Lamont Relying on Federal Funds to Close Budget Deficit, Calls for Connecticut Comeback

Gov. Ned Lamont gives his budget address Feb. 10, 2021, in a pre-recorded video. Screenshot

West Hartford’s statutory funding is projected to remain flat in the biennial budget proposed Tuesday by Gov. Ned Lamont.

By Christine Stuart and Hugh McQuaid, CTNewsJunkie.com 

West Hartford-specific information provided by Ronni Newton, We-Ha.com

Gov. Ned Lamont pitched a two-year, $46 billion budget Wednesday that seeks to close a $4 billion deficit over that same time period.

The deficit Lamont seeks to close is larger than the one projected by his own budget office and the legislature’s Office of Fiscal Analysis. Updated revenue numbers won’t be available until April and budget analysts say the pandemic is making it harder to predict what will happen to Connecticut’s economy so they are being conservative in their estimates.

The budget address was pre-recorded due to the COVID-19 pandemic. Click here to view the video budget presentation and read the full transcript.

Lamont plans to address the deficit with a combination of the $3 billion Rainy Day Fund and anticipated federal funds from Washington. The budget relies on $1.75 billion in anticipated federal aid over two years, and in the absence of more stimulus the state would need to tap into the Rainy Day Fund — that would require a three-fifths vote of the General Assembly.

“There are no broad-based tax increases nor changes to income or sales tax rates,” Lamont’s budget reads. “The largest single component of these revenue initiatives is the expectation that the Biden Administration and Congress will approve unrestricted aid to states to compensate for the drop-off in revenue related to the pandemic.”

Lamont also looks to add revenues from recreational marijuana and sports betting and iGaming.

Lamont made legalizing marijuana a priority last year , but the session was cut short due to COVID-19. His enthusiasm for the policy hasn’t waned.

Lamont includes about $3.2 million in fiscal year 2022 and $18.9 million in fiscal year 2023 in tax revenue from legal cannabis. Licensing from cannabis will bring in about $4.8 million in 2022 and $2.2 million in 2023.

Sports betting and iGaming is expected to generate about $47.3 million in 2023.

In order to address the deficit in the Special Transportation Fund, which helps pay for road improvements, the state creates a new highway milage-based user fee for tractor trailer trucks. The new fee is expected to raise $90 million. The governor said the new funding would help the state leverage $1 billion in projects in the next five years.

“If the thinking had been, ‘If it ain’t broke, don’t fix it,’ then that thinking needs to change. This is personal. Annie and I went over the Mianus River Bridge down in Greenwich a few hours before it collapsed a generation ago. So I know,” he said.

Joe Sculley, president of the Motor Transport Association of Connecticut, says it’s an awful idea.

“It is disheartening, but not surprising, that Governor Lamont has chosen to once again target the trucking industry to try to cover up the fiscal woes of the transportation fund,” Sculley said. “The workers in an industry that he himself declared ‘essential’ have been among the heroes of the COVID-19 pandemic, bringing vaccines, medications, hospital equipment, and groceries to locations all across the state.”

Lamont scrapped a proposal to install truck-only electronic tolls on highways two years ago when he couldn’t get the legislature to go along with the idea.

But that didn’t slow the growing deficit in the Special Transportation Fund. The reduction in residents gassing up to get to work during the pandemic and an increase in electric vehicles has sped up the pace of the deficit.

The budget expects the passage of legalized recreational marijuana. In his remarks, Lamont pointed to revenues lost to Massachusetts, where the substance is commercially available. Massachusetts-based distributors already advertise in Connecticut, the governor said.

“Rather than surrender this market to out-of-staters, or worse, to the unregulated underground market, our budget provides for the legalization of recreational marijuana,” he said.

Lamont plans for half of additional tax revenues generated by marijuana sales to go toward municipal aid payments. Towns will also have the option of a 3% local excise tax, he said. The proposal also aims to automatically erase marijuana-related drug charges from the records of people with past convictions, he said.

The proposed budget also assumes the governor can reach a deal on legalizing online sports betting with the state’s two federally-recognized tribes who run Mohegan Sun and Foxwoods resort casinos. The Lamont administration has been negotiating with the tribes, who say they have exclusive rights to operate legalized sports betting under their casino gambling compact with the state, while other parties like off-track-betting operator Sportech and the Connecticut Lottery, are seeking to participate.

Lamont said he was submitting a proposal “which reflects what I believe to be the best bet in ending this stalemate of inaction in a way which is in the best interest for the entire state.” The bill only proposes to amend the state’s existing compact with the tribes or create a new one.

As far as education is concerned, Lamont’s budget dedicates $6 million in each year of the biennium for the Pledge to Advance Connecticut (PACT) program to provide last-dollar scholarships to qualifying students. And it creates a Higher Ed Relief Fund of $140 million to help students having trouble affording education during these times.

Lamont will maintain the education funding cities and towns currently receive so municipalities can hold the line on property tax increases.

Lamont is also proposing to raise the reimbursement for charter school students. The budget also includes an additional funding for Danbury and Norwalk that will allow 50 students in each community the opportunity to attend a neighboring district while alleviating overcrowding.

Impact on West Hartford

Lamont’s proposed budget would provide West Hartford with funding from the state that virtually matches what the town will receive during the current fiscal year, other than a small boost of $4,546 boost to adult education in FY22 and FY23. 

In FY21, West Hartford’s total statutory formula aid grants from the state total $24,782,999, of which $21,880,498 is Educational Cost Sharing (ECS) funds. ECS funding will remain flat for FY22 and FY23 under the governor’s proposed biennial budget.

In addition, West Hartford is also eligible to receive federal stimulus money being distributed by the state, and has been allocated $1,999,708 in both FY22 and FY23.

The funds are part of the Elementary and Secondary School Emergency Relief Fund (ESSER II) passed by Congress in
December 2020, and are in addition to earlier funding provided through the CARES Act associated with reopening schools.

The intent of the ESSER II funds is to take care of additional costs and reduce educational disparities in elementary and secondary schools resulting from the COVID-19 pandemic. There are specific ways the funds can be used, and spending will be audited by the state. Examples of acceptable uses include extra services, including the use of community providers for mental health support. The funds can also be used for extra tutoring, additional summer programming, or the cost of extended school days, as well as for the purchase of extra technology.

The ESSER II funds cannot be used in to supplant regularly budgeted expenses, only for additional costs related to education resulting from the COVID-19 pandemic.

“We appreciate that the administration is not looking to reduce municipal aid or to pass on additional costs to Connecticut’s local governments,” West Hartford Town Manager Matt Hart said Wednesday.

“Our municipal revenues have been negatively impacted by the pandemic, just like we see in many other sectors of our economy,” Hart said. “Connecticut’s municipalities have limited options to raise revenue in order to provide the essential services necessary to keep our community safe, to educate the next generation, and to support our local businesses. This limitation places tremendous pressure on the local property tax,” he said.

“We encourage the state to prioritize municipal government for the receipt of federal funds, similar to the support the state plans to provide our public schools through the use of Federal ESSER II monies.

“We urge the state to think creatively about ways to provide additional financial assistance to Connecticut’s cities and towns to help us support our local communities as we recover from the pandemic. This state assistance would alleviate the pressure on local property taxes,” Hart added.

“I am grateful for the state support and preserving the level amount of the state’s municipal aid to West Hartford. The additional ESSER II funds (Elementary and Secondary School Emergency Relief Fund) over the next two years will be an important resource for our students and schools,” said West Hartford Mayor Shari Cantor.

“As we all know, these past 11 months have been very challenging and have stressed our community in many ways. We have experienced revenue shortfalls during this economic crisis snd we have used additional resources and incurred increased expenses to meet the health and safety needs of our community,” she added.

“We are hopeful that future federal aide received through the state will be allocated to municipalities who have been on the front line of responding to this pandemic,” Cantor said.

Click here to view the governor’s proposed biennial budget for FY22 and FY23.

Republished with permission from CTNewsJunkie.com, all rights reserved.

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