In Congress, GOP budget bill could pose more problems for state

WASHINGTON–Even as Gov. Dannel P. Malloy finalizes his proposal to close next year’s projected $3.67 billion budget deficit, lawmakers in Washington might open a new hole in the state’s current fiscal blueprint.

The House is poised to take up a bill this week that would slash domestic spending by $100 billion, compared to the president’s request for fiscal year 2011, which is now five months underway.

The Republican proposal takes a knife to dozens of federal programs, from community policing grants to job training funds to low-income energy assistance. The GOP plan, which seeks to make good on a promise to roll back federal spending to 2008 levels, could cost Connecticut and other states millions of dollars in anticipated federal aid.

For example, the House bill would cut $17.5 billion from labor, health and human service programs; $15.5 billion from transportation and housing programs; and $3.6 billion from energy and water programs, compared to 2010 funding levels.

The current spending law now in place preserved flat funding, compared to 2010 levels, for most programs. And that’s what states assumed they would get for the remainder of fiscal year 2011.

“To have to reopen the current budget would add another fiscal problem on top of the ones we’re already trying to cope with,” said Gian-Carl Casa, undersecretary of legislative affairs at the Office of Policy and Management.

“We’re approaching the biennial budget in a comprehensive fashion,” he said, “and if we have to react in February to the feds walking away from their commitments [for this fiscal year], that would obviously create concern.”

The final outcome of this week’s House debate is far from certain. The government is currently operating under a stop-gap spending bill that expires March 4.

The Senate, controlled by Democrats, will likely draft its own more generous spending plan for the remainder of 2011 in the coming weeks. Then the two chambers will have to work with the White House to hammer out a deal.

Rep. Jim Himes, D-4th District, said the House GOP plan is “political theater” and predicted that it will not get very far.

But House Republicans have taken a hard line, pushing aggressively for immediate and deep cuts. GOP leaders say reduced spending is necessary in order to get the federal deficit under control.

“These cuts go far and wide, and will affect every community in the nation,” House Appropriations Chairman Hal Rogers, R-Ky., said in a statement on Friday. But, he said, the committee’s “hard decisions” to weed out “excessive, unnecessary, and wasteful spending” were necessary.

“This year, our nation is spending 1.5 trillion dollars more than we have, running our debt to $14 trillion,” Rogers said. “The taxpayers have told us loud and clear that this is simply unacceptable, and have demanded that we get our nation’s fiscal house in order.”

Himes and others said the GOP proposals would wreak havoc with a fragile economy and hurt still-struggling states like Connecticut.

“At $100 billion, that’s across the board. That’s schools and housing and infrastructure, which is so critical,” Himes said.

Reps. Rosa DeLauro and Chris Murphy, Democrats representing the 3rd and 5th Districts respectively, plan to unveil an analysis this morning that they say will detail the potentially “disastrous” impact of the House GOP plan on Connecticut.

“If these cuts are approved, the state could lose out on millions in education dollars, police funding, affordable housing, heating resources, and more,” Murphy’s office said in a media advisory on his forthcoming report.

There’s no way yet to calculate an exact dollar figure specifying how much the Appropriations Committee proposal would cost Connecticut. But the Federal Funds Information for States, a nonpartisan research group that analyzes federal funding to the states, looked at how resetting the fiscal clock to 2008 would affect the states. Here are a few examples:

  • Connecticut got $30.5 million in Community Development Block Grants in 2010, and the current spending bill left that funding essentially flat for 2011. Paring that program back to 2008 funding levels would slice $3 million from Connecticut’s share of that program.
  • Connecticut got $149 million in 2010 for bridge replacement and rehabilitation. Reverting to 2008 funding for that program would cost Connecticut $7.4 million.
  • Connecticut got $3 million in 2010 for Justice Assistance Grants, funds that localities can use for a broad range of anti-crime initiatives. Going back to 2008 levels would slice that to $1.1 million.

“Right now, states have budgeted all these programs to fund at last year’s levels,” said Marcia Howard, executive director of the FFIS

“So if the programs are reduced, and certainly the House proposal would do that, then states would have to go back in [and] cut those programs,” she said.

Howard said it’s too hard to predict how this fight will play out as it moves to the Senate and the White House. But she said a stalemate, resulting in a government shut-down, is one clear possibility.

This week’s debate is just the first salvo in what is expected to a long, drawn-out battle over federal spending priorities for both 2011 and 2012.

Today, the White House will release President Barack Obama’s budget request for 2012. Obama is expected to call for deep cuts in some domestic programs, including some that would hit Connecticut particularly hard.

For example, the White House has indicated it will slash the Low Income Energy Assistance Program, or LIHEAP, from $5.1 billion to $2.5 billion.

Himes and others said they were deeply concerned about some of the signals coming from Executive Branch.

Asked what the White House should push for, Himes said, “I’d like to see an equitable package of cuts.” That means, in his view, targeting oil and agriculture subsidies, as well as some defense programs, while “insulating our most vulnerable.”

Casa, the OPM official, said he and others in the Malloy administration are keeping their expectations low when it comes to the White House’s 2012 budget. One major concern, he said, is that the president and Congress do not pull back on federal funding for Medicaid, which is a huge source of revenue for the state.

He also said he’s hoping the Administration will come through on a proposal to give states a break on interest payments for loans taken out during the recession to pay unemployment benefits.

In the meantime, he said, “we’re fighting to put together a budget that’s going to work for the state.”