Hoping to focus legislators on closing a $224 million state budget deficit, Gov. Dannel P. Malloy tried Wednesday to make a Friday special session about a different task unnecessary.
The governor suspended legislatively mandated cutbacks to a popular social services program for seniors and the disabled until July 1 — which is what lawmakers still are scheduled to do on Friday.
Malloy has said for weeks that he’s fearful legislators would restore the funds needed to make the Medicare Savings Program whole — but not in a fiscally honest way.
By deferring any program cuts until the next fiscal year, the governor effectively expanded the deficit by another $20 million.
In other words, Malloy effectively told legislators he would rather have a fiscally honest discussion about a larger deficit, than no discussion about a smaller one.
“Of course the additional delay I’ve ordered today will add some cost to our current fiscal year,” the governor wrote in a letter to Democratic and Republican leaders from the House and Senate.
But there are much larger fiscal issues at stake than $20 million and “the options I submitted to you last month in my deficit-mitigation plan far exceed this relatively minor amount,” Malloy added.
The governor has been pressing lawmakers over the last month to come into special session to rebalance the new budget that they adopted in October after a nine-month debate.
Legislative leaders say they will address that shortfall in the coming weeks. But first they want to reverse cuts to the Medicare Savings Program, which uses Medicaid funds to pay medical expenses that Medicare doesn’t cover.
The new budget tightened eligibility for that program starting Jan. 1. to save $54 million. Estimates are those changes could eliminate or reduce benefits for as many as 113,000 residents.
Because the Executive Branch — and particularly the state Department of Social Services — is designated by the U.S. government as the official administrator of the federal Medicaid program in Connecticut, the governor has considerable flexibility to defer program changes ordered by the General Assembly.
Malloy announced earlier this winter he would not tighten Medicare Savings Program eligibility until late February, several weeks after the regular 2018 General Assembly session is set to begin.
Some of the $54 million cost tied to not restricting Medicare Savings Program eligibility as planned already is factored into the latest state budget deficit projection of $224 million. Pushing the eligibility changes back until July 1 should grow the deficit by another $20 million to about $244 million.
Regardless, legislative leaders said Wednesday the General Assembly still will convene on Friday.
“I think we have to,” said Senate Republican leader Len Fasano of North Haven. “We should fix it and find the money for that fix. And then we should deal with the deficit.”
Adam Joseph, spokesman for the Senate Democratic Caucus, said, “We appreciate the work of the governor” and his budget staff, but legislators still intend to take action Friday.
“We appreciate the governor’s decision to delay changes to the Medicare Savings Program this fiscal year, and look forward to providing further assurance to those impacted at our scheduled legislative session Friday,” added Liz Connelly, spokeswoman for House Speaker Joe Aresimowicz, D-Berlin.
How will the legislature find the $54 million to offset the cost of reversing cutbacks to the Medicare Savings Program?
Leaders have said they are considering cuts to omnibus “other expenses” accounts in various departments.
The state also budgeted about $19 million more than necessary to cover contributions to the teachers’ pension fund, and those resources could be transferred to the social services program.
But legislators also were looking at close to $20 million in revenue earmarked to support the 2018-19 fiscal year. In other words, to fully restore the Medicare Savings Program this fiscal year, they may punch a hole in next fiscal year’s budget.
Further complicating matters, nonpartisan analysts warned in November that tax receipts and other state revenues in the 2018-19 fiscal year now are projected to fall $150 million short of earlier expectations.