Gov. Ned Lamont’s administration didn’t violate state law when it moved $340 million in interest earned on federal COVID relief grants into the state budget, Attorney General William Tong said Monday.
But while Tong settled the legal question, a Republican leader said the Democratic governor’s administration still was wrong for not reporting these interest dollars to legislators for nearly three years.
Though Connecticut received roughly $2.8 billion from Congress in March 2021 through the American Rescue Plan Act, Lamont’s administration didn’t shift investment earnings on that pandemic relief from an off-budget account into the General Fund until Jan. 8 of this year — roughly one month before the governor would propose spending most of that interest to expand child care services. (Most state programs and services and financed through the General Fund or other accounts within the formal state budget.)
Frustrated by that late disclosure and timing, House Minority Leader Vincent J. Candelora, R-North Branford, asked whether Lamont could move the funds into the budget without legislative approval.
Tong wrote that existing law stipulates all interest on investments must go into the General Fund, unless the legislature directs otherwise. And no special instructions were issued when Connecticut received the ARPA funds, which it’s used to bolster education, human services, municipal aid and other programs for the past four years.
The attorney general also noted the legislature is aware of its legal options. “The General Assembly knows how to override the default rule when it wants and has done so on several occasions,” he wrote.
And while the legislature set many special rules for Lamont to follow on spending ARPA dollars, the Tong noted they apply only to “federal funds designated for the state” and not on the interest those grants may generate.
“This opinion from Attorney General Tong confirms that our reporting of the interest income is consistent with statutory requirements,” the governor’s budget spokesman, Chris Collibee, said Monday.
“I never doubted in my mind that the Democrat attorney general would have a ruling favorable to the Democrat governor,” Candelora said Monday, adding it still doesn’t explain how hundreds of millions of dollars was not reported for years to the legislature “but magically appeared in the dark of night” shortly before Lamont would propose a use for it. “Fundamentally, I think that’s wrong for good government, and I think it’s wrong for transparency.”
When The Connecticut Mirror first reported that the interest dollars had appeared on a Jan. 15, 2025, revenue projections document that Lamont’s budget office and nonpartisan legislative analysts sent to the General Assembly, legislators from both parties expressed concerns about the timing.
Collibee said in January that the administration had asked the treasurer’s office in the spring of 2021, shortly after the ARPA funding had been received, to assign all interest earnings to the General Fund. But, he added, “There appeared to have been some miscommunication.”
And Jeffrey Beckham, Lamont’s budget director since early 2022, said in mid-January that his office wasn’t aware for years that tens of millions of dollars in ARPA-related interest due annually to the General Fund wasn’t being transferred.
“It became apparent to us in the last couple of months,” he added at the time.
State Treasurer Erick Russell, who succeeded fellow Democrat Shawn Wooden as treasurer in January 2023, has not speculated on communication between his predecessor and the Lamont administration.
But Russell noted in mid-January that the treasurer’s office provides four reports yearly to Beckham on how ARPA investments are performing.
In other words, the Lamont administration had plenty of reminders each year that tens of millions of dollars in interest in ARPA investments were pouring in annually.
The Lamont administration co-writes revenue reports filed three times annually with the General Assembly that reported other interest earnings — but not the return on ARPA investments until this year.
Candelora added that Connecticut Democrats who are worried about President Donald Trump’s efforts to cut spending without congressional approval should be more concerned about Lamont’s handling of the ARPA interest.
“This very behavior,” Candelora said, “reeks of the things they accuse the president of doing.”