March 20, 2017

Budget Updates: the Impact of Federal Grants on Connecticut’s Budget

A new report from the Center on Budget and Policy Priorities examines potential cuts to federal grants based on proposals from President Trump and Congressional Republicans. Federal grants accounted for one-fifth ($6.122 billion) of the state budget in 2016 and supported critical programs for low- to moderate-income families.

The federal budget pays for these grants through mandatory and discretionary spending; mandatory programs are set in permanent law, while discretionary programs have to be appropriated annually.

Mandatory grants fund programs such as Medicaid, CHIP, child nutrition programs, the Adoption and Foster Care Program, Child Care and Development Block Grant (CCDBG), Temporary Assistance to Needy Families (TANF), and Social Services Block Grants (SSBG). Federal Medicaid grants to Connecticut were worth $4.582 billion in 2016.

Discretionary grants to state and local governments in Connecticut were worth $1.753 billion in 2016 and provide funding for high-poverty schools, special education, Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), mental health and substance abuse services, child care, heating assistance, training and employment programs, transportation, and public safety.

The report points out that both discretionary and mandatory grants - excluding Medicaid and the Children’s Health Insurance program (CHIP) - were already at historically low levels in 2016; mandatory grants are lower than any other year since 1980 (equal to 0.42% of the economy in 2015), while discretionary grants were lower in 2015 than all but one year since 1980 (equal to 1.05% of the economy).

Steep cuts to these grants would be catastrophic for a state budget already mired in fiscal challenges, and would likely mean even deeper cuts to programs that are critical to low- and moderate-income children and their families.

Issue Area:
Budget and Tax