This story will be updated.
The legislature鈥檚 Appropriations Committee was poised Tuesday to adopt a $55.6 billion two-year budget that invests in K-12 schools, higher education, child care and other social services 鈥� but would require 海角换妻 to legally exceed its spending cap for the first time since 2007 and reform another key savings program.
The package, released early Tuesday morning and expected to be adopted in the afternoon, also delays raises for most state employees for one year, cancels pay hikes for constitutional officers, underfunds guaranteed health care benefits for retired workers, and rejects bus and rail fare increases sought by Gov. Ned Lamont.
The Democratic-controlled committee would appropriate $27.1 billion next fiscal year, boosting spending 4.3% and exceeding the cap 鈥� which aligns spending growth with household income and inflation 鈥� by $131 million. Its budget would total $28.4 billion in 2026-27, boosting spending by 4.9% but falling $26.5 million under the cap in the second year.
A precursor to final budget negotiations with Lamont, the committee spending plan is more of a rough draft this year than in others. Any state budget adopted before the regular session ends on June 4 likely will be revised dramatically this summer or fall.
By that time, Congress is expected to have completed an unprecedented plan to cut annual federal spending by $880 billion, reductions projected to cost 海角换妻 hundreds of millions of dollars in yearly aid at best, billions at worst.
鈥淚t鈥檚 going to be a balancing act that we still have to go forward with,鈥� said Rep. Toni E. Walker, D-New Haven, co-chair of the Appropriations Committee. 鈥淚t鈥檚 going to be painful.鈥�
Even before reckoning with shrinking federal aid, committee leaders say they faced difficult decisions after a series of state budget caps forced 海角换妻 to save excessively for the past eight years, weakening many core services.
鈥淭his is a real budget for real people in real life,鈥� said Sen. Cathy Osten, D-Sprague, the panel鈥檚 other co-chair. 鈥淲e鈥檝e heard people talk about what is important to them. This is what the people of 海角换妻 told us they need.鈥�
Big investments in education
The committee identified many needs in education, particularly at the local K-12 level.
Legislators pushed back against Lamont earlier this year, ordering $40 million in supplemental aid this fiscal year to local schools to offset what many called a crisis in special education. The School and State Finance Project, a nonpartisan education policy group, estimated districts needed $108 million.
The governor has proposed sending schools an extra $40 million annually for special education, but not for another two years. The committee budget released Tuesday maintains the extra $40 million in state payments in both the 2025-26 and 2026-27 fiscal years.
The panel also clashed with Lamont on the Education Cost Sharing grant, the main funding program to help cover local elementary and secondary school operating expenses. The committee proposed an extra $26 million in funding over the next two years combined to ensure that about 80 communities would not face a reduction in ECS as called for under the state鈥檚 statutory formula. The system weighs local wealth, enrollment totals, and past local education spending in calculating the state鈥檚 contribution.
Legislators and the governor also are expected to clash over higher education.
The Appropriations Committee proposed adding about $15 million above current spending in each of the next two years to the Department of Higher Education, chiefly to fund scholarships.
And it added about $280 million over the coming biennium to support the University of 海角换妻 and its Farmington-based health center, as well as $108 million to back regional state universities and community colleges.
Both of those gains, though, are deceptive. The 海角换妻 State Colleges and Universities system, which oversees the regional universities and community colleges, will lose $140 million in emergency federal pandemic aid after this fiscal year that has been supporting operating expenses. Similarly, UConn will lose about $130 million.
Still, the governor, other moderate Democrats and Republicans have said higher ed institutions have amassed too much in reserves and should spend those down before they receive extra state funds.
The that the CSCU system entered this fiscal year with $611 million in reserve, equal to more than 50% of annual operating expenses. UConn鈥檚 main branch in Storrs held a $171 million cushion equal to 10.2% while the health center had $297 million or 18%.
More funds for child care, social services 鈥� but little for Medicaid
The Appropriations Committee also took issue with to fund the hundreds of community-based, private, nonprofit agencies that deliver the bulk of state-sponsored services to people with developmental disabilities and patients struggling with mental health or addiction issues.
The industry says it loses hundreds of millions of dollars annually because state spending on social programs hasn鈥檛 kept pace with inflation for decades.
Lamont proposed giving them an extra $31 million in traditional state funding next fiscal year, and $126 million more than current levels by 2026-27.
But part of the funding state officials used this year to pay for social services, about $50 million, involves temporary federal pandemic grants that largely have been exhausted.
Taking that hit into account, nonprofits would lose $19 million next fiscal year under the governor鈥檚 proposal. The committee would add $19 million in extra state funds to ensure there is no loss.
The committee did agree with a proposal from Lamont to take $300 million from this fiscal year鈥檚 projected surplus and create an off-budget account to fund investments in early childhood care and education for many years to come. The proposal has been criticized by Republicans, though, who note the off-budget fund is merely an accounting gimmick used to circumvent the state spending cap, which only covers appropriations from within the formal budget.
The committee plan is likely to draw criticism from some rank-and-file Democratic lawmakers for not following through on what many party leaders said was a major priority this year: boosting Medicaid rates for doctors who treat the poor.
The last broad-based rate adjustment plan took effect in early 2008, and critics say many children and adults enrolled in 海角换妻鈥檚 HUSKY program effectively are uninsured, unable to find doctors willing to accept more Medicaid patients.
Earlier this year, to boost spending on Medicaid rates by $300 million by 2028-29, starting with a $75 million jump next fiscal year.
Instead, the Appropriations Committee plan hewed closely to the increased spending Lamont proposed in February: adding about $10 million next fiscal year and $25 million in 2026-27 for a much more modest, incremental bump.
Exceeding the spending cap for the first time in nearly two decades
Legislators faced many tough choices in this plan 鈥� even before cuts in federal aid have been ordered 鈥� because of a controversial series of state budget caps that a growing number of 海角换妻 officials insist need reform.
These 鈥渇iscal guardrails,鈥� as supporters call them, have generated annual surpluses of $1.8 billion in their first seven years. Another $1.8 billion cushion is projected for the current year.
These surpluses represent 8% of the General Fund, and critics say they have leached too many dollars away from education, health care, child care and other core programs.
The Appropriations Committee鈥檚 plan hinges on making two key changes to this 鈥済uardrails鈥� system.
A program that has barred legislators from spending $1.4 billion in annual income and business tax receipts since 2017 would be scaled back by $300 million, effective immediately.
And the spending cap that ties budget growth to household income and inflation would be exceeded and reset to allow an extra $131 million in appropriations next fiscal year. That can be done with a three-fifths vote in the House and Senate, provided the governor first declares a fiscal emergency in writing.
Lamont, a fiscally moderate Democrat who called the spending cap 鈥渟acrosanct鈥� during a January meeting with state business leaders, is expected to challenge that aspect of the committee plan.
鈥淢y administration has stressed careful spending that can be sustained into the future,鈥� Lamont said shortly after the committee plan was released. 鈥淯nfortunately, some portions of this budget proposal include spending that may not be sustainable and could unfortunately result in cuts or tax increases under future state leaders. 海角换妻 has gone down this road before and the result was financially harmful for taxpayers, municipalities and nonprofits.鈥�
The governor added, 鈥淢y administration will continue to meet with legislative leaders to find a compromise.鈥�
Lamont wasn鈥檛 the only one criticizing the committee plan early Tuesday.
鈥淭his is fiscally irresponsible to say the very least,鈥� said Senate Minority Leader Stephen Harding, R-Brookfield.
鈥淭he fact that we鈥檙e going over the spending cap is definitely an area of concern,鈥� said Rep. Tammy Nuccio of Tolland, ranking House Republican on the Appropriations Committee.
Legally exceeding the spending cap is far from unprecedented, though it hasn鈥檛 happened in a long time.
Unlike the other 鈥渇iscal guardrails,鈥� the spending cap has existed in various iterations since 1991, when it was enacted 鈥� and later added to the state Constitution 鈥� to temper public outrage over creation of a state income tax.
From the late 1990s through 2007, Republican Govs. John G. Rowland and M. Jodi Rell teamed up with Democratic-controlled legislatures to .
The last time, in the spring of 2007, Rell and the legislature approved a new biennial budget that exceeded the cap by .
But those cap overruns largely have been criticized by both parties as excessive and irresponsible.
Nuccio also noted the new committee spending plan underfunds a major contractual obligation, heatlh benefits for retired state workers.
Comptroller Sean Scanlon recommended that the committee find another $228 million over the next budget cycle 鈥� in addition to what Lamont proposed 鈥� to cover this contractual obligation. The comptroller made a similar recommendation to the Lamont administration in December, but the governor didn鈥檛 add the money into his February budget plan.
The committee also ignored this recommendation and, like Lamont, is hoping Scanlon can negotiate savings with the state鈥檚 health insurance carrier to at least mitigate this gap.
Delaying raises for most state employees
Because the new Appropriations Committee proposal already exceeds the spending cap for the upcoming fiscal year, the panel assumed raises for most state employees, which are due July 1, would be delayed at least one year.
The governor, who is negotiating with the State Employees Bargaining Agent Coalition, has announced no agreement to date.
SEBAC unions have received about 4.5% annual raises 鈥� a 2.5% general hike and a step increase that normally is worth another 2 percentage points 鈥� . According to nonpartisan analysts, this year鈥檚 raises cost the General Fund about .
If Lamont doesn鈥檛 ask lawmakers to ratify a new wage agreement before the regular session ends on June 4, that doesn鈥檛 mean workers would forfeit raises. A pay hike eventually ordered for 2025-26 might be delivered late 鈥� as has been done on occasion in the past.
Other elements of the Appropriation Committee鈥檚 proposal include:
- Adding about $120 million over the next two fiscal years combined to the Department of Correction. State employee unions and many legislators say the department, which spends more on overtime than most agencies, is badly understaffed. The department is projected to overspend its salary account this fiscal year by .
- Rejecting Lamont鈥檚 call to increase bus fares by 25 cents in 2026-27 and rail fees by 5% in each year of the upcoming biennium. Those changes would generate an extra $35.5 million and are necessary, the administration says, because pre-pandemic levels.
- Adding 53 employees to the Public Defender鈥檚 Office and 13 in the Secretary of the State鈥檚 Office.
- Maintaining $384,000 in the Department of Aging to support the fall prevention program and $1 million for nonprofit library programs.
