Some state lawmakers are asking Gov. Ned Lamont to declare a fiscal emgergency to they can suspend spending caps in case the state loses federal funding, but the governor says that move is premature.
House Speaker Matt Ritter told reporters Wednesday that he wants Gov. Ned Lamont to declare a fiscal emergency, a move that would allow the state to get around fiscal guardrails.
Ritter said he wants Lamont to make the declaration before the current budget year ends on June 30 so the state can add another $1.4 billion to its rainy day fund amid fears of federal budget cuts.
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WATCH HERE“Hit the time button – time out,” he said to reporters during a press conference ahead of the House going into session Wednesday. “Hit the pause button so we can get a better handle on where we’ll be, whenever that is.”
Ritter and other Democrats, including Lamont, have hinted for weeks a move could be possible amid fears that President Donald Trump and Republicans in Congress will continue to cut federal aid.
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SIGN UP Ritter's comments Wednesday, though, are the most direct any of the leaders had made publicly.
The legislature first enacted the guardrails in 2017 to limit state spending and gave the governor the ability to declare a fiscal emergency as safety valve.
Neither Lamont (D-Connecticut) nor his predecessor, Dan Malloy, has ever declared such an emergency.
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Lamont said he’s continuing to monitor federal spending cuts, but isn’t ready to invoke the authority for the first time.
“Premature,” he said. “We’ve got a couple of months left in this session, everybody wants to do everything yesterday, slow down.”
But Ritter said he wants the declaration now to prevent the automatic transfer of a surplus into the pension fund.
The volatility cap limits how much the state can spend from taxes on investment income and other volatile revenue streams.
Any money over the cap, the volatility surplus, goes to pay unfunded pension debt. Ritter said he expects that to be $1.4 billion.
If that money is intercepted, it would add to the $4.2 billion already in the rainy day fund.
“People say, ‘We’ll you have a $4 billion budget reserve fund, you’re fine,’” he said. "Well depends on the level of cuts and it depends on how long they go.”
The state can use the rainy day fund to cover lost expenses, but Ritter said a declaration would also create more freedom to spend money directly from the surplus.
Republicans called the move an overreaction, describing much of the federal cuts to this point as losses of one-time funding.
Those cuts include $175 million in public health grants, money the Trump administration has said was COVID-related, and $2 million for libraries.
Rep. Vincent Candelora (R-Minority Leader) said Ritter and other Democrats are using the fear of cuts as an excuse to relax the fiscal guardrails and increase spending.
“I understand there might be some programs that might be replaced by that one-time money, it wasn’t going to be here forever, Connecticut has to live within their means,” he said.
