{Updated at 5 p.m. with comments from Lamont administration.}
The same day Gov. Ned Lamont was criticized for not finalizing health care savings already assumed in the next budget, the state formally solicited bids for a cost containment specialist to assist with the endeavor.
Senate Minority Leader Len Fasano, R-North Haven, released a link Friday to the request for proposals (RFP) issued Thursday by Comptroller Kevin P. Lembo’s office.
“The process to begin shaping these savings was only started today, a day after the governor and Democrats were slammed for their phantom savings and unbalanced budget,” Fasano said. “Democrat lawmakers who voted in favor of this budget believed these savings were a done deal. But the truth is none of these savings exist yet.”
“This has become desperate, sad and tiresome,” responded Colleen Flanagan Johnson, Lamont’s senior advisor, who noted minority Republicans failed to propose an alternative budget during the last session, when Democrats worked to avert the $3.5 billion potential shortfall Lamont inherited.
Johnson added that “as a 15-year member of the Senate, Senator Fasano surely knows how the process works. In issuing the RFP for a component of the healthcare savings, the comptroller is executing on his plan to achieve those savings. We wish Senator Fasano would spend half as much time drafting a budget as he does press releases and composing letters.”
Fasano’s comments Friday were to bolster his charges Thursday that the $43.4 billion, two-year budget adopted June 3-4 by the Democrat-controlled legislature is unbalanced and unconstitutional because it relies on nearly $460 million in labor savings that unions still haven’t endorsed.
Lamont, a Democrat, has said he intends to sign the budget, which his office crafted along with Democratic legislative leaders.
At issue are two major savings targets built into the new, two-year budget.
About $180 million of the $460 million in planned savings involves reducing employee health care costs without reducing benefits. This involves creating incentives for workers to select less costly providers. It also could mean negotiating discounts when purchasing health care services and pharmaceuticals.
The rest of the savings would come from restructuring Connecticut’s contributions to the state employees’ pension fund. Contributions would rise — but not as quickly as originally planned, through 2032. Taxpayers between 2033 and 2047 would pick up those burdens, plus an effective interest charge. No tentative deal with labor unions has been announced on the pension payments to date.
Building savings targets into the state budget is nothing new, including savings that rely on labor negotiations. But Fasano said there has been no evidence to date that these savings are going to be achieved.
Article 28 in the Connecticut Constitution, an amendment adopted by voters in 1992 following institution of the state income tax, requires the budget approved by the legislature to be balanced.
So while it’s acceptable for the state to borrow money to close an unexpected deficit at the end of a fiscal year, it’s an entirely different thing to concede before the year even begins that the budget is unbalanced — and that funds must be borrowed.
Hartford attorney Daniel Livingston, the chief negotiator for the state employee unions, said earlier this month he believes all of the planned savings can be achieved.
And the governor’s budget director, Melissa McCaw, said Thursday that the health care savings process has long been underway.
The state and its worker unions already participate in a health care cost containment committee that works throughout the year to find savings options. It already has identified savings and is continuing to do so, Lamont said.
The author might revise this statement: “So while it’s acceptable for the state to borrow money to close an unexpected deficit at the end of a fiscal year, it’s an entirely different thing to concede before the year even begins that the budget is unbalanced — and that funds must be borrowed.”
Why must funds be borrowed?
The legislature has often revised the budget during the fiscal year. Those are called deficit sessions.
And there’s already one deficit session scheduled for this fall, after the hospital settlement has been accepted by the hospitals. There have been estimates that the state reserves will have to pay $160 million, though that could prove to be an underestimate.
If there’s another deficit session resulting from an inability to reduce prices from medical service vendors, that won’t be unprecedented either. Other sources of deficit might be taken up at the same time.
This vagueness isn’t as bad as the unspecified savings of (what was it?) $800 million assigned to Governor Malloy in the past.
Despite the Senator’s comments, this is business as usual, and can be resolved without borrowing.
“We wish Senator Fasano would spend half as much time drafting a budget as he does press releases and composing letters.” Translation : Well, we drove the car off the cliff, maybe it’s time for Republicans to take the wheel?”
Stefanowski in the WSJ:
https://www.wsj.com/amp/articles/connecticuts-blue-politicians-spill-an-ocean-of-red-ink-11560551672
This is what an “honest” budget looks like.
“The rest of the savings would come from restructuring Connecticut’s contributions to the state employees’ pension fund. ”
While deferred payments might appear as a lower expense in a cash based accounting system, it is not a savings in an accrual based accounting system.
Stretching out pension payments is much like delaying your mortgage payments, the expense does not decrease.
The proper way to record the cost of defined benefit pensions is to add the amount paid into the fund +/- the change in the actuarial liability from the beginning of the period to the end of the period.
The Teachers Retirement fund received payments from the state of 2.3 billion for the years ending in June 2017 and 2018. Meanwhile the actuarial accrued liability wen from 29.8 to 31.1 billion during that two year time period. So the cost of the TRS pension was 2.3 + 1.3 = 3.6 billion. Decreasing the funding in a given year would NOT be a “savings” in accrual accounting.
I am sure these efforts with provide the same cost savings for taxpayers as the Government Union Worker Suggestion Box, touted by the former Governor Malloy and his administration. If they really want to save hard earned taxpayer money and work in the best interest of those taxpayers. They would cap any Annual Cost of Living Adjustment for current pensions that exceed $150,000.00 per year, and instead put them on a 5-Year schedule that aligns with Social Security Benefit Increase Rates.