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

The CT Mirror file photo

Rep. Toni Walker, D-New Haven

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.

It largely rejects Lamont’s efforts to privatize mental health and substance abuse treatment programs. And unlike the governor, the panel provides funding to open highway welcoming center and ensures rest centers are open 24 hours per day.

The committee also recommended more spending than Lamont did for job training, start-up costs to open the state’s health insurance program to small businesses and to uninsured residents, and staffing and other supports for the state’s clean contracting review program.

“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.”

“This is an honest line-by-line budget that increases local education funding, increases our investments in job training, and continues the promises we made the last two years in our bipartisan budget,” said Sen. Cathy Osten, D-Sprague, the committee’s other co-chairwoman.

Jacqueline Rabe Thomas :: CtMirror.org file photo

Sen. Cathy Osten, D-Sprague (file photo)

The Appropriations Committee is scheduled to vote today on spending proposals for the next two fiscal years. The Finance, Revenue and Bonding Committee also is scheduled to meet Tuesday 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.

Higher taxes for hospitals. Pension bills for towns are uncertain

Keith M. Phaneuf :: CTMirror.org file photo

Connecticut Hospital Association CEO Jennifer Jackson (file photo)

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.

It was unclear, at first, whether the committee would back the governor on another controversial revenue item.

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.

The appropriations panel’s spending plan states it does not rely on those payments to make required pension contributions. But committee members said privately it was their understanding that towns would be asked to make pension contributions.

Shifting billions of dollars in pension debt

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Gov. Ned Lamont

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.

Social services/health care debate is far from over

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.

Unionized workers from 20 Connecticut nursing homes announcing May 1 strike plans.

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.

Panel takes a different path from Lamont on education aid

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

Legislators approved a bipartisan plan in 2017 to expand education grants through 2028 by about $350 million, with about two-thirds going to the state’s 33 lowest-performing districts.

Lamont proposed more modest growth, scaling back increases primarily on higher-performing school districts.

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.

The committee also rejected a Lamont proposal on how to designate students as coming from low-income households — a key factor in assigning more education aid to a particular district.

The governor focused on students enrolled in social service programs, like HUSKY health insurance or food stamps. This is the process mandated by the federal government that municipalities in all states must follow.

But this approach ignores poor households that have private insurance, or those with undocumented immigrants that may not participate in government-sponsored social programs.

The Appropriations panel budget maintains the current methodology, focusing on numbers of students who qualify for free or reduced school meals.

This approach also has risk, though. Critics say it tends to exaggerate totals, since some districts with large numbers of poor households offer free meals to all students regardless of income.

More differences from the governor’s budget

The Appropriations Committee also recommended sufficient funding to open seven highway welcoming centers. These include centers in East and West Willington, Danbury, Middletown, North Stonington, Southington and Wallingford. The budget also ensures rest areas are open 24 hours per day.

Legislators also removed $190,000 from the Department of Economic and Community Development budget to reflect Commissioner David Lehman’s willingness to do that job with no salary.

The committee plan also increases funding Meals and Wheels, the state’s elderly nutrition program. The nine regional nutrition programs served nearly 1.4 million meals in 2017, but have had to reduce services since then due to increasing costs.