Connecticut Gov. Ned Lamont increased Medicaid payments to the state’s 213 nursing homes by $35 million over three months to help them cope with spiraling costs related to the COVID-19 pandemic.
The extra funding, Lamont said Friday, will apply toward employee wages, including staff retention bonuses, overtime and shift-incentive payments; and new costs related to visitor screening, personal protective equipment, and cleaning and housekeeping supplies.
Although Connecticut faces a $500 million deficit for the current fiscal year, which ends June 30, and a gap of up to $1.4 billion for the following year, the $2.2 trillion federal rescue bill that passed late last month provides the state with some flexibility, according to Lamont and state budget director Melissa McCaw.
Connecticut expects its $1.45 billion allocation of the relief bill to arrive April 27.
Still, the federal package will cover coronavirus expenses, not revenue losses. To fill a huge hole from a drop in income and sales taxes from the shuttering of the state and the delays in tax filings, the state will probably have to tap its $2.5 billion rainy day account.
“Revenue deterioration would 100% come from the rainy-day fund,” McCaw said. “Obviously, this is the rainy day.”
McCaw expects no necessary legislative approval to tap the stabilization account. “There is existing statutory language whereby when the comptroller [Kevin Lembo] closes the books, if he determines that there was a shortfall, then those costs would be covered from the resources of the rainy-day fund. So that would automatically happen.”
The possible $1.4 billion gap for fiscal 2021 would parallel Connecticut’s experience from the 2008-2009 recession, McCaw added. “Obviously, recovery from an economic downturn takes multiple years.”
According to McCaw, the federal aid will include packages for K-through-12 and higher education to offset costs such as transitioning to online learning and an uptick in summer programs.
“This is not your garden-variety recession,” Lamont said. “You could have a slow comeback and that could impact revenues for one, two, three years. Or you may say, we were a very strong economy up until the COVID shutdown. And it was a medical-related shutdown of our economy that stopped things dead in their tracks.
“And whether we have a slow recovery or faster recovery will definitely impact what Melissa’s numbers are and what she’s talking about.”
Keeping small businesses intact, the governor added, could enhance the state’s recovery. “So if there is demand coming out of this medical shutdown, we’re in a position to take advantage of it and get our economy growing faster.”
Further strain on Connecticut is the backlog of 220,000 jobless claims, or more than one year’s worth. Lamont last week acknowledged a turnaround time of five weeks.
Through Sunday, Connecticut reported 5,675 positive cases for COVID-19, with 1,142 hospitalizations and 189 fatalities, including a 7-month-old infant that Lamont said was virus-related. Roughly half the deaths have been in Fairfield County, near national epicenter New York City.
Connecticut has low ratings for a state government: A from S&P Global Ratings, AA-minus from Kroll Bond Rating Agency, A1 from Moody’s Investors Service and A-plus from Fitch Ratings.
