Cuts to Medicaid and clean energy programs in Gov. M. Jodi Rell’s budget proposal could jeopardize Connecticut’s eligibility to receive more than $1.3 billion in federal stimulus funding, seen as essential to the state’s efforts to close a projected $8.7 billion deficit over the next two years.
It’s a concern that the governor’s office has been trying to address “for weeks,” said Matthew Fritz, special assistant to the governor.
“There are requirements in order to receive funding that we are doing all these things or we are poised to do all these things,” Fritz said. “Those are discussions we’re having on a daily basis.”
In February, the state learned it was eligible for $3 billion of federal funding through the $787 billion American Recovery and Reinvestment Act. Connecticut is eligible for $1.3 billion in bonus Medicaid funding — by far, the biggest chunk of stimulus dollars — and $38.5 million toward renewable energy and energy efficiency projects.
But requirements for states to maintain funding levels could damage Connecticut’s ability to receive that funding. As the federal government continues to address states’ concerns, it is still unclear how much funding could be affected.
Some of Rell’s proposals to reduce the state’s Medicaid commitment by $283 million by the 2011 fiscal year could possibly violate a stimulus funding requirement for states to maintain Medicaid eligibility requirements as of July 1, 2008.
Fritz said the governor’s office is investigating whether a proposal to charge co-pays on most Medicaid recipients above poverty level could damage Connecticut’s standing. Others have raised concerns that new premiums on adults and children could hurt Medicaid recipients’ ability to afford coverage, in effect changing eligibility requirements.
A spokeswoman for the Center for Medicaid & Medicare Services, a division of the U.S Department of Health and Human Services, said the federal department could not determine conclusively whether Rell’s proposed budget changes would disqualify Connecticut from receiving stimulus funding.
“It is too early to comment on Connecticut’s plan, and we would have to reserve judgment until the state came to us once it has been passed,” said CMS spokeswoman Mary Kahn.
Kahn said several states which had toughened eligibility requirements after July have already rolled back those changes or are in the process of doing so to remain eligible for stimulus funding.
Rell’s budget also proposes a transfer of at least $20 million from the Connecticut Clean Energy Fund, which supports renewable energy projects, to help close the budget gap for the upcoming fiscal year. Another $350 million would be borrowed from the energy funds over the next 10 years. The governor’s budget also looks to remove $40 million for the upcoming fiscal year from the Energy Conservation and Load Management Fund, which supports energy efficiency programs.
Those cuts could violate a U.S. Department of Energy requirement that states use renewable energy stimulus funding to create new programs or expand existing programs and “not to supplant or replace existing state, ratepayer or other funding.” States have a March 23 deadline to submit 2009 and 2010 funding plans for existing energy efficiency and renewable energy programs.
The U.S. Department of Energy did not comment specifically on Connecticut’s situation.
“Federal funding is aimed to supplement state funding, not replace it. If it were determined that federal funds were replacing state funds, the state would not be eligible to receive funding,” said department deputy press secretary Tiffany Edwards.
There seems to be more questions than answers right now as states facing massive budget deficits try to understand how budget plans could affect stimulus dollars, Fritz said.
“I’ve described it as the greatest experiment in inter-governmental relations ever,” Fritz said.
Clean energy advocates say a loss of stimulus funds could damage the industry’s future in Connecticut, considered an early leader in the green push.
“If the money’s not in Connecticut, they’ll go to Massachusetts, they’ll go to New York if the money is available there,” said Charles Rothenberger, staff attorney for the Connecticut Fund for the Environment. “It would be a real shame if we’re driving that business activity out of the state.”
