The federal government's contortions over the debt ceiling have left the state comptroller worried not just about the uncertainty of future funding for state-run programs but also actual cuts in federal funding to Connecticut.
"I think the thing to think about is, the money we receive as a state for issues like highways, for Medicaid, for other programs that are either state and federal partnership programs, or others where we draw down a direct grant from the federal government," Kevin Lembo, the Democrat-elected Comptroller in 2010, said.
In that year, federal stimulus money was the difference between a balanced budget for the state government and a billion-dollar shortfall, he said. This year, the Malloy administration's hefty tax increases generated a budget that was less dependent on federal funding.
But the state government is by no means independent of federal funding. The debt ceiling deal could have savaged state-administered programs.
The Department of Social Services administers Medicaid.
"It's the state's single largest expense," said Gov. Dannel Malloy.The money for Medicaid comes from Washington and Malloy said he's been assured that for this year, anyway, Medicaid money won't be cut.
"All in all, I think, given the circumstances, this is about as good as it could get," he said.
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However, Malloy's not sure what the special committee charged with cutting the federal deficit will mean for Connecticut. It could recommend limiting tax expenditures, tax breaks the governor calls "loopholes," and it could recommend cutting federal spending.
"I think 2013 is a key year under this. The work that has to be done by the special committee is also going to be very key in all of that -- whether that committee ultimately sees that ending, some of these loopholes are a part of the way to get to the savings that we need. I certainly would advocate that," Malloy said.
Lembo thinks the state government should realize it has to cut its dependence on Washington.
"We need to increase the state's rainy day fund, the budget reserve fund, get it to 15 percent of our state budget and over time, have the money to weather these economic storms as they arise," Lembo said.
