Connecticut not alone in gambling on more federal aid

Connecticut is one of 21 states counting on Congress to approve billions in emergency health care aid for next year – and lacking any back-up plan if the funding doesn’t come through, according to a new report from the National Conference of State Legislatures.

And a senior policy specialist for the Washington, D.C.-based lobbying group said Wednesday that while support remains strong on Capitol Hill to expand the stimulus program, federal lawmakers are equally reluctant to do so without new spending cuts or revenue increases to offset the $25.5 billion cost.

“They all agree this needs to move forward to help states out,” conference health care specialist Rachel Morgan said. “But they also want offsets to cover it. Where there isn’t any consensus yet is how they can pay for it.”

The new $19.01 billion budget that the General Assembly and Gov. M. Jodi Rell approved earlier this month depends on $365.6 million in new federal aid that hasn’t been approved yet by Congress. The state legislature’s nonpartisan Office of Fiscal Analysis opted not to include the funding in its revenue forecast for the new fiscal year that begins July 1.

That $365.6 million includes $266.5 million for health care and child welfare programs, and $99.1 million for education.

A new report from the conference shows Connecticut and 29 other states have adopted budgets for 2010-11 that count on the additional health care and child welfare funds. And of those states, Connecticut and 20 others have no contingency plans if Congress ultimately rejects or reduces the proposed increase.

NCSL officials have warned that the education stimulus expansion measure is in similar jeopardy as the proposed increase in health care funding, lacking sufficient revenue increases or spending cuts to balance it.

California, New York and Texas, the largest states in the nation, each is counting on between $900 million and $1.5 billion in extra health care stimulus. But while New York has no contingency plan, California will reduce benefits and tighten eligibility rules for its Medicaid program if the money fails to arrive, while Texas plans to implement 5 percent spending cuts across most state agencies.

Maine and Oklahoma have similar back-up plans to cut spending across the board while Idaho and Maryland would draw down their budget reserves. Louisiana would cut payments to health care providers and use a tax amnesty program if the federal aid doesn’t come through. And South Carolina, which is counting on $230 million in extra aid, has identified a matching $230 million in spending to be canceled if the relief falls through.

“Those kind of things never came up” during the Connecticut legislature’s budget negotiations with the Rell administration, Rep. John Geragosian, D-New Britain, co-chairman of the Appropriations Committee, said Wednesday.

Connecticut did have one contingency option built into the preliminary budget for 2010-11, an $18.93 billion plan adopted last September. Specifically, a concession deal reached in May 2009 with state employee unions allows the governor to reduce the 2010-11 pension fund contribution by $100 million if overall revenues fall more than $300 million below projections.

But the revised, $19.01 billion budget for next fiscal year not only spends that $100 million savings, it also estimates revenues will be $72 million higher than originally anticipated – a forecast which, if correct, would prevent the state from achieving the savings and would punch a $100 million hole in the budget.

Geragosian added that Connecticut has enjoyed some modest tax revenue growth since April, and “if the revenue keeps going on that trajectory we might not need any” contingency plan.

When asked about the report, Rell spokesman Rich Harris said “Both the (state) legislature and the governor are working with the congressional delegation to make sure the federal funding we need is forthcoming.”

U.S. Rep. Christopher Murphy, D-5th District, who co-chaired the Connecticut legislature’s Public Health Committee before being elected to Congress in 2006, couldn’t offer any assurances when he returned to the state Capitol on Tuesday to tout new jobs created through stimulus funding over the past year.

“I’m hopeful that Connecticut is going to receive additional (Medicaid) funding, but not certain,” Murphy said, calling the need to find cuts or revenues to pay for any stimulus expansion a “make-or-break” issue. “It’s a large concern for me and for many other members of Congress.”

U.S. Rep. John B. Larson, D-1st District, whose post as chairman of the House Democratic Caucus makes him the fourth-highest ranking Democrat in the chamber, was similarly cautious last month after the NCSL issued a policy statement warning that the funding “is now on the ropes.”