In the 2013 legislative session, quirks in Connecticut’s state budget translated into a budget impasse: the state spending cap threatened to prevent Connecticut from accepting federal funds to pay for the Affordable Care Act’s expansion of Medicaid coverage for thousands of residents. In response, the legislature and Governor made significant, positive reforms that removed federal Medicaid funds from the appropriations process (and thus the spending cap), enabling Connecticut to move forward with expanding access to health coverage for the uninsured.
Connecticut’s treatment of federal funds within its state budget has long diverged from that of other states. Only two of the 24 other states with expenditure limits include federal funds under their limits. The budget deal reached by the legislature and Governor went much of the way towards aligning Connecticut’s practice with that of other states. However, by leaving some federal funds in the appropriations process and under the spending cap, the State has made it more difficult for citizens and legislators to track the overall impact of federal funds on the state budget and to provide input and oversight.
Connecticut policymakers should finish the positive work they have begun by removing the remaining federal funds from the appropriations process. Then, they should improve transparency for these “non-appropriated” federal funds. Those that can be forecast should be reported clearly in the budget document and receive a public hearing alongside appropriated funds.