WEEKLY UPDATE: 05/22/25
On Monday, May 19, Governor Ned Lamont issued a rare budget emergency declaration and the Connecticut General Assembly voted to spend an additional $284 million on Medicaid for this fiscal year (FY), which ends on June 30 — the combination of which allows the state to legally exceed the constitutional spending cap under extraordinary circumstances.
The annual “deficiency bill” addresses a total of $466 million in overspending across state agencies for FY 2025. The Connecticut Department of Social Services (DSS), the agency responsible for administering Medicaid, said nearly $300 million of the allocation keeps the Medicaid program fully funded through the end of June and preserves payments to providers for services.
“Our most vulnerable residents, including seniors and those with disabilities, receive health coverage through Medicaid and it is important that we authorize the funding necessary to ensure these payments continue to be made and people can access the care they need,” Lamont said in a statement. “Connecticut is not alone on this issue as many states are confronting funding issues with Medicaid that are being driven by several intersecting factors.”
More than 900,000 Connecticut residents receive health coverage through Medicaid, including children, older adults, individuals with disabilities, and low-income families. The administration cites changes in the enrollment mix, rising home care and pharmacy costs, and overall increased utilization of services across the program as factors driving higher Medicaid expenses.
The deficiency bill brings the FY 2025 budget about $25 million over the cap, equal to about 0.1% of the overall budget. This measure marks the first time in nearly two decades that state officials have legally exceeded the spending cap, when Governor Jodi Rell boosted municipal aid and Medicaid payments to providers in 2007.
This budget adjustment for the current fiscal year builds room for a bigger two-year budget for FY 2026/2027 while maintaining the so-called “fiscal guardrails.” Under the spending cap rules, the budget for the biennium that starts on July 1 will increase by about $1 billion to $27 billion per year, up from the current $26 billion, for a total of about $55.5 billion.
