Gov. Ned Lamont challenged top lawmakers last week to keep perspective as they negotiate the next state budget and particularly to remember all the new spending already approved.
But after recent administration statements painted an overly rosy image of funding for town aid and higher education, other budget stakeholders are encouraging Lamont to have a reality check himself.
“He may be a little tone deaf to our challenges,” Joe DeLong, executive director of the Connecticut Conference of Municipalities, said Tuesday in response to the Democratic governor’s claim that state aid to cities and towns has grown 59% since he took office in January 2019.
“Though technically accurate within a very narrow frame, it’s also misleading,” DeLong added.
While meeting with reporters last week in his Capitol office, Lamont expressed disappointment that legislative budget panels want to move hundreds of millions of dollars outside of spending cap while shifting hundreds of millions more from this year’s surplus into the next budget cycle.
Lawmakers cited pressing needs not only in town aid but in higher education, social services and child care, but Lamont said state finances are a far cry from the not-so-distant past.
In the decade immediately following the recession of 2008 and 2009, state finances were plagued with frequent deficits and major tax hikes in 2009, 2011 and 2015.
“It was always ‘How much more do we have to cut? How much taxes do we have to raise?’ And often [legislators] had to come back halfway through the year and do it all over again,” Lamont said. “We’ve come a long way.”
As evidence, Lamont added, “Municipal aid’s up about 59% since we took office.”
Did town aid grow as Lamont claimed?
About 20 minutes later, as reporters pressed for clarification, Lamont’s budget director, Jeffrey Beckham, clarified that the governor’s statement only applied to “the general government grants that OPM administers.”
What neither Lamont nor Beckham mentioned was the 59% growth they cited took place in just one-fifth of the total municipal grants program — which has an overall annual value approaching $3.6 billion per year.
The entire grants package has grown about 16% in total, stretched across the first four fiscal years of the Lamont administration. And while that growth was appreciated, DeLong said, it was mitigated severely by a pandemic followed by a national inflation rate that hit a 40-year-high of 9% in mid-2002.
Legislators are pushing to bolster municipal aid in two areas.
The $51 billion two-year budget recommended by the Democrat-controlled Appropriations Committee earlier this month includes more than $130 million extra over the coming biennium to keep the Education Cost Sharing grant program for local school districts on a growth schedule initially adopted in 2017. Lamont also proposed staying the course in the $50.5 billion, biennial budget he recommended in February.
But legislators began the 2023 session talking about accelerating that growth schedule even more.
And the Finance, Revenue and Bonding Committee last week proposed shaving $300 million of this fiscal year’s $3.3 billion surplus projection and sending that to towns, along with $100 million in annual sales tax receipts.
This plan relies on an accounting gimmick to circumvent the spending cap, which keeps most budget growth in line with inflation and changes in household personal income.
Leaders of the Democratic majorities in the House and Senate have said they also want to explore options to work around the cap and appropriate more for social services, child care and higher education.
Governor insists higher ed funding is up. Overall numbers disagree
The Lamont administration also offered perspective this week when the Connecticut State Colleges and Universities system said every budget proposal to date — from Lamont and from legislators — leaves them in a big hole in the coming biennium, making layoffs and tuition hikes a distinct possibility.
The system includes the regional state universities, 12 community colleges and the online Charter Oak State College — but not the University of Connecticut.
Beckham wrote in a statement that the governor’s plan for the 2023-24 and 2024-25 fiscal years would boost “baseline appropriations” for the system 27% higher than they were when Lamont took office in 2019.
And “total state funding” would be up 55% by the biennium’s close.
Beckham added that substantially declining enrollment would mean significantly more funding per student.
But “baseline funding” refers only to the chief block grant the legislature and governor give higher education units to help cover operating costs. Since the pandemic began, legislators also have pumped hundreds of millions of state surplus dollars and federal pandemic aid into public colleges and universities.
Lamont’s proposal would give the system about $80 million less — from all sources — over the next two fiscal years combined than it received this fiscal year and last.
Ben Barnes, chief financial officer for the CSCU system, noted that Beckham’s “carefully worded statement does not take into consideration the massive increase in costs and expenses that were agreed to by the state on our behalf, that ultimately are not [fully] funded in this current budget.”
Barnes is referring to big raises Lamont negotiated with unionized state employees last year. Besides bonuses of $3,500 for most workers, the four-year $1.9 billion compensation package also awarded general wage hikes of 2.5% per year, as well as an annual step hike for all but the most senior workers. Step hikes typically add another 2 percentage points to most raises.
The state budget lawmakers passed and Lamont signed last spring ordered public colleges and universities to pay those raises to most staff, not just those supported with block grants from the state budget.
Barnes estimates the Appropriations Committee’s budget proposal for the CSCU system would fall about $330 million shy over the coming biennium of covering current services and expenses. The gap involving the governor’s proposal is more than $400 million.
Rep. Greg Haddad, D-Mansfield, co-chairman of the legislature’s Higher Education Committee, said most legislators understood not long after the coronavirus struck in 2020 that as the pandemic weakened enrollment, it also cut into university revenues from housing and other student fees.
Most lawmakers understood that even after infection rates dropped, the economic challenges would remain and extra funding would be needed “for years to come,” Haddad said.