aecifo

CT Budget Controls Will Force State to Save 50% More Than Planned

Umito November 13, 2024

State government’s controversial budget controls will force lawmakers to save $2.5 billion in the next two-year budget, nearly 50 percent more than they planned to withhold for education, health and child care, along with other core programs, analysts projected Tuesday.

At the same time, the revenue that lawmakers can spend in the next biennium increased by a much more modest 1.3 percent, or nearly $620 million, according to a new report budget analysts for Gov. Ned Lamont and the General Assembly. And all this growth is not good news. About one-sixth of that increase reflects larger federal reimbursements for a Medicaid health care program facing a growing workload and skyrocketing costs.

“There’s an easy compromise here,” said House Speaker Matt Ritter, D-Hartford, one of the leaders who urged Lamont to modestly reduce his savings efforts — which have increased reserves budgetary measures and reduces pension debt – and to invest more. in struggling core programs. “Everybody come to the table and let’s find a solution.”

Two sources of state revenue closely tied to investment income – quarterly income and business tax revenue – will bring in $5.3 billion this fiscal year, 70% more than in 2017. This is when lawmakers first decided that some of the revenue from these special revenue categories could not be spent in the budget.

Historically, these sources have been unstable, pulling in large amounts of money one year and much less the next. And expectations for this savings program, or “volatility adjustment,” were modest when it launched.

But instead it exploded, withdrawing an average of $1.4 billion, or 6 percent, from the general fund every year in its first seven years — and never less than $530 million a year. Tax analysts had reported last January that demands for savings would soon decrease. End of AprilHowever, they said any slowdown in savings would be modest.

And now they say the pace of saving won’t slow noticeably until 2028. They project that $1.4 billion in quarterly income and corporate tax revenue will be saved this year, and just under $1.3 billion over each of the next three years.

Lamont, who frequently touts this savings package and other budget controls as “fiscal safeguards,” said Tuesday’s report was good news.

“This consensus revenue forecast shows the strong belief of businesses and residents that Connecticut is moving in the right direction,” Lamont said.

And while he did not indicate whether he would reverse his previous opposition to moderating savings efforts, he added that: “The work to make our state a more affordable place to live and work and more equitable continues. And as we approach the next legislative session, this will be a key focus of our efforts. The decisions we make in Hartford directly impact the kitchen tables of every community in our state, and our budgets must reflect the needs and desires of our families to improve their lives and the lives of generations to come.

Many of the governor’s Democratic colleagues, who hold large majorities in the House and Senate, say these savings efforts have been too aggressive since 2017, draining valuable resources from basic services and pushing them into crisis.

The Medicaid rates that Connecticut pays to doctors and other providers who serve low-income patients have not been adjusted across the board since 2008, and critics say many can’t find doctors willing to treat them.

Public colleges and universities are projecting large deficits in the next budget cycle. The federal pandemic aid that Connecticut used to support them over the past three years — when budget controls limited the state’s available tax revenue — is almost exhausted.

Connecticut’s pension debt remains substantial, surpassing $37 billion entering this year. But many lawmakers note that this is a problem created over seven decades between 1939 and 2010 and cannot be eliminated quickly. Even accounting for the debt that was eliminated through the savings package, the unfunded liability is expected to disrupt Connecticut’s budget well into the 2040s.

Income growth offsets huge Medicaid costs

But even though the savings package saw the biggest growth in Tuesday’s report, there was some good news regarding the revenue lawmakers can spend.

While state tax revenue from payroll withholding is also on the rise, revenue in the current budget is now $275 million above initial expectations for this fiscal year.

That’s important because the General Fund, which covers about 90 percent of government operating expenses, has been struggling since the fiscal year began July 1. Specifically, there were approximately $400 million in cost overruns, more than half of which related to Medicaid.

The fund would have already sunk into a deficit if lawmakers hadn’t launched the plan with a built-in $300 million cushion.

Taking into account cost overruns and improved revenue projections, that projected surplus now stands at about $180 million, or just under 1 percent of the general fund.

Analysts also reported Tuesday that General Fund revenues for the state’s next biennial budget also improved slightly.

Revenue forecasts are up about $240 million for the fiscal year that begins July 1, 2025, and about $380 million for 2026-27.

“Our revenues remain strong in virtually every area, reflecting the growth of Connecticut’s economy, thanks to low unemployment levels and businesses moving and expanding in our state,” said Jeffrey Beckham, director of the Lamont’s budget.

But most of that growth is expected to be swallowed up by raises Lamont will negotiate this winter with all state employee unions. The state’s largest health care workers union, SEIU 1199 NE, is also expected to ask lawmakers to significantly strengthen Medicaid to cover raises for most statewide nursing home workers and nursing home staff group for people with intellectual disabilities.

Legislative leaders say there must also be funds to meet urgent needs in other social service programs, child care, public colleges and universities and to meet the costs of special education in the K-12 system.

Connecticut For All, a progressive coalition of more than 60 faith, labor and other civic organizations, said Tuesday that analysts have shown there is enough revenue to fund all of these programs and pay down pension debt — provided that budgetary controls be reformed.

“These latest numbers tell the same story: tax barriers are being removed,” said coalition director Norma Martinez HoSang. “We cannot continue to ignore billions in stable revenues – projected through the end of the decade – while flirting with disaster through emergency budget cuts, divestment and underfunding. More and more families can’t help but worry about their wallets and their well-being. We must invest in the services and infrastructure our communities desperately need.

Apre-salomemanzo

Apre-salomemanzo

CT Budget Controls Will Force State to Save 50% More Than Planned

Umito

Winnipeg police investigate homicide in North End

Provedel and Sorgerechts Street for Gericht

Southport striker refuses to speak in court for third time

Best Pilates Essentials and Equipment to Improve Your Workout

CT Budget Controls Will Force State to Save 50% More Than Planned

Umito

You Might Also Like

Winnipeg police investigate homicide in North End

Provedel and Sorgerechts Street for Gericht

Southport striker refuses to speak in court for third time

Best Pilates Essentials and Equipment to Improve Your Workout