This story has been updated. The legislature’s Appropriations Committee adopted a $29 billion state budget Tuesday that would enhance Medicaid payments for doctors who treat the poor, shield magnet schools from a steep cut and invest in public transit, municipal grants and financial aid for hi gher education. The proposal for the 2026-27 fiscal year, which the Democratic-controlled panel approved 38-12 largely along party lines, also relies on Gov. Ned Lamont to tap much of the remaining $330 million in a special fund lawmakers created using surplus last November — outside of the formal budget — to offset deep cuts in federal aid for human service programs. But Appropriations Committee’s plan, which would boost spending 6.2% over current levels, according to the legislature’s nonpartisan Office of Fiscal Analysis, also relies on an accounting maneuver to avoid violating the constitutional spending cap by nearly $150 million. Lamont, a supporter of the cap that keeps budget growth in line with household income and inflation, likely will butt heads with his fellow Democrats over this issue. Still, his own $28.7 billion plan for the 2026-27 fiscal year has its own problems with spending limits. The governor and legislative panel’s budgets provide the foundation for final negotiations between Lamont and top legislative leaders. The two sides hope to craft a compromise budget for the fiscal year beginning July 1 before the regular 2026 General Assembly session closes on May 6. “We have dealt with a lot of issues that we think that people in the state of Connecticut have asked us to take care of,” Sen. Cathy Osten, D-Sprague, co-chairwoman of the committee, said during a briefing prior to Tuesday’s meeting. “We consider this a very serious, responsible budget.” Part of that responsibility involves advancing a long-overdue adjustment of medical provider rates, said the panel’s other co-chairwoman, Rep. Toni E. Walker, D-New Haven. “We made that promise three years ago, and we have to fulfill that,” she said, adding that the committee also felt it must build on recent efforts to boost municipal aid. “Our colleagues have heard from their constituents that they need help.” Lamont’s budget spokesman, Chris Collibee, said the administration “proposed a balanced budget focused on keeping Connecticut on strong financial footing. While the proposal from the Appropriations Committee takes a different approach, it is reflective of what people have been saying in public hearings and conversations across the state — and those voices are important.” Collibee praised legislators for building on Lamont’s proposals to invest in health care and schools, adding, “We will work with lawmakers to find a path that’s responsible and delivers real relief where it’s needed most — just as we have done for the past seven years.” But Republican leaders generally criticized the plan, saying Democrats hadn’t done enough to keep spending in line — other than employing an accounting maneuver to circumvent the cap. “There’s good stuff in the budget,” said Rep. Tammy Nuccio of Tolland, ranking GOP representative on the Appropriations Committee. But “the $150 million in spending is problematic for me. I do think there is a way to get there” without that accounting maneuver, she said. Sen. Heather Somers of Groton, ranking Republican senator on appropriations, agreed with Nuccio that some of the proposed new spending is good. But Somers also warned Connecticut is repeating fiscal mistakes it often made in the 2010s. That’s when state budgets were plagued with deficits and two of the largest tax hikes in Connecticut history were ordered. “We continue to move things off budget,” Somers said, “and we did this years ago when we were not in a good financial position.” If any municipal aid expansion next fiscal year is paid for by drawing off a temporary emergency response fund outside of the formal budget, those dollars could be exhausted in one or two years. What happens to this extra town aid at that point? asked Republicans, who say Connecticut could reduce spending some by trimming raises for state employees, finding more efficiencies at public colleges and universities, and further shrinking agency staff. Democrats, who control both the House and Senate, counter that the minority is quick to complain but usually proposes few cuts capable of achieving the overall spending levels they advocate. Investing in health care, human services Democrats also said their biggest investments involve core services that badly need additional support. For example, Lamont and lawmakers this fiscal year added a modest $15 million to support higher rates for physicians and other providers who treat Medicaid patients. But that is far shy of the $300 million legislative leaders last year said was needed to upgrade rates that hadn’t been adjusted comprehensively since 2007. Many legislators and health care advocates complain Medicaid patients often cannot find doctors willing to treat them because the compensation is so poor. A 2019 analysis by KFF, the health care think-tank formerly known as Kaiser Family Foundation, found that Connecticut’s Medicaid rates for most specialists ranked 42nd among all states. Lamont would add another $30 million to that rate-enhancement effort starting July 1, while the Appropriations Committee would invest $60 million. Spending more in this area, legislators said, would help more patients regularly see doctors, promote wellness, and ultimately reduce overall health care costs. Similarly, the community-based nonprofits that deliver most state-sponsored social services to people with disabilities and patients struggling with mental illness and addiction say they lose hundreds of millions annually under state payment schedules that haven’t kept pace with inflation for decades. The committee budget, like Lamont’s plan, preserves an earlier deal to boost spending in 2026-27 by about $150 million over levels from 2024-25. The committee also recommended almost $900,000 to add roughly 52,000 new doses to the state’s pilot vaccination program to combat adult influenza and $443,000 to help prevent the closure of 10 school-based health centers in southeastern Connecticut. More funds for K-12, higher education, universal free breakfast Education was another top priority for Democratic lawmakers, who rejected a Lamont proposal to cut $12 million in operating aid for the regional magnet schools. The panel also blocked another $6.7 million in cuts the governor sought for adult education and for health and welfare services in private schools. Districts must provide the same services to private students as they do to public, if most of its nonpublic pupil population resides in Connecticut. Lawmakers and the governor did see eye-to-eye on education in a few areas. The Education Cost Sharing program, the state’s chief operating grant for cities and towns, grew by $170 million this fiscal year, while special education aid jumped $30 million. Both lawmakers and the governor would preserve those increases for 2026-27. Democratic legislative leaders have said they want to add $150 million or more to these education grants next fiscal year, and Osten said some major addition still is possible. But those funds might need to come from outside of the budget, specifically from the emergency response fund set up to offset federal programmatic cuts, she said. Any use of the response fund would require a compromise with Lamont, since boosting aid to local schools doesn’t represent shoring up a program harmed by reductions in federal funding. The Appropriations Committee and the governor do agree when it comes to universal free breakfast in Connecticut schools. Lamont has tried for the past two years to convince lawmakers to appropriate $12 million for this effort, and the committee endorsed those funds. James Williams, government relations director for the American Heart Association, called this “a giant, positive step towards ensuring every kid can get the nourishment they need to learn and perform at their best. “Food insecurity is a very real problem in Connecticut. Thousands of kids across the state whose families struggle to make ends meet, don’t qualify for subsidized meals.” The appropriations panel also would trim operating aid for the University of Connecticut, though it doesn’t pull back as much as the governor did. Aid for UConn’s main campus in Storrs and its regional branches would drop under the committee plan from $268 million this fiscal year to $264 million in 2026-27. Lamont proposed $253 million for next fiscal year. Similarly, the committee would drop funding for UConn Health in Farmington from $143.5 million to just over $139 million, about $600,000 more than the governor recommended. Lawmakers and the administration have been pressuring higher education units to find ways to curb spending now that the federal pandemic grants Connecticut used to supplement their operating budgets between 2021 and 2025 have largely expired. The committee also recommended increasing state aid next year for regional state universities and community colleges by $27 million to $506 million, which is about $8 million more than Lamont proposed. Most of that difference involves extra dollars for financial aid. Dealing with the spending cap At first glance, Connecticut could not make all of these, and other investments proposed by the Appropriations Committee, without exceeding the constitutional spending cap by more than $140 million. To work around that problem, majority Democrats on the committee want to use an accounting maneuver to carve out that extra space, a plan that hinges on a huge chunk of state dollars likely to go unspent this fiscal year. Nonpartisan analysts say the General Fund in the current $27.2 billion operating budget is on pace for a nearly $30 million surplus, a relatively tiny amount that represents a fraction of 1%. But Connecticut also has a savings program that takes a portion of income and business tax receipts outside of the budget and doesn’t allow lawmakers to spend it easily. Analysts say this savings program is projected to capture $1.8 billion this fiscal year. But those funds are supposed to be used this fall or winter, after the current budget cycle ends on June 30, to bolster reserves and pay down pension debt. The accounting maneuver involves taking $150 million from this program and spending it now, before the fiscal year ends, to pay down pension debt. Spending the funds on pension contributions before this budget cycle ends would alter cap calculations and trigger an extra $150 million in allowable spending next fiscal year. The committee then would use that extra cap room in the next budget cycle to green-light its various new investments in health care, education and other core services. Lamont generally has decried such accounting maneuvers as fiscal gimmicks that violate the spirit of the cap. But the fiscally moderate governor has his own cap problems in the next budget cycle. The administration says its budget for 2026-27 falls a razor-thin $1.1 million under the cap, but Comptroller Sean Scanlon says it underfunds contractually guaranteed retirement benefits by almost $92 million. But if Lamont funded retiree health care at the level the state’s chief fiscal watchdog says is needed, his budget also would exceed the cap. The Appropriations Committee plan also falls about $90 million short of the funding level Scanlon says is needed to meet retirement benefit obligations next fiscal year. Other components of the Appropriations Committee budget Legislators also recommended $2 million extra next fiscal year to add 10 new registered nurses and 10 additional social workers to the Department of Correction in response to recent in-custody deaths at Connecticut facilities. Another $2.6 million was recommended to order a 4.35% pay increase next fiscal year for judges and workers compensation commissioners. The Judicial Branch last month asked lawmakers to grant a 4.6% pay hike, citing disparities between Connecticut judges and those in other states, other state employees and the private sector. Other components of the committee budget include: More than $21 million to strengthen public transit programs, including enhanced service levels on the Shoreline East rail service and bus fare reductions for students and veterans. $6.5 million extra next fiscal year for regulation and public safety programs, including new investments for state police recruitment and to upgrade aging police cruisers. $2 million to offset declining federal funding that supports state Department of Labor staff that processes unemployment benefits. $7 million to expand manufacturing workforce development and other job training programs. ...read more read less