Connecticut Governor Dannel Malloy signed into law a two-year, $40.2 billion state budget on October 31, ending the state’s stint as the last in the country to enact a budget. Mr. Malloy’s signature on the bipartisan agreement marks the end of a months-long impasse in the state legislature that lasted 123 days, the longest fiscal standoff in Connecticut history. Despite difficult cuts to some municipal aid and social services, housing advocates praised the preservation of funding for affordable housing and homelessness services in a challenging fiscal environment.
Importantly, the budget preserves the Department of Housing (DOH) as a stand-alone agency. The budget also provides homelessness and housing funding at $74 million in FY18 and $78.6 million in FY19. The deal also transfers the Homeless Youth Program, a $2.3 million annual expenditure, to the DOH from the Department of Children and Families.
The Community Investment Act (CIA) is largely restored, with negotiations resulting in $5 million being swept each year from the CIA into the General Fund. The funds in the CIA are raised through a $40 recording fee on real estate transactions. The DOH receives an allocation of 25% of CIA funds, which is used for various one-time projects not covered through bond-funded affordable housing development and for programs related to homelessness reduction like the Coordinated Access Network. Finally, funding for the Housing Supports and Services line item within the Department of Mental Health and Addiction Services budget is continued at $23.3 million for FY18 and FY19.
Mounting fiscal problems from declining tax revenue, coupled with historically underfunded pension obligations, have caused a $3.5 billion deficit in Connecticut. Disagreement over how to close the deficit fueled the historic impasse, leaving the state without a budget since the July 1 start of the fiscal year. Budget negotiations floundered not just along political lines, but also along geographic ones, with the priorities of the state’s wealthier suburbs and those of the financially-struggling cities diverging.
Given Connecticut’s acute housing needs, the preservation of resources directed towards affordable housing and homelessness services was crucial. According to NLIHC’s report The Gap: A Shortage of Affordable Homes, there are only 36 affordable and available rental homes for every 100 extremely low income renter households in the state. NLIHC’s Out of Reach report shows that on average a Connecticut renter earning the state’s $10.10 minimum wage would have to work 98 hours every week to afford a two-bedroom rental home at the Fair Market Rent of $1,285 per month. Maintaining level funding for housing was crucial to addressing Connecticut’s need for affordable housing. With a gubernatorial race looming on the horizon, housing advocates are eager to see how candidates position themselves on the issue of affordable housing. Governor Malloy significantly expanded affordable housing development and made ending homelessness one of his administration’s major objectives.
Lawmakers in both major political parties point to pieces of the final budget they see as successes. Democrats highlight the protection of funding for education, housing, and social service programs, while Republicans highlight fiscal restraint and the inclusion of a spending cap, which will be implemented in the future, and a bonding cap, which takes effect this year. Advocates are concerned that the bipartisan agreement cuts Medicaid benefits for at least 68,000 Connecticut seniors, disabled and low income individuals. For Mr. Malloy, concerns over the budget—namely, surrounding spending caps and cuts—remain. Still, he acknowledged, “After 123 days without a budget, it is time to sign this bipartisan bill into law and continue the steady and significant progress our state had made over the past several years. Connecticut’s families and businesses deserve to have a budget in place, one that provides a stable environment to live and work.”