Wednesday, May 22, 2024

Sponsors

Lamont Keeps State Spending Lean

The administration claims Connecticut cannot afford the relief at this time, even though fiscal projections for the 2020-21 fiscal year are better now than they were when Lamont made the pledge two years ago.

“The budget you have before you today is financially responsible and pro-growth,” Office of Policy and Management Secretary Melissa McCaw, Lamont’s budget director, said during a midmorning briefing.

The latest budget proposal would grow General Fund spending in the 2020-21 fiscal year by 3.7% over the current year, which is a 0.6% increase over the preliminary 2020-21 budget he and lawmakers approved last May.

Most of the new spending in Lamont’s plan would cover rising state employee health costs, larger-than-anticipated state pension contributions, a growing demand for Medicaid services and a potential shortfall at the University of Connecticut Health Center.

Lamont’s budget holds aid to cities and towns largely flat, though it does allow a previously approved increase for the state’s largest grant — the Education Cost Sharing program — to move forward. This would boost aid to communities by $50 million next fiscal year.

Connecticut already enjoys a record-setting $2.5 billion rainy day fund, yet it still does not match the level recommended by Comptroller Kevin P. Lembo and other fiscal watchdogs to safeguard state programs and tax rates against the next economic downturn.

By keeping spending lean and continuing to save a portion of state income tax receipts tied to investment earnings, McCaw projects the reserve — which currently represents 13% of annual operating expenses — would grow beyond $2.9 billion after the next fiscal year ends in mid-2021.

The recommended level is 15% of annual operating costs, which is roughly $3 billion.

“Our successful efforts have resonated on Main Street,” Lamont said in his budget address. “Our budget provided predictability to those counting on it most; I have heard from school principals, city and town leaders, small businesses and families – all saying – “finally, we can now plan for our future.”

Just two years ago, Connecticut had almost no reserves, was still paying off its operating debt from the last recession, and had concluded three consecutive fiscal years in deficit.

“Three years ago, credit rating agencies downgraded our state with headlines like The Wall Street Journal that asked ‘What’s the matter with Connecticut?’” the governor said. “Today, The Wall Street Journal has changed its tone. “‘The state has dug a deep hole–maybe it has now stopped digging.’”

An equally important focus of the new budget, McCaw said, is to grow the state’s economy.

The plan reinvigorates the Office of Workforce Competitiveness to create a unified, statewide strategy for training and developing new workers. The budget adds about $700,000 for new staffing.

The governor also kept a pledge to establish a new “earn-as-you-grow” tax credit for businesses seeking to add jobs. Companies adding at least 25 new full-time jobs over two years, with income at or above 85% of median household income, would receive a break. The program would be capped, meaning Connecticut would not provide more than $40 million in annual tax relief.

McCaw noted that the plan makes no cuts to social services nor to health care providers. But it also lacks any additional operating funds for the community-based nonprofits that provide the bulk of Connecticut’s social services.

Since 2002, state spending for nonprofits has grown by about 10%. After adjusting for inflation, nonprofits say they have lost money.

The CT Community Nonprofit Alliance projects it would take an extra $462 million per year to make them whole. They recently asked the governor and legislature to gradually increase funding over the next five years for an average of about $92.4 million extra per year.

Though Lamont has said he will support legalization of recreational marijuana use and taxation of cannabis sales, the new budget does not assume any revenue from this initiative.

The governor proposes that no sales occur before July 2022. In the interim, the Department of Consumer Protection and the state’s Equity Commission would study the challenges of legalization and make recommendations for implementation to the 2021 General Assembly.

Other components of the governor’s new budget include:

A “clean slate initiative” that would automatically clear certain Class C and D misdemeanors and certain drug convictions after a waiting period of seven years.

New restrictions on debt-free community college. A means test would be instituted to weed out students with sufficient resources. The program also would be limited to students who enroll full-time in courses within one year of graduating from high school.

$75,000 for new clerical support for the Connecticut Retirement Security Authority. The funding would also allow Lembo to assume operational control of the struggling agency charged with overseeing a new state-run retirement savings program for private-sector workers.

Allowing candidates who receive public grants to run for state office to use a portion of those grants to cover child care services.

The administration claims Connecticut cannot afford the relief at this time, even though fiscal projections for the 2020-21 fiscal year are better now than they were when Lamont made the pledge two years ago.

“The budget you have before you today is financially responsible and pro-growth,” Office of Policy and Management Secretary Melissa McCaw, Lamont’s budget director, said during a midmorning briefing.

The latest budget proposal would grow General Fund spending in the 2020-21 fiscal year by 3.7% over the current year, which is a 0.6% increase over the preliminary 2020-21 budget he and lawmakers approved last May.

Most of the new spending in Lamont’s plan would cover rising state employee health costs, larger-than-anticipated state pension contributions, a growing demand for Medicaid services and a potential shortfall at the University of Connecticut Health Center.

Lamont’s budget holds aid to cities and towns largely flat, though it does allow a previously approved increase for the state’s largest grant — the Education Cost Sharing program — to move forward. This would boost aid to communities by $50 million next fiscal year.

Connecticut already enjoys a record-setting $2.5 billion rainy day fund, yet it still does not match the level recommended by Comptroller Kevin P. Lembo and other fiscal watchdogs to safeguard state programs and tax rates against the next economic downturn.

By keeping spending lean and continuing to save a portion of state income tax receipts tied to investment earnings, McCaw projects the reserve — which currently represents 13% of annual operating expenses — would grow beyond $2.9 billion after the next fiscal year ends in mid-2021.

The recommended level is 15% of annual operating costs, which is roughly $3 billion.

“Our successful efforts have resonated on Main Street,” Lamont said in his budget address. “Our budget provided predictability to those counting on it most; I have heard from school principals, city and town leaders, small businesses and families – all saying – “finally, we can now plan for our future.”

Just two years ago, Connecticut had almost no reserves, was still paying off its operating debt from the last recession, and had concluded three consecutive fiscal years in deficit.

“Three years ago, credit rating agencies downgraded our state with headlines like The Wall Street Journal that asked ‘What’s the matter with Connecticut?’” the governor said. “Today, The Wall Street Journal has changed its tone. “‘The state has dug a deep hole–maybe it has now stopped digging.’”

An equally important focus of the new budget, McCaw said, is to grow the state’s economy.

The plan reinvigorates the Office of Workforce Competitiveness to create a unified, statewide strategy for training and developing new workers. The budget adds about $700,000 for new staffing.

The governor also kept a pledge to establish a new “earn-as-you-grow” tax credit for businesses seeking to add jobs. Companies adding at least 25 new full-time jobs over two years, with income at or above 85% of median household income, would receive a break. The program would be capped, meaning Connecticut would not provide more than $40 million in annual tax relief.

McCaw noted that the plan makes no cuts to social services nor to health care providers. But it also lacks any additional operating funds for the community-based nonprofits that provide the bulk of Connecticut’s social services.

Since 2002, state spending for nonprofits has grown by about 10%. After adjusting for inflation, nonprofits say they have lost money.

The CT Community Nonprofit Alliance projects it would take an extra $462 million per year to make them whole. They recently asked the governor and legislature to gradually increase funding over the next five years for an average of about $92.4 million extra per year.

Though Lamont has said he will support legalization of recreational marijuana use and taxation of cannabis sales, the new budget does not assume any revenue from this initiative.

The governor proposes that no sales occur before July 2022. In the interim, the Department of Consumer Protection and the state’s Equity Commission would study the challenges of legalization and make recommendations for implementation to the 2021 General Assembly.

Other components of the governor’s new budget include:

A “clean slate initiative” that would automatically clear certain Class C and D misdemeanors and certain drug convictions after a waiting period of seven years.

New restrictions on debt-free community college. A means test would be instituted to weed out students with sufficient resources. The program also would be limited to students who enroll full-time in courses within one year of graduating from high school.

$75,000 for new clerical support for the Connecticut Retirement Security Authority. The funding would also allow Lembo to assume operational control of the struggling agency charged with overseeing a new state-run retirement savings program for private-sector workers.

Allowing candidates who receive public grants to run for state office to use a portion of those grants to cover child care services.

Leave a Reply

Your email address will not be published. Required fields are marked *