Jump in insurance costs put Lamont's budget proposal over spending cap

Rising healthcare costs are creating problems for the state’s budget, even pushing Gov. Ned Lamont’s budget proposal over the spending cap.

The discovery that Lamont’s two-year, $55.2 billion proposal would need more than $100 million in additional funding each year for health insurance comes as lawmakers are working on their own plan.

This puts Lamont’s budget proposal over the spending cap. Lawmakers said the news caught them by surprise.

“I've been very frustrated with this governor, laws don’t seem don’t to matter,” Rep. Vincent Candelora, (R-Minority Leader) said.

Lamont said Wednesday health insurance cost overruns have been an ongoing problem in Connecticut and around the country.

“It's not really news to us, we’ve known for a while that healthcare costs, especially of Medicaid, but now also retiree healthcare have gone up in our state, but probably also 49 other states,” Lamont said.

But lawmakers said they didn’t learn about it until Comptroller Sean Scanlon informed them in testimony submitted during a public hearing on the governor’s budget.

Scanlon’s office, as first reported by the Connecticut Mirror, first notified Lamont’s budget team via email Dec. 18 about the need to increase funding for employee health insurance next fiscal year.

That was well over a month before Lamont submitted his proposal to the legislature.

When asked if he was frustrated about the timing of the disclosure, Sen. Martin Looney (D-president pro tem), simply said “yes.”

The disclosure comes as municipalities, nonprofits and other groups are asking the legislature to provide more money that Lamont proposed.

Lawmakers will now have to find cuts elsewhere in the budget to bring it under the spending cap or vote to change the rules.

The spending cap uses inflation as a limit on how much a state budget can grow annually. So far, conversations about changing the fiscal guardrails have focused on other rules, mainly the volatility cap.

“It's another indicator on the fact that the spending cap needs to be defined in a different way,” Looney said.

Lamont has been a vocal defender of the cap and on Wednesday, he urged the legislature not to take that approach.

“Before I got here, they end-runned the spending cap six, eight times,” he said. “Let’s be very cautious before we get too loose with the spending cap.”

The legislature’s budget proposal is due at the end of April.

Lawmakers can choose to change the guardrails, but face the prospect of a veto from Lamont.

Democrats have the two-thirds majority needed in each chamber to override that veto, but would essentially need to line up all of their votes to do so.

Lamont said the state should take a cautious approach to budgeting while it also waits to see what happens at the federal level.

Congress passed a continuing resolution last week that lasts until September, meaning state aid and other funding levels remain untouched for the time being.

Lamont and other Democrats have worried about cuts from President Donald Trump and the Republican-held Congress.

Connecticut’s fiscal year runs from July 1 to June 30, meaning it is not in sync with the federal budget calendar of Oct. 1 to Sept. 30.

That means any cuts in federal aid, if approved, would occur in the middle of Connecticut's budget cycle.