Lamont Lays Out Spending Priorities for $900 Million of Federal Aid

Gov. Ned Lamont presented a plan today to direct federal American Rescue Plan Act dollars to increase spending on early childcare, provide premium pay for “frontline” public-sector workers and funding for economic recovery grants. 

The state has received $2.6 billion in direct funds through the American Rescue Plan Act. In February, Lamont announced a state budget using $1.75 billion of those funds. Today, Office of Policy and Management Secretary Melissa McCaw outlined the governor’s priorities for the remaining $900 million, which she said would not be used to add to the budget, but would instead be spent on programs spanning 10 to 15 state agencies. 

“This is a significant amount of resources, a one-time in many decades experience for the states,” McCaw said at a press conference on Monday. 

An additional $1 billion of federal funding would directed to local school districts, $141 million to capital projects and $1.6 billion directed toward local municipalities.

Lamont’s proposal will still need to be approved by the state legislature. 

One of the largest programs includes an additional $161 million in funding for economic development, which includes $93.5 million for workforce development training and over $13 million in economic support for arts and cultural centers and events venues that are still unable to open fully because of continuing restrictions to limit the spread of COVID-19.

Additionally, Lamont announced plans to use $57 million from the Coronavirus Capital Projects Fund, another source of federal money, to support two competitive grant programs. One will fund three economic development projects in Connecticut’s cities, and the other will fund transit-oriented development projects. Together, the state estimates that the projects could create up to 18,000 jobs. 

Ashley Zane, a government affairs associate at the Connecticut Business Industry Association, said the organization supported the governor’s focus on workforce development, as well as providing funds to support childcare and higher education. She also said that they were pleased with the coordination between agencies. 

“A lot of times, we’ve seen agencies operate in silos,” she said. 

Childcare and nonprofits

Expanding access to childcare was a focal point of the governor’s plan. The Office of Early Childhood has received a total $346 million in federal funding since the start of the pandemic, parts of which have been allocated to expanding eligibility for the state’s Care4Kids subsidy program, offering grants to childcare providers and piloting a home visitation program. 

The plan would also create an additional $50 million package for nonprofits that contract with the state to provide services to underserved communities. McCaw said that a number of the agencies are coping with the cost of providing services for people still unable to come in person.

Funding for nonprofits was a key component of a separate proposal by the legislature’s Appropriations Committee. Lamont’s budget allocated approximately $50 million to nonprofits over two years. Appropriations added an additional $60 million to that total in its own budget. 

State Sen. Cathy Osten, D-Sprague, co-chair of the Appropriations Committee, said this was part of a seven-year plan to support nonprofit organizations. 

Osten told CT Examiner that the additional funding would not change the Appropriations Committee’s budget proposal.

Speaker of the House Matt Ritter, D-Hartford, praised the governor’s proposal for spending toward providing free daycare, funding for summer camps, and funds to provide legal counsel for individuals in housing court. 

“It’s a really good start, and I’m sure we’ll have some additions, but we’re happy,” said Ritter. 

Pay for “Frontline” workers

The plan will also set aside $10 million in premium pay for state employees who are deemed frontline essential workers. Chris McClure, spokesperson for the Office of Policy and Management, said that of the state’s 50,000 employees, up to 14,000 could be classified as frontline workers, or individuals who have to report to work in person. He said about 80 percent of those work in direct care or direct service agencies. 

McClure said that 4,699 state employees had contracted COVID as of April 22. Ten died from COVID-19. 

The Lamont plan also sets aside $12.5 million for frontline workers in nursing homes in the form of $500 direct payments. 

Zane said that it was important to remember that frontline workers included more than just state employees.

“There’s so many other people [who are frontline workers],” she said. “We hope that when they decided to do this, they also took into account those other folks.” 

Osten said she was also in support of premium pay for frontline workers that would go beyond just state employees. She brought up nursing home workers and teachers. 

“This has always been a component of both the American Rescue Plan Act and the other COVID funding,” she said. 

Osten said she thought the individuals who work with people with intellectual disabilities or mental health conditions in the state’s 775 privately-owned group homes should also receive premium pay.

Avoiding a cliff

The federal funds will be available until December 31, 2024, according to McCaw. Asked how the programs will be supported beyond that date, she replied that it would depend on the program. Some programs, she said, were intended to be short-term, like the $2 million for food insecurity grants.

“I’d like to hope that in two years, we don’t have the critical needs that we have,” she said.   

Others, she said, were pilot programs that the state would evaluate at the end of the biennium. She said that she anticipated being able to supplement some of the program funding with Medicaid dollars once the coronavirus relief funds ran out. And some, like children’s behavioral health, would require the state to “step up and respond.” 

Responding to the Lamont plan, Ken Girardin, director of policy and research at the Yankee Institute for Public Policy, criticized the governor for allocating money toward new programs rather than paying off existing debts. 

“The governor is proposing considerable spending on amenities and new programs, which will saddle state taxpayers with extra costs when the federal money dries up,” Girardin wrote in an email.

Girardin said that the Governor should increase the amount of money the state is paying toward the Unemployment Insurance Trust Fund. According to the Office of Policy and Management, by the end of 2021, the state will have borrowed approximately $894 million from the federal government to cover COVID-19 related unemployment claims. The current plan will pay back $50 million of this fund.

Osten agreed that the state needed to direct more than $50 million toward paying off the trust fund debt.

“We’ll owe a billion dollars at the end of this time frame,” she said, adding that it wasn’t right to put that sum “on the backs of small businesses.”

State Sen. Kevin Kelly, R-Stratford, also warned against creating programs that would rely too heavily on federal aid. 

“We must make healthcare more affordable, accessible and equitable. We must focus on education and workforce development. And we must make our state a place where job growth and income growth is possible so all people can have a ladder out of poverty,” Kelly wrote in a statement. “We must not squander this opportunity with policies or programs that are not sustainable or that will create a cliff for people in the future.” 

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