The Connecticut state Capitol.

The legislature’s Appropriations Committee passed a $24.2 billion budget Thursday for the next fiscal year that makes unprecedented new investments in child care while fully funding the state’s contracting watchdog agency for the first time in its 15-year history.

The Democratic-controlled committee’s plan, approved 35-15 in a vote along party lines, provides a municipal car tax relief program, but one that is less generous than what Gov. Ned Lamont pitched in February.

Like the governor, though, lawmakers on the Appropriations Committee would draw heavily on the current fiscal year’s massive surplus to help boost spending by nearly 8% above current levels after July 1, and about 2.5% beyond the original 2022-23 budget enacted last June.

The package also makes new investments in social services, smoking cessation programs, school-based health centers, environmental initiatives and workforce training, and expands Medicaid for undocumented children. It largely keeps municipal aid flat, though a previously approved $39 million increase in the Education Cost Sharing program, the state’s primary grant to local school districts, remains in effect. And it includes no additional funding to stave off a significant tax hike on businesses this fall that involves the state’s cash-strapped unemployment fund.

The Appropriations’ Committee’s spending plan, coupled with revenue initiatives adopted earlier this week by the Finance Committee, set the stage for final negotiations between legislative leaders and Lamont on the next state budget. Both sides hope to reach an agreement before the regular 2022 legislative session adjourns on May 4.

“This is a good budget that uses public policy to address all of the issues that have affected Connecticut residents over the past two years of the COVID-19 pandemic,” said Sen. Cathy Osten, D-Sprague, co-chairwoman of the Appropriations Committee. “We dealt with a variety of issues in this budget that are real in Connecticut and that are going to make people’s lives better.”

But Sen. Craig Miner of Litchfield, ranking GOP senator on the committee, said “there are some serious problems in this budget.”

While there are some good investments helping Connecticut respond to the coronavirus, Miner said, the state also must prepare for 2024 — when the roughly $3 billion in federal pandemic aid it received under the American Rescue Plan Act expires.

“Living within our means has never been an easy thing,” Miner said.

“Spending is not sustainable in its current form,” added Rep. Michael France of Ledyard, ranking House Republican on the panel.

But Democrats countered that Connecticut won’t recover well from the pandemic if it doesn’t repair the damage inflicted on residents and necessary services by the years-long pandemic. And some of the worst damage, they argued, was done to the state’s child care and early childhood development services.

Rep. Toni E. Walker D-New Haven, the committee’s other co-chairwoman, said Connecticut has pressing needs that cannot wait. And there is no support this year, among legislators from either party or Lamont, to increase taxes to address these challenges.

“Helping people now with the federal dollars is the best thing that we can do,” Walker said.

Child care gets a big boost, nonprofits get a smaller one

The budget invests $74 million to help child care employers enhance wages and resolve what many legislators and advocates call a severe staffing crisis.

It also includes $20 million to help expand program slots for infant and toddler daycare and another $15 million to support construction and renovations to childcare facilities.

“If we don’t have child care, we don’t have people [able] to get to jobs,” Walker said.

The package includes about $72 million for private, nonprofit social services, which is better than the flat-funding proposed by Lamont, but much less than the industry sought.

Community-based nonprofits provide the bulk of state-sponsored social services, and the industry says state increases for a decade-and-a-half have fallen far short of inflation.

The CT Community Nonprofit Alliance estimates that nonprofits, collectively, are losing close to $460 million per year because of this trend.

Lawmakers and Lamont approved about $180 million in extra funding last year. But most of it was reserved for a subset of the industry — nonprofits that run group homes and day services for people with development disabilities. 

Most of that funding was earmarked for wage increases. And while many nonprofits say they’re struggling to pay wages that help them retain staff, they also say they need more funding to cover debt service, facility maintenance and other costs.

Gian-Carl Casa, president and CEO of the nonprofit alliance, thanked the committee for the funding increase but added, “We are still reviewing the proposal and its impact on nonprofits. We will work to protect these gains and advocate for an adopted budget that ensures providers of all types receive an eight percent increase to help them survive rising costs, a workforce crisis and increasing demand for their services.”

Nonprofits weren’t the only ones that got less than they hoped for in the committee budget.

Committee pushes back on car tax relief, contracting board

Connectiuct’s businesses are facing a major assessment this November to help close $460 million in outstanding debt in the state’s unemployment trust fund. The debt was accumulated chiefly during the worst of the pandemic in the spring and summer of 2020.

Miner said it was disappointing the committee found no resources to help businesses with this debt as they try to recover from an economic downturn.

“It ultimately ends up as a tax on business,” he added.

“The lack of legislation to encourage business investments and address the challenges facing small businesses — the backbone of our economy — ignores Connecticut’s once-in-a-generation opportunity to rebuild our state stronger and better than before the pandemic,” Chris DiPentima, president and CEO of the Connecticut Business and Industry Association, said Thursday. “We cannot afford to further burden employers, particularly hard-hit small businesses, as they attempt to recover and grow after two years of disruptions.”

The governor also came up short in some ways with the committee.

Lamont in February called for the statewide cap on municipal tax rates on passenger vehicles to drop from 45 to 29 mills. [One mill equals $1 in tax per $1,000 of assessed value.] 

The $160 million Lamont sought would offset the revenues lost by municipalities because of the lower cap.

But the committee said Connecticut only could afford to send communities $100 million next fiscal year, which means the new cap would be 32.46 mills.

Lamont’s office did not comment Thursday afternoon after the committee budget was approved.

The Appropriations Committee also rejected Lamont’s proposal to expand staffing for the state auditors’ office in lieu of fully staffing the State Contracting Standards Board.

The committee budget includes $454,000 to enable to contracting watchdog to fill five investigative posts.

The board was the linchpin of the “Clean Contracting” system created in 2007 in response to the contracting scandals that drove Republican Gov. John G. Rowland from office amid an impeachment inquiry in July 2004. Rowland later served 10 months in federal prison after admitting he accepted about $100,000 in gifts from state contractors and his staff.

The board was empowered to review Executive Branch agencies’ contracting processes to ensure they were transparent, cost-efficient and in compliance with the law. It also would have authority to suspend any procurement effort deemed improper. [The auditors have no enforcement powers.]

But not long after the contracting board’s creation, the state fell into the Great Recession, state government finances slipped into the red, and legislators siphoned away nearly all resources, leaving the volunteer standards board with no staff.

An executive director was hired in 2011, but no additional staff was added as the Democratic governors who succeeded Rell — Dannel P. Malloy and Lamont — both questioned the need for the watchdog group.

Pressure from legislators to strengthen the contracting watchdog office has intensified since early February following reports that the FBI is investigating school construction work and other projects once overseen by Lamont’s former deputy budget director, Konstantinos Diamantis.

“We are very encouraged by this step,” contracting board Chairman Lawrence Fox said. “There’s no question in my mind that we can be a significant help for the state of Connecticut in doing a better job at contracting.”

Expanding health coverage for undocumented kids

The budget also includes funding to expand Medicaid services for undocumented children.

Connecticut currently provides coverage for such children up to age eight. Rep. Cathy Abercrombie, D-Meriden, says this limit makes little sense. 

“A child who has asthma at eight still has asthma at nine,” she said.

Starting Jan. 1, the state’s Medicaid program would cover all undocumented children up to age 8. The committee plan would boost that through age 12.

Other components of the Appropriations Committee budget proposal include:

  • $23 million to improve compensation for home care aides.
  • $14 million to enhance domestic violence prevention programs.
  • $12 million to the Tobacco Trust Fund for smoking cessation programs.
  • $7 million to initiate or enhance student mental health services at 36 school-based health centers
  • $1.4 million for the Eastern Workforce Investment Board (EWIB) manufacturing pipeline to help General Dynamics’ Electric Boat Shipyard in Groton to expand manufacturing jobs.
  • And $1.25 million to fund a gambling prevalence study.

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.