Although the state ended the year in the black, uncertainty in Washington could soon push Connecticut’s budget back into the red, the state’s budget director told agency heads Tuesday.
“A federal shutdown or default would not only derail the economic recovery and significantly affect state revenues, it would also affect state programs that rely on federal funds (the most significant of which is the Medicaid program), and state employees funded, either wholly or partially, through federal funds,” state budget director Ben Barnes wrote in this letter.
He asked agency heads to identify programs and positions that are funded by grants and other outside funding that may be impacted by the potential federal government shutdown or default.
“You should also be aware that my office is considering various contingencies to ensure that the state’s budget remains in balance if tax revenues falter in the face of a shutdown, such as the implementation of allotment reductions (rescissions), further tightening hiring controls (including a hiring freeze which would encompass both state- and federally-funded positions), and limits on contracting,” Barnes said.
Malloy has the authority to cut 5 percent of any appropriation and 3 percent of any fund in a financial crisis without legislative approval. He needs the help of the General Assembly if he wants to cut municipal aid. And he has no authority to rescind money from the judicial and legislative branches of government or the state’s colleges and universities.
The hiring freeze that was implemented last January was lifted in June, but Barnes said he may reconsider it.
The federal budget office has not issued detailed federal guidance to help state agencies make their assessments, according to Barnes’ letter.
But there are still too many unanswered questions to make any definitive statements about what will happen.
“The governor and I are both deeply concerned that the United States Congress, particularly the House, may take reckless actions in the coming weeks that will undermine the improvement that we have seen, and threaten our fiscal condition in the months to come,” Barnes wrote Tuesday.
This week the U.S. Senate is expected to strip the defunding of Obamacare out of the continuing budget resolution, which funds government through the end of the year. The resolution would go back to the U.S. House for approval, U.S. Sen. Chris Murphy explained this weekend to a group of constituents.
Murphy expressed confidence the Republican majority in the House would pass a budget resolution that doesn’t gut Obamacare, but Barnes said the state needs to be ready for a federal shutdown.