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April 30, 2019

Legislators' budget hews to Lamont's bottom line, but big issues remain unsettled

HBJ File Photo Connecticut state Capitol in Hartford.

At first glance, Democratic lawmakers appear to see eye-to-eye with Gov. Ned Lamont when it comes to state spending for the next two fiscal years.

But while the $43.3 billion biennial plan the Appropriations Committee is expected to adopt Tuesday strays very little from Lamont’s recommended bottom line — and echoes many of his priorities —it leaves the door open for debate on municipal aid, hospitals, social services, and a massive pension debt shift onto the next generation of taxpayers.

Perhaps the biggest difference is a proposal to add almost $60 million more to the Education Cost Sharing grant for cities and towns than the governor has recommended.

“Tuesday is just another step in the process,” said Rep. Toni E. Walker, D-New Haven, co-chairwoman of the Appropriations panel. “Then we have to get our final revenues before we see where we will go.” 

The Appropriations Committee is scheduled to vote today on spending proposals for the next two fiscal years. The Finance, Revenue and Bonding Committee is expected Wednesday or Thursday to finalize proposals for taxes, other revenues and borrowing for the coming biennium.

Walker did not discuss specifics Monday in the spending plan that will be presented Tuesday to the Democrat-controlled committee. 

But according to documents obtained by the CT Mirror, the committee will propose $21.3 billion in spending for the fiscal year beginning July 1, and $22 billion for 2020-21.

The budget Lamont offered on Feb. 20 would grow spending next fiscal year by 1.7 percent. The Appropriations Committee comes in just under 2 percent.

The committee plan also echoes — at least on paper —the governor’s positions on many key issues.

The appropriations panel also could be viewed as endorsing Lamont’s hospital provider tax, as well as his plan to bill municipalities for a portion of the state’s surging annual contribution to the teachers’ pension.

Lamont would cancel a previously approved tax cut for hospitals and replace it with an effective tax hike of about $43 million per year.

Even though the tax is a revenue matter — and not within the Appropriations Committee’s purview — the levy is part of a complex system that also triggers state payments back to hospitals. And the Appropriations Committee recommended the same spending level for payments to hospitals that the governor did.

Leaders of both the finance and appropriations committees said last week that the hospital tax is far from settled, but lawmakers can offer little in terms of alternatives without an update from Lamont on other complex negotiations. 

The administration has been meeting with hospital officials in an attempt to resolve disputes over the provider tax as well as state payments to the industry for treating Medicaid patients.

“I think there is still considerable uncertainty … about the future of the hospital tax,” Rep. Jason Rojas, co-chairman of the Finance, Revenue and Bonding Committee, said last week.

Similarly, Lamont proposed billing communities $73 million over the next two years to help cover teacher pension costs. This is another revenue matter for the finance committee, but the appropriations panel’s spending plan relies on those payments to make required pension contributions.

And many legislators from both parties say they remain wary of billing municipalities for even a portion of the fastest-growing, major line item in the state budget. 

Lamont has a controversial plan to stem the growth in teacher pension costs, as well as required contribution increases to the state employees’ pension plan.

Though both expenses would continue to grow annually, Lamont’s plan would scale back the increases in both plans between now and 2032 by roughly $8 billion in total.

But taxpayers between 2033 and 2049 would have to replace that $8 billion — plus the estimate investment earnings they would have achieved had the contributions been made on the earlier schedule. 

The total bill for the next generation stands at about $27.5 billion — or nearly $20 billion extra. 

Members of the House Democratic Progressive Caucus as well as Republicans from both chambers have balked at this proposed cost shift. But the first two years of savings under this plan — about $640 million over the next two fiscal years combined — are factored into the Appropriations Committee budget.

The committee’s spending plan and the governor’s also agree to maintain current eligibility levels in the HUSKY A program that provides coverage for poor adults with children, and would withhold any inflationary increase or rate adjustment for nursing homes.

The latter omission is a temporary move, sources close to the budget said.

The state’s largest healthcare workers’ union, New England Health Care Employees Union, District 1199 SEIU, last week suspended plans for a May 1 strike at 20 nursing homes.

But union officials also have warned a work stoppage could be rescheduled if Lamont and legislators can’t agree on additional funding to ensure better pay and additional staffing at these facilities.

In addition, several Appropriations Committee members continue to press to expand HUSKY A eligibility by restoring the income limit to 201 percent of the federal poverty level — up from its current limit of 155 percent. Some legislators and health care advocates fear that if the state minimum wage is raised from $10.10 per hour to $15, some HUSKY A recipients will lose health benefits — but still not be able to afford private insurance.

The Appropriations Committee did break with Lamont in several other areas of the social services safety net.

The committee plan rejects the governor’s proposal to place an asset test on the Medicare Savings Plan, a Medicaid-funded program that helps low- and moderate-income seniors meet health care expenses.

It also adds $12 million over the next two fiscal years to preserve mental health and substance abuse grants, support research in these areas, and scale back planned privatization of treatment services currently offered at state-run mental health facilities. 

It also includes $1 million in start-up costs for a public option health insurance program. 

The Appropriations Committee clearly took a different path than the governor when it came to municipal aid. 

Legislators approved a plan last session to dramatically expand education grants over the next five years. Lamont also called in February for growth, but at a more modest pace over a decade.

The committee countered Lamont’s proposal — an extra $20 million in Education Cost Sharing funds next year and $38.5 million above current levels by 2020-21 — with a $37.5 million jump in the first year and a $78 million increase by the second.

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