CT exceeds spending cap for first time in 18 years since Gov. Rell. Here’s what that means

Hartford Courant – Monday, May 19, 2025
By Christopher Keating

The state legislature voted Monday to spend an additional $284 million on Medicaid in a compromise deal that exceeded the state’s spending cap and paved the way to craft a new, two-year state budget.

Gov. Ned Lamont issued a rare fiscal declaration for the Medicaid spending for the current fiscal year that ends on June 30 as lawmakers continue working behind the scenes to reach a compromise on a two-year, $55.5 billion state budget in the coming weeks for the biennium that starts on July 1.

The money was approved in the House by 98 to 46 on a strict party line vote after less than two hours of debate. The measure was immediately sent to the Senate, which approved the bill 24-10 on party lines shortly after 5:30 p.m. Monday.

Lawmakers said they needed to solve the Medicaid crisis, which prompted them to break the state’s spending cap in the current fiscal year that ends on June 30. But Lamont and state Democrats said they broke through the cap only slightly. The spending would be about $25 million over the cap, which Lamont described as about 0.1% of the overall budget.

“I wanted to do a one-time declaration to make sure we can preserve the spending cap” in the 2026 and 2027 fiscal years, Lamont told reporters outside his Capitol office. “It’s the first time it has gone up since we had a Republican governor. … Look, everybody calm down. Medicaid has gone up a lot. It has happened in 49 other states. … We pay for it out of surplus.”

Republicans, though, blasted the idea, saying that Democrats ignored them last year when they argued that Medicaid spending was going off track. The extra spending is for rising costs for pharmaceutical drugs and home and community-based services for the elderly so that they can avoid more-expensive nursing homes. In addition, costs were higher due to increased use of health care by low-income residents.

“It’s really disappointing that we have a governor who has literally folded like a lawn chair over this,” said Sen. Heather Somers, a Groton Republican who serves as the ranking member on the budget-writing appropriations committee.

When told by The Courant about the comments by Somers, Lamont said, “I’m still waiting to see the Senate Republicans’ budget proposal. It’s pretty easy sitting on the sidelines, throwing hand grenades. You’re never going to govern if you can’t come up a constructive solution of your own. I think we’ve come up with a pretty constructive solution. We’re going to maintain our guardrails in the next two fiscal years, and we’re going to do it without raising taxes. And we’re going to make sure our budget is in balance.”

Lamont added, “I thought this was the most manageable way to do it. We’ve got to get the Medicaid checks out. … Frankly, nobody else came forward with any other constructive ideas. This is our idea.”

The Medicaid money is part of the the annual “deficiency bill” that covers the overspending in each year. That includes an estimated $555 million in a tally that will be further refined over the next six weeks. The over-spending does not mean that there will be an annual deficit because tax collections have been strong at the same time. The latest estimate by the state comptroller’s office is that the state is projected to end the current fiscal year on June 30 with an estimated surplus of $461 million.

The deficiencies cover overspending in more than 20 agencies across state government, ranging from the state police to the courts, along with the labor, housing, correction, education, early childhood, social services, and public health departments, among others.

Medicaid is a critically important health program for more than 900,000 Connecticut residents, including children in low-income families, the disabled, and adults in nursing homes.

“The costs of Medicaid are going through the roof,” Lamont told reporters Monday outside the state armory in Hartford. “It’s happening in 49 other states. … This is happening in Maryland, Utah, Virginia, red and blue states across the country.”

The last time that a similar financial declaration was signed was in 2007 under then-Gov. M. Jodi Rell.

“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. “Connecticut is not alone on this issue as many states are confronting funding issues with Medicaid that are being driven by several intersecting factors.”

Earlier, Rep. Joe Polletta, a Watertown Republican who serves as the ranking House member on the tax-writing finance committee, said the Democratic majority in the legislature made a mistake last year by not passing any adjustments to the budget.

“We never took up the most important thing that we are sent here to do: our budget,” Polletta said. “We did a disservice to the residents and the taxpayers of the state of Connecticut. … Mississippi just abolished their state income tax. Has there ever been talk about abolishing our tax? I doubt it. … It’s extraordinary to me that we did not adjust our budget a year ago. That’s what’s extraordinary to me.”

“Our governor said, and I agree with him, that our caps are sacrosanct,” Polletta said on the House floor. “Today … we are blowing through our spending cap. This is the first time in 18 years that we have blown through our spending cap. … When we blew through the spending cap 18 years ago, do you know what we had? The largest tax increase in Connecticut’s state history.”

When discussing the budget, Lamont noted that the overall totals will be going up. Under the spending cap rules, that budget will increase by about $1 billion to $27 billion per year, up from the current $26 billion.

“By the way, these are not cuts,” Lamont told reporters. “It’s how much more you increase, compared to last year. Put that in your headline.”

Later in the day, Sen. Ryan Fazio, a Greenwich Republican, said the bipartisan fiscal guardrails of 2017 have led to consistent surpluses during the Lamont years and should have been maintained. The legislature voted again to extend the guardrails for five years until June 30, 2028 but can be stopped by lawmakers after that date.

“These budget guardrails exist because they protect regular citizens who are taxed too much already,” Fazio said on the Senate floor. “It might be insufficient in a state with the second-highest tax burden. … But it is the bare minimum of what should be acceptable. … It’s the reversal of something that we said should all do. … We’ve known about the potential deficiencies in the Medicaid program for a year. … Only one and a half months before the end of the fiscal year are we dealing with it.”

Fazio added, “The spending cap was a word that we promised to the general public.”

Senate Republican leader Stephen Harding of Brookfield said lawmakers were breaking the guardrails “less than two years after we unanimously extended them. … Yet the minute things got tough … it was not so sacrosanct any more. … It’s an insult to our constituents. … I think we need a moment to pause to realize what we have done here.”

In his wrap-up speech, Senate President Pro Tempore Martin Looney, a New Haven Democrat, said the Medicaid funding was a “crisis” that needed to be resolved in straightforward fashion.

“We know there is a national problem in Medicaid that more and more people are relying on Medicaid,” Looney said on the Senate floor. “They often rely on Medicaid-paid aides if they are fortunate enough to live at home. This is a current problem. … The federal impact is coming, and we will probably have to deal with that in the fall.”

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