committee invests in child care, ignores unemployment debt |
The General Assembly Appropriations Committee approved a $24.2 billion budget on April 7 for fiscal year 2023, increasing spending by 8% from current levels.
The committee’s budget remains under the statutory spending cap of $200,000 for this fiscal year and $4.6 million for fiscal year 2023.
Spending will increase 6.2% this year and 2.3% in fiscal year 2023 from the original two-year budget passed in the last legislative session.
As with Governor Ned Lamont’s proposed budget, the Appropriations Committee did not tap into the state‘s Rainy Day Fund, allowing additional funds to be deposited into the state employee retirement system. .
The budget invests about $125 million in child care and provides additional funding for workforce development, but provides no relief to businesses facing a 22% hike in unemployment contributions to repay federal pandemic loans.
“Optimistic” revenue projections
Continuing last year’s funding theme, the committee’s budget hinged on a combination of optimistic revenue projections and one-time federal funding from the US bailout bill.
The budget reallocates a series of funds, resulting in a total of $748.7 million in new ARPA allocations for a variety of grant initiatives and programs.
The remaining unrestricted federal funding is approximately $373.7 million. It should be noted that budget allocations using ARPA and related federal funds do not count against the state spending limit.
The committee’s co-chair, Senator Cathy Osten (D-Baltic), called it “a COVID relief budget – a budget that addresses the immediate challenges of today while investing in an equitable future.”
Committee Democrats said the budget, which passed by a 35-15 vote, made investments in much-needed areas including child care and workforce development.
Republicans opposed the budget, pointing to the use of one-time funding to support recurring spending, creating potential structural problems down the road.
Ranking member Rep. Mike France (R-Gales Ferry) expressed concern that the legislature is creating a funding cliff with stakeholders expecting that level of funding in the coming years.
Unemployment Debt Relief
CBIA President and CEO Chris DiPentima said he was disappointed the committee did not act on previous proposals to mitigate the impact of tax hikes and special assessments that employers will face later this year to pay off debt from the state unemployment fund.
“The absence of legislation to encourage business investment and address the challenges facing small businesses – the backbone of our economy – ignores Connecticut’s unique opportunity to rebuild our state stronger and better than before the pandemic,” he said.
“State and federal unemployment taxes will rise 22% by 2026, money better invested by employers to deal with the labor crisis, the greatest threat to the Connecticut’s economic recovery.
“It took six years of increasing unemployment contributions to employers to pay off federal loans after the 2008-2010 recession, we can no longer hold that debt on small businesses. economic downturn and hampered the recovery of employment.
“There is still time and opportunity for state lawmakers to do the right thing and help small businesses overcome an overwhelming number of obstacles, from labor shortages to bottlenecks in supply chain and inflation.”
The committee’s budget retained much of the appropriations proposed by the governor, although he rejected the centralization of computer services in the Department of Administrative Services.
According to the co-chairs of the committee, the rationale for this change was to wait and see how the process of centralizing human resources works before taking similar steps with the state computer system.
The committee also rejected the governor’s proposal to move the State Procurement Standards Board to the public auditors.
Instead, the budget allocated five paid positions. The committee also intends to designate the agency’s budget as a transfer budget, providing additional future protections.
The Legislature provided additional funding in addition to the Governor’s recommendations:
- $23 million for personal care agreement
- $52 million for private providers offering direct health and social services to clients from various state agencies (some funding also comes from ARPA dollars)
- $3.7 million for residential care home supports and $2.25 million for the Ministry of Mental Health and Addiction Services housing assistance program
- $100,000 for a new position in the Office of Workforce Strategy. The first new position is designed to support and manage OWS communication and legislative initiatives.
- $1.4 million targeting Eastern Connecticut manufacturing pipeline
- $1 million for adult education
- $1.57 million to fund additional charter school seating at Park City Prep, Odyssey and Integrated Day School
- $600,000 for the recruitment and remuneration of interns within the Ministère des Transports
One-time funding sources
The budget proposal relies heavily on federal funding and deferrals to fund spending increases, shifting many Governor’s appropriations to ARPA funding, including:
- $20 million in operating assistance for the University of Connecticut
- $20 million in operating assistance to UConn Health
- $24 million in operating assistance for the Connecticut State College and University System
- $3.5 million in various social service programs
The committee budget uses significant reprofiled funds to fund programs including:
- $100 million to DOT to support federal competitive/non-competitive grants anticipated under the Infrastructure Investment and Jobs Act
- $74 million to the Office of Early Childhood
- $23 million for salaries of non-union employees to address curtailment issues
- $65,000 to help create an e-commerce training program at community colleges
- $25 million in the salary reserve fund to help recruit and retain healthcare, engineering and other hard-to-recruit positions
The committee reallocated the Governor’s ARPA funding recommendations, including:
- $10 million for business grants for electric vehicles
- $3 Million Reinstatement Training for Commercial Learner Permits at the Department of Correction
- Eliminates $15 million for the CareerConnect program
- Eliminates $20 million for the Innovation Corridor program
- $7 million for climate-smart agriculture
- Cut $12.5 million in funding for outdoor recreation through the Department of Energy and Environmental Protection
- $7 million for school health centers
- $50 million for various childcare programs, including Care4Kids
- $20 million for private provider support
- Cut $14 million in funding for the Department of Public Health’s student loan repayment program
- Eliminates $50 for Affordable Housing Support
Impact of SEBAC
This is the second version of the budget and faces additional revisions.
Appropriations Committee and Legislature Must Act on Lamont Administration’s Salary and Bonus Contract Agreement with State Employees Bargaining Agent Coalitionot.
This agreement will have a significant fiscal impact, which is expected to add $287 million to state spending this fiscal year and another $403 million next fiscal year.
Legislative leaders must also reconcile the appropriations budget with the revenue package approved by the finance, revenue, and surety committee.
Although there is only $4.6 million under the current spending cap for fiscal year 2023, the Legislature will receive new revenue figures later this month, which could lead to an increase in the leeway.
The spending cap limits state spending growth to the greater of inflation or personal income growth in Connecticut.
The CBIA will continue to monitor the budget going forward to ensure it prioritizes programs that maximize taxpayers’ return on investment and move the needle forward with the state’s economic recovery.
For more information, contact AABC’s Ashley Zane (860.244.1169) | @AshleyZane9