One week after being pushed by legislators into bolstering local school grants for special education and awarding emergency grants for nonprofits, Gov. Ned Lamont took $41 million from more than a dozen agencies on Friday, including more than $6 million from public colleges and universities he pledged to shield.
The governor, who signed two bills Thursday that shift $43 million outside of a budget already on pace to exceed the spending cap, is scrambling to comply with that constitutional limit before the fiscal year ends June 30. One bill provided $40 million for special education aid; another provided nearly $3 million to nonprofits at odds with the administration of President Donald J. Trump.
The offsetting cuts made Friday without public notice sparked criticism Monday from legislative leaders, who noted the state expects to wrap the fiscal year with a $1.7 billion surplus that equals nearly 8% of the General Fund. The criticism came on the same day that Lamont was applauded by nonprofits for their additional grants.
The episode illustrates the tensions between Lamont and the legislature over how the spending cap is frustrating some lawmakers over their inability to meet certain needs in a time of budget surpluses. Over four days last week, Lamont vetoed two bills that would have provided the $43 million for special education and nonprofits, then he agreed to sign similar compromise measures providing the same amounts although through a different mechanism.
While he acceded to legislative demands for the emergency appropriations, Lamont argued last week and again Monday at a ceremonial bill signing that the versions he signed did not represent a retreat from his demands for fiscal discipline and respect of the spending cap.
But the quick turnaround, from vetoing the emergency spending to championing it, was unmentioned at a ceremonial bill signing in the Bridgeport office of CIRI, the Connecticut Institute for Refugees and Immigrants. Nonprofit leaders studiously ignored the veto of the first bill and profusely thanked him for signing the second.
“I thank you, Gov. Lamont, for your strength and determination in keeping Connecticut a safe and empowering state for all of our residents,” said Susan Schnitzer, the chief executive of CIRI, a century-old refugee group.
CIRI is one of the two dozen groups earmarked for grants in a bill that provides $2.88 million in emergency funding to nonprofits that provide reproductive health, serve refugees and immigrants, or an LGBTQ clientele, including transgender people seeking gender-affirming care.
In vetoing an earlier version of the bill exactly a week ago, Lamont took issue with the ad hoc nature of how the recipients were chosen, the ability of the state to backfill every funding hole created by Trump, and whether the legislature was undermining Lamont’s insistence on fiscal discipline.
His chief budget official reiterated that the spending cap remains crucial to Lamont.
“The spending cap exists to ensure that government spending does not grow faster than the income of our residents, which supports that spending,” Office of Policy and Management Secretary Jeffrey Beckham wrote in a memo Friday to agency heads.
At the same time, Beckham used his statutory authority to withhold $40.6 million in funds due over the final four months of the fiscal year to 14 agencies, the University of Connecticut and the Connecticut State College and University system.
These “holdbacks” amount to instant cuts. Governors routinely have used them to balance the budget, and lawmakers tasked Lamont with finding $182.7 million in efficiency savings throughout the fiscal year. This typically comes from job attrition, delays in launching programs, and other general efficiencies.
But Lamont already has hit and surpassed his savings target, reporting last month that various agencies would save almost $238 million.
Yet even as some accounts were deep in the black, some agencies were overspending others by wider margins. The administration last month pegged gross overspending at $541 million. The only reason Connecticut expects to close its books with $1.75 billion left over involves robust tax receipts and other revenues.
Regardless, Lamont must comply with the spending cap, which keeps appropriations in line with household income and inflation.
Despite a warning from Lamont that Connecticut already was on pace to exceed the cap by $61 million, the General Assembly ordered $43 million in supplemental spending last week, including $40 million in grants to K-12 school districts to mitigate a growing fiscal crisis in special education.
Lamont, a fiscal moderate who called the cap “sacrosanct” earlier this year, initially vetoed the extra spending. But with legislators poised to override that veto nonetheless, Lamont agreed to shift the funds to an off-budget account and spend them outside of the cap system, a gimmick he has criticized in the past.
The spending cap and Connecticut’s other budget controls, which Lamont calls “fiscal guardrails,” have come under fire recently from the governor’s fellow Democrats in the legislature’s majority.
Those controls have generated an average annual surplus of $1.8 billion since 2017, windfalls that have elevated the budget reserve to a record-setting $4.1 billion and helped retired more than $8.5 billion in pension debt.
But critics say the savings programs are too aggressive, draining huge resources away from core programs like education, health care, social services and municipal aid.
Higher education taking a hit
Connecticut’s higher education system, along with its community colleges and regional universities, have struggled financially over the same period.
Tuition and fees at community colleges this past fall were up 11% from two years earlier, while those at regional universities were up more than 7%.
Lamont had pledged in July that he would shield higher education from any emergency budget cuts this fiscal year. But he reversed himself in November, taking $8 million in total from CSCU, the University of Connecticut and the UConn Health Center in Farmington.
And late last week, the administration held back another $1.9 million from UConn and $4.4 million from CSCU.
“The Connecticut State Colleges and Universities system has taken incredible steps to steady its financial footing,” said Samantha Norton, spokesperson for CSCU, who noted the Board of Regents for Higher Education already has ordered close to $100 million in cuts and other budget-balancing adjustments for the next two fiscal years. “There is no better investment that Connecticut can make than in the future of its students. We are committed to working with state leaders to ensure CSCU receives the proper levels of funding and support it needs to continue to provide its students with a high-quality, affordable education.”
But the leaders of the legislature’s Higher Education and Employment Advancement Committee said Connecticut’s current budget process doesn’t make sense.
“Our constituents are getting really sick and tired of reading in the newspaper … that we have these massive budget surpluses, and at the same time their property taxes are going up, and we have these cuts to higher education,” said Sen. Derek Slap, D-West Hartford.
“It sounds almost ridiculous on its face to explain,” said Rep. Gregg Haddad, D-Mansfield, who added, “the governor has taken every opportunity to reduce support for public higher education.”
Chris Collibee, Lamont’s budget spokesman, said “We’re looking for savings whether for hiring, contracting or other means.”
The administration, which already has achieved significant savings through job attrition this fiscal year, announced it also would curtail hiring further, a move likely to frustrate state employee unions, which note overall staffing is well below that of two decades ago.
Drew Stoner, spokeswoman of the State Employees Bargaining Agent Coalition, said communities already have their hands full dealing with problems created by the federal job cuts ordered since January by President Donald J. Trump’s administration.
“Connecticut residents have inevitably turned to their state and local services to once again provide a safety net,” she said. “The work of our public workers is even more critical, but too many agencies are already facing crisis level staffing shortages. This unnecessary hiring freeze is a direct result of the Governor’s fanatic interpretation of our fiscal policies that is irresponsibly siphoning off billions from the programs and services our residents need now.”