut Medicaid, probably not subsidize the Medicaid expansion, and cut back on the subsidies we have for Access Health, the state’s health insurance exchange.

That’s going to either push people off health insurance, or that’s going to mean more subsidies paid for by the taxpayers of Connecticut.

Q: The Connecticut Business & Industry Association (CBIA) annually raises concerns about new labor mandates. This year, you vetoed the striking workers’ bill, which would have allowed strikers to receive unemployment benefits.

The CBIA vehemently opposed that measure. Do you anticipate it coming up again?

Lamont: I’m not supportive there. I made that pretty clear about a year ago.

But a lot of the stuff that CBIA doesn’t like, they don’t like it and then they forget about it six months after it passes. I don’t want to be dismissive, but I mean, let’s take paid family and medical leave, (which CBIA opposed). (They said) ‘Everybody’s going to get sick in July, (take time off) and come back in September,’ right?

I heard that, and it’s not what happened. And we actually had a few more young families come to the state because we’re family friendly.

Q: Yale New Haven Health’s acquisition of Prospect Medical Holdings’ three Connecticut hospitals in Vernon, Manchester and Waterbury remains tied up in the courts.

Yale has sued the struggling Prospect to try to lower the original $435 million purchase price, arguing the value of the for-profit company’s Connecticut hospitals are much lower now following a major cyber attack and other significant financial issues that have come to light.

You recently met with both parties. What’s the status of the deal?

Lamont: I got them together separately. I got them together (jointly). I said, ‘this deal is in the best interest of the state and I want you to get this thing done.’ They don’t think highly of each other, have you noticed that?

Yale had a purchase agreement at $435 million and they don’t want to pay it … because they say there’ve been material changes and Prospect hospitals aren’t worth as much as they were before.

Prospect said, ‘let’s talk about it, but a deal is a deal.’

We got that price down, but I didn’t get the price down enough to get Yale New Haven back to the table.

I hate it when people go to the courthouse; then everything just gets screwed up for the next two years, and I’ve got to have monitors at the hospitals making sure that quality of care is not being compromised.

It’s not pretty.

Q: Would you be in favor of the state providing financial support to help push the deal forward?

Lamont: I don’t.

Every time there’s a problem, they always say, ‘I want the state to subsidize it.’ This is a transaction between two private entities.

Everybody wants the state to get involved. No.

Q: On the energy front, you recently said the proposed electric vehicle (EV) mandate, which would phase out all new sales of internal combustion engine vehicles by 2035, is now off the table. Are you telling legislators not to raise it again?

Lamont: Why bother? Nobody liked it and now the president (Trump) doesn’t like it.

We were going to follow the federal standards and now I don’t think there will be any federal standards.

I really thought that between hybrids and EVs, we could really make a difference in this. I thought it was good for Ford and GM that people knew what our goalposts were going to be in 2035.

Anyway, nobody agreed with me, so it didn’t happen, and it’s not going to happen.

Q: The other big issue is the cost of electricity in Connecticut. Do you have any specific proposals you’re considering to address that?

Lamont: Yeah, more supply and less demand. I’m a supply-and-demand guy.

I want to come out with a really strong energy efficiency program. It’s worked really well in the commercial sector, but hasn’t worked as well in the residential sector. So that’s a piece of the pie.

I think the other 80% is, I need more supply into the state, and I’ve been working really hard on that. … You know what we’re doing on renewables, and we’re doing a lot, especially when you count nuclear in there.

But I also am very deeply concerned about affordability, and I care about all the protesters who are banging away at my gate because of the high price of electricity. I also know that I have a hard time recruiting companies to the state because of the high price of electricity.

So, let’s say there’s going to be fewer tax credits for wind power under a Trump administration and, as I said before, I think you’ll see more incentives for expanding nuclear power and maybe even natural gas.

My priority, I think, is going to be nuclear, because we’ve got a lot of capacity there (with Millstone) and an appetite for it.

(Lamont hinted at his openness to ‘modular nukes,’ which are small, advanced nuclear reactors that have a power capacity of up to 300 MW per unit, according to the International Atomic Energy Agency.)

Ned Lamont

Governor

State of Connecticut

Education: Bachelor’s degree in sociology, Harvard College; MBA, Yale School of Management

Age: 70

RELATED STORY: Lamont to decide on reelection bid after legislative session ends

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