Gov. Ned Lamont’s new two-year budget plan underfunds employee health care by nearly $230 million, according to data from the state comptroller’s office, prompting bipartisan legislative charges that the plan was unbalanced from the start.
Restoring those funds, as the comptroller’s office
asked the Appropriations Committee to do last week, also would push the governor’s $55.2 billion plan well over the constitutional spending cap next fiscal year.
The latest development heightens tensions between Lamont and lawmakers, who have battled over spending controls and growing needs in core public services.
“We must work together,” Sen. Cathy Osten, D-Sprague, co-chairwoman of the budget-writing committee, said Monday, adding that the administration “should just be open and clear about the problems” and should have discussed health care cost issues with lawmakers in early February.
“It wasn’t something that happened quickly,” Rep. Toni Walker, D-New Haven, the panel’s other co-chair, said of the rising cost projections. “It was known. … I thought we were all working together for the state of Connecticut.”
“I would agree with the idea that it’s out of balance,” said Rep. Tammy Nuccio of Tolland, ranking House Republican on appropriations, who called the funding gap “dishonest and a disservice to our taxpayers.”
Lamont’s budget spokesman, Chris Collibee, released a brief statement, calling the two-year budget proposed on Feb. 5 “a reasonable, good faith estimate of the cost for both active and retiree health care.”
But Scanlon told The Connecticut Mirror on Monday that his office recommends legislators allocate $112 million next fiscal year and $116 million in 2026-27, in addition to what Lamont proposed, to meet health care obligations to active and retired state employees.
Scanlon said his office notified the Lamont administration on Dec. 19, almost seven weeks before the governor’s budget was released, that several trends were pushing health care costs upward. His office also warned legislators one week after Lamont’s budget was released about the rising health care costs.
Secretary of the State Stephanie Thomas, Comptroller Sean Scanlon, and Treasurer Erick Russell clap during Gov. Ned Lamont’s budget address on Wednesday, Feb. 5, 2025, in Hartford. Credit: Shahrzad Rasekh / CT Mirror
The state is facing growing demand for medical services among retirees on Medicare Advantage, an alternative to traditional Medicare offered by a private insurance company. Connecticut’s contract with Aetna, its Medicare Advantage carrier, is expiring, and that could boost costs. Among active employees, demand for inpatient hospital services and prescription drugs has increased.
Scanlon said he is very hopeful those costs hikes can be reduced before legislators and Lamont adopt the next budget, which is expected shortly before the regular General Assembly session closes June 4. The comptroller is soliciting bids for a new Medicare Advantage provider, directing patients to lower-cost care sites and providers, and negotiating savings on prescription drugs.
“I want to be conservative,” Scanlon said when asked why he wants the extra $230 million.
Rising tensions between governor, lawmakers
Collibee didn’t offer details on how the administration prepared its cost projections or why it didn’t accept Scanlon’s December estimates.
“It’s another example from this governor of saying one thing and doing another,” said Sen. Heather Somers of Groton, ranking GOP senator on the Appropriations Committee. “In his February budget address, he professed to be a ‘strong believer’ in the spending cap. Meanwhile, he was apparently willfully ignoring the December warnings of the state’s top accountant.”
Collibee said that if more funding is needed after the budget is adopted, “there are mechanisms in place to address the difference.”
Those “mechanisms,” though, are increasingly limited and controversial.
The Executive Branch controls the bulk of hiring and traditionally has used attrition to create savings when other programs run in the red.
But the state workforce shrank 10% between 2011 and 2018 under the previous governor, Dannel P. Malloy. And Lamont already announced plans earlier this month to curtail most hiring to mitigate projected overspending in Medicaid and other accounts.
Existing law also gives the governor broad discretion to reduce most accounts unilaterally by up to 5% whenever “the governor determines that due to a change in circumstances … certain reductions should be made.”
These reductions, referred to as “rescissions,” are rarely employed except when overall state finances are in deficit.
But despite the projected Medicaid overspending, the administration estimates Connecticut will close this fiscal year with more than $1.7 billion left over, a huge amount equal to roughly 8% of the General Fund.
Analysts say a program that bars legislators from spending a portion of income and business tax receipts will capture close to $1.3 billion in each of the next three years as well.
Critics of Connecticut’s budget controls say the system, largely enacted in 2017, is too aggressive, amassing huge surpluses to build reserves and lower pension debt at the expense of education, health care, social services, town aid and other core programs.
Despite warnings from Lamont that the current fiscal year already was on pace to exceed the constitutional cap that keeps spending growth in line with household income and inflation, lawmakers earlier this month approved $40 million extra for local schools to mitigate a financial crisis in special education and $3 million for various human services nonprofits.
Lamont vetoed the plan but later compromised with the legislature and accepted an accounting gimmick that still expended the funds after first moving them outside of the formal budget, effectively circumventing the cap.
Tensions heightened again, though, when Lamont ordered about $41 million in emergency budget cuts across more than a dozen agencies, including cutting $6 million from public colleges and universities he had pledged to legislators to shield from such action.
But the governor, who called the spending cap “sacrosanct” earlier this year, kept appropriations just $1.8 million under the limit next fiscal year in his February plan, a razor-thin margin equal to 1/132nd of 1% of the General Fund. Include the $112 million in health care spending that Scanlon asked lawmakers to restore to the budget, and Lamont exceeds the cap easily. ...read more read less
