Gov. Ned Lamont’s fellow Democrats took exception Thursday to key elements of his latest budget plan, arguing higher education, municipal schools and people with disabilities were short-changed.
And leaders of the General Assembly’s Appropriations Committee also questioned the administration’s efforts to spend emergency federal coronavirus relief as directed, and warned that lawmakers would take a firm hand directing final use of pandemic grants.
“The legislature will maintain the control over the ARPA. I just wanted to say that out loud,” Sen. Cathy Osten, who co-chairs the committee, told Lamont’s budget director, Jeffrey Beckham, referring to $2.8 billion in American Rescue Plan Act funds awarded state government here by Congress in 2021.
Pandemic grants
Connecticut has gradually been spending those dollars to buffer health care, social service, education and other programs strained by the pandemic. But a key deadline is looming.
State agencies must have expended all ARPA funds — or have awarded them to outside entities — by year’s end. Any outside groups that receive ARPA funds, though, can continue to spend them through Dec. 31, 2026.
The $26.1 billion budget Lamont proposed Wednesday for the fiscal year starting July 1 was complemented by a plan to use $55.7 million in unspent ARPA funds it has identified.
And there likely are more.
“We think it could be a larger number,” Beckham said, adding the administration is trying to calculate that amount, but it could take a while. “I just don’t know what that is yet.”
But the regular legislative session ends May 8 and this is a state election year. Lawmakers traditionally don’t come into special session while campaigning.
Lamont proposed having legislators designate a few programs to receive any unspent, unassigned funds identified at the last minute. The governor suggested allowing his administration to assign any dollars unspent after Oct. 1 to programs to combat homelessness and to promote affordable housing, and also into the state’s unemployment trust fund.
Osten didn’t speculate on the likelihood of a special session, but insisted legislators would resolve the fate of those funds.
“We didn’t give you a free hand in spending the ARPA, we are not going to give you a free hand to reallocate those dollars,” she told Beckham, “so I wouldn’t count on that.”
Meanwhile, Rep. Toni E. Walker, D-New Haven, the committee’s other co-chairwoman, said legislators are worried state agencies haven’t been earnest in spending ARPA dollars as directed by lawmakers, despite assurances from administration officials.
“I have, with my office and with my colleagues, had a lot of frustration and anger for the lack of effort that has been put into funding the programs,” she told Beckham.
But Lamont’s budget director said the issue isn’t a simple one.
Federal rules tied to those funds are complex and require a lot of reporting that can slow the process significantly.
In some cases, community-based agencies and vendors that lawmakers want to receive funds decline to accept them because of these requirements.
“There’s been no unwillingness to move the money,” Beckham added. “We want to move the money. I don’t want to give it back. I want to spend it.”
But legislators had issues Thursday with more than just the administration’s handling of federal pandemic relief.
Pushing back
Rep. Gregg Haddad, D-Mansfield, co-chairman of the Higher Education and Employment Advancement Committee, was one of several who raises concerned about public colleges and universities.
“I’m kind of stunned and disappointed,” Haddad said, adding that he believes the governor is not responding to a “crisis.”
Lamont noted Wednesday in his budget address that his plan “makes our state’s largest ever commitment to child care, K-12 education, [and] our universities.”
Base funding for the University of Connecticut and for the system that oversees community colleges, regional state universities and online Charter Oak State College all would increase next fiscal year under the governor’s plan.
But lawmakers and Lamont also have poured hundreds of millions of dollars from temporary sources — chiefly budget surpluses and federal ARPA grants — since the pandemic began in 2020.
Overall funding for higher education units would decrease next fiscal year once declines in those other sources are taken into account.
The administration says higher education systems should have been preparing to live without the temporary money. Those systems, and many legislators, counter that all state officials knew these funds were needed for ongoing expenses, including large pay raises the governor negotiated with state employee unions. The governor and unions negotiated general wage and step increases two years ago that boosted most workers’ pay by about 4.5% annually.
Haddad said he expected to see more from the administration.
“You offer no solutions in your budget,” he said. “So, my question is, why?”
“Both systems are working on their issues and we’re working with them,” Beckham responded. “We don’t happen to have operating resources that we are recommending to them.”
But critics of the governor’s plan note that it has a built-in operating surplus of $290 million and would save another $450 million through a program that limits lawmakers’ ability to spend revenues from certain volatile taxes. But these savings efforts are required under budget controls enacted by the legislature in 2017 and then renewed unanimously last February.
And even if those savings programs were lifted, another control — the spending cap — would leave no room to increase funding for higher education next fiscal year.
Some legislators, particularly Lamont’s fellow Democrats, have begun to question these controls, commonly called “fiscal guardrails,” arguing that while they help to generate large surpluses that can be used to reduce the state’s debt, they are saving excessively to the detriment of core programs.
But Rep. Mitch Bolinsky, R-Newtown, praised the Lamont administration for sticking closely to these fiscal controls.
“I wanted to just say thank you to the governor and to you for the state’s commitment to the fiscal guardrails,” he told Beckham. “It’s important and I like how the world is viewing us. It’s a nice change.”
Some Appropriations Committee members also objected to the governor’s proposal to scale back a planned $150 million increase for K-12 education funding down to $111 million next fiscal year.
Lamont not only maintained one element of that plan — a $68.5 million increase in Education Cost Sharing grants to local school districts — he recommended boosting it to $74.2 million.
But he proposed reducing other planned increases for magnet, charter and vocational schools and for the Open Choice diversity program and re-directing much of that funding to child care programs.
Much of the funding lawmakers wanted to direct to these institutions was designed to keep them from losing money, since the legislature also ordered caps on the tuition charged to towns that send students to participate in these schools.
“That wasn’t providing any new teachers, any raises to anyone, any new magnet slots, any new resources for the classroom,” Beckham said. “It was just municipal aid masquerading as education reform.”
But Rep. Antonio Felipe, D-Bridgeport, said legislators wanted both to bolster education and assist cities and towns, which spend a large share of their local budgets on education. He added that his city struggles with great poverty and great need.
“I don’t think disrespect is the right word,” Felipe said, characterizing the administration’s position, “but it’s not looking at legislative intent with the proper reverence.”
Lamont has been warning legislators for months that the guardrails require priorities and choices. When asked Thursday about the pushback about K-12 education funding, the governor said, “Everything can’t be both/and. Sometimes it’s either/or. That’s what you’ve got to figure out.”
Lamont’s $26.1 billion budget proposal for next fiscal year falls a razor-thin $1.1 million under the spending cap, so funding K-12 education as lawmakers want would trigger the same problems as finding more dollars for public colleges and universities.
[RELATED: Lamont’s plan keeps CT budget within guardrails, pays down $500M in debt]
But Osten couldn’t understand why the governor’s plan canceled an $800,000 increase that legislators wanted for the American School for the Deaf in West Hartford.
“We have de-prioritized the deaf community time and time again since 2017,” Osten said, citing the year Connecticut adopted the fiscal guardrails.
But while about $11 billion in surpluses have rolled in since then, the school for the deaf has largely been struggling to maintain funding that represents a rounding error set against the entire state budget.
Lawmakers appropriated $10.1 million for the school in 2016-17, after which funding dipped and never again cleared the $10 million mark until this year when it got $10.7 million, according to state budget records.
“They really needed the resources,” Osten added.
Beckham responded that the administration simply wants to hold the line on spending in this area. “Where we flat-fund something, we’re not de-prioritizing it,” he said.
State Capitol Bureau Chief Mark Pazniokas contributed to this article.