Face the Facts: Republican leader breaks down state's spending rules

Rising costs of Medicare and Medicaid...Cities and towns say they're underfunded by $400 million collectively when it comes to their education costs.

So how can we solve all this? There is a lot to balance when it comes to balancing a budget.

NBC Connecticut's Mike Hydeck spoke with the Republican leader in the House, Vincent Candelora.

Mike Hydeck: Good to see you, Mr. Candelora, once again. Let's start with the budgets of cities and towns. The Connecticut Conference of Municipalities, I know you know this, said cities and towns are, collectively, $400 million underfunded because of the rising education costs they face each year. Is that true in your estimation, and can it be fixed?

Vincent Candelora: I mean, the towns, what they're saying is you're not keeping up with inflation. So you're flat funding us, which is nice, but we have more and more costs that are impacting us. You know, we've heard the debate. Special ed is overbudgeted by $109 million. That is just the state share.

Mike Hydeck: And that's one year, right?

Vincent Candelora: So that's just one year. It's the state share. Extrapolating it out, it could be up to $500 million that towns are paying. You know, you talk about the energy costs, those public benefit charges. The schools have to pay those charges, too. So electric prices are through the roof. So they have their challenges, and they need the state's help because they can only raise property taxes.

Mike Hydeck: And when you see the word raising property taxes, you get a quick no, quick clap back from from voters, pretty much. So what do you do? What's the solution?

Vincent Candelora: Yeah. I mean, the state has to prioritize its towns and cities. The property tax is so regressive because everyone has to pay it and they're trying to put food on the table and maintain their homes, it gets to be crippling. And so our state needs to make sure there's a steady stream. When Republicans did our budget last year, we fully funded special ed, knowing that we want to avoid those property tax increases.

Mike Hydeck: So are we talking about adjustments in priorities? Are we just moving stuff on the balance sheet? Are you hinting at working with guardrails? What do you, how do we fix it?

Vincent Candelora: I mean, there has to be an adjustment to priorities. One of my frustrations is, you know, last year, Republicans, we did a budget. It was balanced. We knew we're going to have Medicaid overruns. We knew we're going to have special ed overruns. The governor and the democrats ignored it. And so now, going into next year, we have a $500 million overrun in the budget this year alone. So that money, which could have been used for next year, is gone. It's going to be absorbed into this year. You know, on top of not knowing what the feds are going to be doing, there are, is a lot of uncertainty, a lot of challenges that we're going to have.

Mike Hydeck: So if there's a time to use the Rainy Day Fund, when is it? Because it seems like we have this great rainy day fund and projected over a million dollars for the next three years, but we're always reticent to touch a penny of it. So when is the good time?

Vincent Candelora: I mean, the Rainy Day Fund is there for emergencies. Like even this year, it looks like with all the spending, they're going over the spending cap. The governor has tools in his toolbox. He could do rescissions. He could declare an emergency and go over the spending cap.

Mike Hydeck: So rescission is when he says, "Look, we're not going to spend here. I'm going to claw that back."

Vincent Candelora: That's right. And then you also, with the Rainy Day Fund that's there for the emergency. What we could do is, let's look at immigrant healthcare. Right now, illegal immigrants, the healthcare that's being given by the State of Connecticut's Cadillac plan. It's been over budgeted. It's going to cost us over $100 million next year. That's something we could look at and say, "Let's pare that down." Those are the decisions we need to make.

Mike Hydeck: So special education costs, let's go back to that for a second, have been a big focus this year. Superintendents across the state have said it. Should that formula be adjusted if, say, for example, Bridgeport has 2,000 special education students, should their cost be adjusted, their cost sharing for the number of, and, say Killingly, maybe has one. Should it be adjusted in that respect?

Vincent Candelora: I mean, the state sort of does that because of the way our formula works. If you have more money you're spending, the state gives you more money. What's fallen down is we didn't fully fund it. So the state needs to fully fund its share of special education. That's the first thing. I think we have to look at, are we getting the right bang for our buck? Should we be capping some of these cost services that are provided by private organizations?

Mike Hydeck: You mean looking at how much they charge for those services and put a cap on it. So let's talk about quickly, Medicaid and Medicare. Governor Lamont proposed budget puts it over the spending cap. He knew going in. I guess back in December, the comptroller said, "look the way things are trending, we're going to need more money for this area of the budget." How do we fix that? He realizes it needs to be fixed. What happens?

Vincent Candelora: I mean, the governor's budget ignored it, and so now it needs to be brought in. It's $230 million that now needs to be absorbed. You know, the governor's budget also assumes a hospital tax, which is expiring. He's got to negotiate that deal. That's another $300 million. So those are things that the governor's office really has got to negotiate, and it's going to have to be worked into the budget. It's going to be a daunting task.

Mike Hydeck: Yeah, the hospital tax alone is going to be an argument, I would imagine.

Vincent Candelora: It's a $900 million revenue source for the state.

Mike Hydeck: So that's got to be figured out.