Gov. Lamont: Trump’s budget cuts could cause fiscal crisis, special legislative session

CT Post – Saturday, March 15, 2025
By Ken Dixon

HARTFORD — Connecticut’s finances will be in good shape through the end of the budget year June 30, but after that, with uncertainty over massive federal spending cuts ordered by President Donald Trump, the state’s next two-year budget could become a financial nightmare for Gov. Ned Lamont and the General Assembly.

With the legislature’s June 4 deadline to create a new two-year, $55 billion spending package that anticipates billions of dollars in expected annual payments from the federal government, unanticipated Trump-ordered reductions this spring and summer could send the General Assembly into a special session, Lamont warned in a Friday interview.

“That’s a real possibility,” Lamont said. “If there are some sudden cuts in things like Medicaid that could have long-term implications for our budget, it’s probably something that we have to talk about. I’ve talked to a lot of my fellow governors about it. We’re all in pretty much the same position. We want to help out the folks in need, but there’s no way the taxpayers can make up the entire shortfall.”

It could eventually result in the kind of financial weather that would force lawmakers to tap the state’s more than $4 billion emergency reserves called the rainy day fund.

“The next two years is a little trickier,” he said. “Right now we’re assuming the 2024 numbers will continue, but that could change dramatically. They’re talking about $880 billion out of health care and most of that would be Medicaid. Let’s say that’s over 10 years. That could be $880 million per year if all of that went through. I don’t think there’s any way we could make up all of that shortfall out of our reserves. But we are looking at different contingencies to make sure that we can help people be protected.”

Lamont said his staff is researching particular areas that could be cut; who would be impacted; and what the cost could be. “If there’s a government shutdown – I think we’ve avoided that – then we would be able to make up the shortfall because it’s short-term, out of the rainy day fund,” he said. “If they just cut Medicaid in half, we’re going to have to make some broader adjustments because we can help out in the near term, but we can’t do all that in the long term without fundamentally changing our taxes and revenues.”

“Look, you never know what’s going to come at you from Washington,” he said. “It’s unguided missiles sort of heading our way. Generally the rainy day fund is there to make sure if there’s a revenue shortfall due to a recession and, you know, the chances of a recession have gone up dramatically in the last month, right? Then we’re able to make sure we don’t have to raise taxes or cut municipal aid in order to balance it. I don’t think we’re going to be there this fiscal year but we still have three-and-half months to go.”

Lamont is particularly concerned with Medicaid funding, a partnership with the state to provide health care for 1.2 million low-income state residents along with elderly and the disabled. During 2024, $6.6 billion in federal matching funds supported Connecticut Medicaid program, state Comptroller Sean Scanlon recently said.

“In the operating budget for this fiscal year, we’re in pretty good shape although as we’ve alerted people, Medicaid is up more than fifty, sixty million dollars more than we had anticipated,” said Lamont, whose recent veto of $43 million in additional legislative spending, mostly in local special education support, approved by the General Assembly, soon led to an agreement to take the money from outside the operating budget.

That led to a recent order from Lamont for a partial hiring freeze. “We’re pretty close to where we want to be and it just made sense,” he said. “It’s not a big deal,” Lamont said. “We’ve only got three-and-a-half months to make these savings. That’s why I was concerned about adding $40 million or $100 million on special (education) into this budget because I would have had to try and make up all of those savings in less than four months.” He noted that the state employee workforce that was depleted during the COVID pandemic and thousands of retirements during the summer of 2022 taking advantage of severance enticement, has since been restored.

The governor said that the continuing budget resolution in Congress would keep Medicaid coming at normal levels at least until the end of June. “That said, they’re going after the not-for-profits and one-off grants are being cut back,” he said.

Lamont recalled recent conversations with Linda McMahon, the former pro-wrestling entrepreneur appointed by Trump to oversee what is becoming the dismantling of the federal Department of Education.

“I said why are you deprioritizing education?” Lamont said in a wide-ranging phone interview. “It’s one of our strengths here as a state. It’s one of our strengths as a country. She said ‘the president was elected to do some things. He couldn’t have been more clear about what he said about ending the Department of Education.’ What worries me is that I hear nice things from the secretaries when I’m down (in Washington ) talking, but everything runs through DOGE and they don’t control that.”

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