Gov. Ned Lamont stopped just shy of a veto threat Sunday, saying through a spokesman he 鈥渟trongly opposes鈥� legislators鈥� 鈥渋rresponsible鈥� plan to push the budget further over the spending cap to bolster special education.
Lamont鈥檚 budget spokesman, Chris Collibee, also accused the governor鈥檚 fellow Democrats with disregarding hard realities, expecting the administration to avert a cap catastrophe in slightly more than four months.
鈥淟egislative leaders are ignoring the facts,鈥� Collibee said, referring to planned votes Monday evening in the House and Tuesday in the Senate to appropriate slightly more than $40 million 鈥� most of which would bolster grants to local school districts.
For weeks the governor鈥檚 budget office has noted 海角换妻鈥檚 $26 billion budget was a whisker-thin $500,000 under the cap that keeps most budget growth in line with household income and inflation, a problem driven by hundreds of millions of dollars in projected cost overruns 鈥� particularly in the Medicaid program.
That meant ordering $40 million extra to assist special needs students would exceed that limit, leaving the governor with the difficult challenge of finding nearly $40 million in off-setting savings before the budget year ends on June 30.
The problem worsened late last week when administration updated its numbers, showing the base budget was now on pace to shatter the cap . That means if Lamont鈥檚 fellow Democrats in the legislature鈥檚 majority stick to their plans to assist local schools, the potential cap violation exceeds $100 million.
鈥淭o add this funding in the current fiscal year and expect the administration to manage over $100 million in spending cap overages with four months remaining is irresponsible,鈥� Collibee said. 鈥淭he governor strongly opposes this course of action.鈥�
But House Speaker Matt Ritter, D-Hartford, said Sunday he still plans to call the chamber in session Monday evening to help resolve what many legislators are calling a financial crisis in local education.
鈥淥ur school districts are struggling from massive special education cost increases and great uncertainty from the federal government,鈥� Ritter said. 鈥淭hese funds will help during this difficult time.鈥�
The School and State Finance Project, a 海角换妻-based education policy group, estimates the $181.1 million Excess Cost Grant 鈥� the state鈥檚 child program to assist students with special needs 鈥� will provide $108.2 million less than what districts need to cover their expenses.
Another argument for assisting schools is that despite the spending issues, state government remains on pace to close the fiscal year with a huge savings.
Despite projections that some agencies will overspend collectively by more than $540 million, the budget is on pace to close $390 million in the black, due largely to better-than-anticipated tax receipts and savings from freezing many vacant state jobs.
And that operating $390 million operating surplus doesn鈥檛 even include another $1.4 billion in income and business tax receipts legislators are required to save because those revenues are deemed too likely to fluctuate greatly from year to year, and therefore too risky to spend.
But this so-called 鈥渧olatility adjustment鈥� 鈥� along with the spending cap and all of the state鈥檚 savings policies 鈥� have come under increasing legislative criticism in recent years.
海角换妻 has closed its books with an average of $1.8 billion in savings since 2017, a whopping cushion that represents about 8% to 9% of the General Fund each year.
This has been great for the budget reserve and cash-starved pension funds, which together have received $12.5 billion in surpluses since 2017.
But critics say it also has leached vital resources from education and other core programs like health care and social services.
Lamont, a fiscal moderate who inherited these budget caps when he took office in 2019, has largely praised them throughout his tenure. He agreed earlier this winter to modestly scale back the 鈥渧olatility adjustment鈥� savings program, but assured business leaders that
He also proposed sending another $54 million in special education aid to local schools 鈥� but not for two more fiscal years.
If the governor allows legislators to boost local education aid, he will face three options, all difficult:
- Try to find $100 million in off-setting budget cuts before June 30 to ensure cap compliance. The chances of this are slim, given that most state agency spending occurs in the first three-quarters of the fiscal year, meaning that most money is gone before April 1.
- Scramble to find a legal loophole that would exempt certain areas of overspending when determining whether the budget complies with the cap. This would likely spark criticism from business leaders, Republican legislators and other fiscal conservatives.
- Or begin the process of legally waiving the spending cap 鈥� something 海角换妻 hasn鈥檛 done since 2007, and which also comes with a host of political problems.
During the 1990s and 2000s, Republican governors and Democrat-controlled legislatures seven times. This can be done provided the governor declares a fiscal emergency in writing, and three-fifths of both the House and Senate agree.
But those maneuvers 鈥� coupled with decades of inadequate savings for pensions guaranteed to state employees and municipal teachers 鈥� took a huge toll.
When Gov. Dannel P. Malloy took office in January 2011, he inherited a budget headed for an unprecedented, 18% deficit, and about $1 billion in operating debt.
He and lawmakers approved a tax hike worth more than , one of the largest in state history, while securing concessions from state employee unions.
When 海角换妻鈥檚 economic recovery from the Great Recession badly lagged the nation鈥檚, Malloy and legislators ordered another big tax increase just four years later.
But while Malloy was accused at times of circumventing the cap through various accounting maneuvers, he never openly tried to exceed the limit.
Similarly, Lamont hasn鈥檛 declared a fiscal emergency. But he did ask lawmakers earlier this month to create a new $300 million fund 鈥� outside of the state budget and spending cap 鈥� to allow greater investments in child care services.
Ritter and Senate President Pro Tem Martin M. Looney, D-New Haven, have warned the governor that if 海角换妻鈥檚 budget controls are too rigid 鈥� and if pension debt is repaid too aggressively to the detriment of education, health care and other core programs 鈥� lawmakers will force a debate about revising them.
This story was originally .
