State legislators pushed back in bipartisan fashion Monday against Gov. Ned Lamont’s plan for spending nearly $3 billion in federal pandemic relief, insisting on greater investments in business relief, tourism and recreation, and health care and social services.
The Appropriations Committee’s proposal for American Rescue Plan Act funds also declined to leave large pools of discretionary funds for the governor to assign over the next three years.
The committee’s proposal, coupled with a competing plan Lamont offered last month, now will be the foundation for final negotiations between executive and legislative branch leaders. A final plan for the federal money — which includes more than $2.8 billion in flexible funding and $142 million specifically earmarked for capital projects — is expected to be adopted before the regular 2021 General Assembly session closes on June 9.
“Families need activities and normalcy in their lives,” said Rep. Toni E. Walker, D-New Haven, co-chairwoman of the appropriations panel. “We want to make Connecticut better, we want to continually grow and improve” by focusing on those segments of Connecticut most hurt since the coronavirus first tore into the state in March 2020.
“That was something we took to heart,” said Sen. Cathy Osten, D-Sprague, the committee’s other co-chairwoman. She added the committee worked in a bipartisan fashion to craft a plan — which was adopted unanimously Monday — that began with jobs.
Getting CT back to work
Connecticut still has about 180,000 people receiving weekly unemployment benefits. By comparison, the state lost 120,000 jobs at the height of the last recession between 2007 and mid-2009.
After that downturn, Connecticut had the slowest economic recovery of any state in the nation — a problem many business leaders say was exacerbated by the state’s unwillingness to eat some of the unemployment fund debt created by the recession.
Each state fuels its unemployment trust, which covers benefits for the jobless, with a tax on businesses. Those trusts typically become insolvent during a recession, and states must borrow federal dollars, which their businesses ultimately repay when the recession is over.
Connecticut has borrowed more than $700 million since the pandemic began, and state Department of Labor officials say the debt could top $1 billion later this year.
The Appropriations Committee proposed using $310 million of the state’s pandemic relief to mitigate this debt — more than six times the $50 million Lamont proposed.
Rep. Michael France of Ledyard, ranking House Republican on the committee, called the package “ a positive step forward for the state.”
House Republicans wanted to invest as much as $400 million in the unemployment trust, he said, but added there was “greater collaboration” between the parties to ensure it was a plan both sides could support.
“If this proposal is enacted, it will take a huge weight off the shoulders of the business community, helping us emerge from this pandemic and get back to creating jobs,” said Eric Gjede, associate counsel for the Connecticut Business & Industry Association.
The committee also endorsed $85 million for marketing and other efforts to bolster the state’s tourism industry and hospitality sector, $40 million more than the governor recommended.
The panel also increased, from $6.4 million to $20 million, support for fairs, concerts and other local events, and it endorsed a new $50 million investment in parks that Osten said would involve creating public works jobs, beautifying public assets and giving cash-strapped families affordable options to have summer fun in Connecticut.
More funding for human services
The committee placed a heavy emphasis on human services, with many of the investments aimed at the state’s poor urban centers and low-income communities in rural eastern Connecticut.
While Lamont proposed $50 million for the nonprofit community agencies that provide the bulk of state-sponsored social services, the panel recommended $90 million.
The CT Community Nonprofit Alliance says the industry lost millions of dollars during the first year of the pandemic. Besides increased operating costs tied to protective gear, cleaning services and hazardous duty pay, many programs for the disabled had to be scaled back or suspended entirely for months at a time, limiting revenues.
Alliance CEO Gian-Carl Casa called Monday’s committee action “a bipartisan statement of support” for the nonprofit sector. The appropriations panel also has endorsed a plan in the state budget to increase annual support for nonprofit social service agencies by nearly $470 million by 2026.
Connecticut nursing homes, which narrowly averted a strike involving unionized aides last week, estimate they need more than $300 million per year extra from the state just to replace the lost revenue and cover added costs since the pandemic began.
The committee plan includes $140 million for skilled nursing facilities, while Lamont recommended $20 million.
Nursing homes receive the bulk of their revenue from the state in exchange for serving residents and patients covered by Medicaid.
Matthew Barrett, president and CEO of the Connecticut Association of Health Care Facilities, the state’s largest association of nursing homes, said Monday his group was reviewing the committee proposal.
But the governor called that recommendation “premature” and said it’s unclear how the pandemic might have changed the industry and encouraged more seniors to seek at-home care.
“I think we’re going to learn a lot over the next nine months,” Lamont said. “Let’s not over-commit now.”
The committee also added $65 million above the governor’s proposals for re-entry programs both for juvenile and adult offenders, including employment assistance.
Committee: Don’t keep big federal dollars in reserve
To help pay for all of these additional proposed investments, the committee opposed other expenditures of federal dollars sought by the governor.
Lamont proposed $240 million for COVID-19 testing, but both Walker and Osten said the administration didn’t demonstrate sufficient evidence that anything close to this level of funding was needed. And the governor acknowledged Monday during his regular bi-weekly briefing on coronavirus containment measures that demand for testing was shrinking.
The committee recommended $25 million for testing.
“Don’t get too casual and say ‘Whoo-hoo, COVID is behind us,’” Lamont cautioned. “But there’s room to negotiate.”
If committee leaders are correct and $240 million isn’t needed, dedicating that amount would effectively create a large reserve that could be reassigned somewhere else later. But legislators said they wanted to put all dollars to use immediately.
The governor’s plan did include a specific reserve account, keeping $26 million in federal funds there. The committee recommended no reserve.