How Geissler’s Supermarkets Added Shopping Carts With AI

Nick Nickitas, general manager of local independent grocery at Instacart, sat down for a conversation with Bob Rybick, president and CEO of Geissler’s Supermarket, to discuss the strategy behind Geissler’s decision to replace a majority of their shopping carts with AI-powered smart Caper Carts, making them one of the first retailers in the U.S. to launch a dense deployment of smart Caper Carts. A conversation on Geissler’s strategy to launch smart carts in their stores:

Nickitas: Hi Bob! Thanks for sitting down with me to discuss Geissler’s vision, experience and expected outcomes of launching smart carts in your stores. I’d like to start at the beginning and ask what made you interested in smart shopping cart technology as a local independent grocer?

Rybick: As a multi-generational, independent grocer, we are focused on finding the best offerings and technology to help our customers, team members and business. With so many technological advancements now available for the grocery industry, we wanted to find something that could hit several of our strategic focuses, including:

  • Enhancing the in-store experience for our customers;
  • Assistance in loss prevention; and
  • Helping grow revenue.

So, when we began exploring solutions to address our three strategic focuses, smart shopping carts emerged as a perfect fit. After evaluating our options, Caper Carts stood out as the most comprehensive solution.

Nickitas: Let’s dive deeper into those three strategic focuses then. How are you projecting that smart shopping carts will enhance the in-store experience for your customers?

Rybick: At launch, smart shopping carts will reduce lines and congestion in the store, creating a more enjoyable shopping experience for customers. The cart’s screen helps customers track their running total in real-time, helping them stay on budget. The screen also offers a Deals Hub – with digital coupons, aisle locations and loyalty program login to ensure we’re giving our customers all of the benefits they expect. Customers can also checkout directly on the Caper Cart with an integrated payment terminal, ensuring a seamless process. Our customers expect us to continually offer them first class in-store shopping experience and we feel implementing Caper Carts will drastically help with that.

Nickitas: One of the biggest concerns that retailers have with self-checkout experiences are with shrink/loss prevention. How do you project smart carts helping with that?

Rybick: Caper has a number of built in features that make it plug-and-play for loss prevention assistance. All together, these carts collectively have more safeguards to prevent theft than traditional self-checkout. For example, with Caper Carts specifically, the cart doesn’t just scan an item’s barcode, it recognizes it with the built-in computer vision cameras, taking into account item attributes so customers don’t scan one item, but put a different item in their basket. Additionally, the Caper Cart has a scale built-in to the bottom of the cart basket, allowing for accurate measures of weighted items. Lastly, Caper Carts have an audit system that flags carts based on our audit preferences, which are then checked by a store employee, or when notable items are added to the cart.

Nickitas: And finally, I want to talk about ROI. Most grocers are wondering how to think about profitability with smart carts. Do you expect Caper to affect your revenue growth?

Rybick: Yes, in so many ways. The engaging customer experience of the smart cart has already proven to drive a larger basket size. In addition to that, our smart carts offer gamification features, such as a “spin the wheel” feature that unlocks Caper Cart-only coupons for instant dollars off a customer’s shop. Furthermore, the cart’s screen is a new surface for the future potential of serving relevant, personalized ads directly to our customers at the point of purchase. These ads would help generate a new revenue stream that can help offset the implementation cost of smart carts.

Nickitas: Now let’s pivot to the technical side of smart cart implementation. What were your questions coming into this initiative on how it would affect your current tech stack, store operations and ongoing maintenance?

Rybick: We had many questions about this, as we aimed to ensure a seamless launch of smart carts in our stores, especially with our want to replace a majority of our carts with smart carts. Our key questions included:

  • How difficult is it going to be to integrate smart carts into our catalog and POS systems?
  • Would there be any technical requirements or store modifications needed?
  • What does the ongoing maintenance look like for these products?

Nickitas: And what did you find to be the answers to those questions?

Rybick: The answers were a lot less cumbersome than one might think. It all came down to picking the right smart cart and the right company to partner with, for Geissler’s that was Instacart’s Caper Cart. With our chosen smart cart, integrating into our existing catalog to ensure all our SKUs would be recognized easily by the smart cart while customers are shopping was handled without issue. Our partner company integrates with all the leading POS systems in grocery, so that was also an easy check off.

Myself and the Geissler’s team were surprised at the minimal amount of technical requirements and store modifications needed to implement something as big and widely used as new shopping carts. Basically all we needed was an internet connection to get the smart carts connected and an area in the store for the carts to charge. Since regular shopping carts already have a bay, we were able to make that the charging area, as Caper Carts have the ability for nested charging. We do also have a smart cart checkout priority lane, which wasn’t a big deal to implement. We did add some in-store signage to help educate our customers on the smart carts, but the lift there was also minimal.

And lastly, for the ongoing maintenance, Instacart has remote management personnel and software for easily auditing each Caper Cart, as well as providing software updates as needed. For the physical cart maintenance, Instacart manages that ongoing, alleviating that potential stress from our teams.

Nickitas: I appreciate all you said and just have one more question. What would you tell other local, independent grocers who are considering smart cart technology for their stores?

Rybick: I think local, independent grocers have such an exciting opportunity to be the leaders in innovation in this space. The ability to be nimble and have an outsized impact on their business with new technology shouldn’t be dismissed and just because a solution or product uses AI doesn’t mean it’s out of reach for our peers. I’d tell other local, independent grocers who are considering smart cart technology for their stores that the benefits of incorporating smart carts into their short- and long-term business strategies are too great to ignore. From the customer impact, store impact and revenue opportunities through increased basket sizes and retail media network/advertising, paired with the lower than expected lift to actually launch smart carts in store, it seems to me a no brainer that smart carts should be on all local, independent grocers’ strategic radar with a push on sooner rather than later.

Original article found at The Shelby Report.

Navigating The Inflationary Tide: How Connecticut Food Retailers Adapt in Political Headwinds

Amid an unrivaled inflationary environment that has sparked debate at both federal and state levels, Connecticut grocers have come under unwarranted scrutiny from the state’s Senate Democratic leadership and attorney general following a relatively uneventful 2024 legislative session. With pressure mounting from national polls, some elected officials are scrambling to address the root causes of inflation, aiming to alleviate consumer angst over higher food costs attributed to government policies. However, their investigation is focused solely on the state’s food retailers and has warranted industry indignation regarding the broader context of inflation and the efficacy of government intervention to mitigate rising food prices.

During the pandemic, surge buying, labor shortages, production facility closures, and supply chain disruptions collectively contributed to increased costs across multiple economic sectors. In response, the federal government implemented substantial stimulus measures aimed at bolstering the economy by injecting almost six trillion dollars into the U.S. market. From my perspective, although not that of an economist, paying people to stay home and artificially inflating incomes invariably leads to inflation. Despite these factors, some political leaders seem inclined to scapegoat food retailers rather than address the underlying causes of runaway inflation.

Connecticut Attorney General William Tong’s current investigation into “potential” grocery store price gouging exemplifies this misguided government focus. Following an April Federal Trade Commission (FTC) report that found grocery store prices remained elevated even as the pandemic ended and inflation cooled, Tong announced his office would investigate whether grocery stores in Connecticut have been engaging in price gouging. The FTC’s report examined national grocery chains like Walmart, Kroger, and Amazon and found that revenues and profits continued to rise after the pandemic disruptions, casting doubt on assertions that rising grocery store prices merely reflect retailers’ rising costs.

Seizing on the FTC report and White House talking points, Senate Majority Leaders Martin Looney and Bob Duff, along with several Senate Democrats, supported the Connecticut AG’s inquiry, citing the FTC’s findings that grocery prices “might be” artificially high due to corporate opportunism. Many local observers quickly pointed out that this approach is fundamentally flawed in its belief that food prices begin and end at the checkout register. The Connecticut Food Association along with multiple news editorials around the state pushed back, emphasizing that inflation is a multifaceted problem influenced by global supply chains, energy costs, and international economic policies and that the rise in food prices is no higher than increases in the restaurant, entertainment, healthcare, automotive, home improvement, insurance, and banking sectors. Bottom line: inflation has affected the cost of everything consumers purchase.

Elected officials are ignoring broader economic factors by focusing narrowly on local retailers while unfairly blaming local and regional businesses. This not only fails to address the root causes of inflation but also risks damaging the reputation of food retailers who are themselves struggling with increased costs. Yet some political leaders in D.C. and Connecticut are fixated on grocery stores, using them as convenient targets for political gain rather than addressing the macroeconomic issues that drive food prices. Ultimately, the current scrutiny of Connecticut’s grocers appears to be more of a political maneuver than a genuine effort to tackle inflation. I’m curious to see how interested these same political opportunists are after state and national elections in November.

Original article found at Food Trade News.

National Grocers Association Applauds Congressional Action to Protect Grocers and SNAP Participants

Washington, D.C. –  The National Grocers Association (NGA) today applauds members of Congress forsafeguarding the Supplemental Nutrition Assistance Program (SNAP) in the FY 2025 agriculture appropriations bill by removing a provision that would have led to widespread disruptions and undermined SNAP’s effectiveness.

A proposal dropped from the final bill would have created a five-state pilot to significantly limit the types of foods covered under SNAP, forcing grocers to examine hundreds of thousands of food items to determine which qualify and which don’t. The proposed pilot program would have allowed five state governments to pick winners and losers in the grocery sector, harming the 42 million SNAP participants who have diverse nutritional needs.

“Fortunately, members of Congress realized that a proposal that looked simple on paper would have created confusion for program participants and resulted in a costly bureaucratic nightmare for small businesses around this country,” said Stephanie Johnson, RDN, NGA vice president of government relations. “The strength of SNAP lies in its efficient and flexible design. We are proud to support the continuation of an effective and impactful program for families and local economies.”

The successful amendment, offered by Congressman Sanford Bishop, removed a pilot project that would have restricted SNAP purchases  of “non-nutritious food or beverage items” in five states, a potentially disastrous policy that would have turned grocers into the food police. Members Bishop, DeLauro, Espaillat, and Watson-Coleman spoke in favor of keeping SNAP Choice, the current policy providing participants the freedom to purchase what is right for their families. The amendment passed via voice vote after a robust lobbying effort from NGA.

NGA is also pleased to see that the Senate passed an agriculture appropriations bill without any new restrictions on SNAP purchases.

This victory follows NGA’s commitment to making SNAP choice a key issue during our Fly-In for Fair Competition. Credit also goes to the NGA Grocery Guard, who, at a moment’s notice, reached out to House Appropriators urging support for the amendment.

Original article found at National Grocers Association.

Big Y Opens New Market In Middletown, CT

Big Y has opened a new market at 850 S. Main St. in Middletown, Connecticut, the second of three new locations coming to the state this year.

The Middletown Big Y market offers an on-site bakery with hand-decorated cakes and specialty baked goods, such as signature snowflake rolls, along with full-service butcher and seafood departments with six deliveries of fresh, sustainable seafood every week.

The kitchen and deli feature ready-to-heat, -eat or -cook Big Y Quick, Easy Meals including hand-tossed pizza available by the slice or whole pie, freshly made sushi, made-to-order subs and paninis with Boar’s Head Premium meats and cheeses. A selection of Boar’s Head products are also available sliced or pre-packaged in the deli.

It has a wide assortment of products and specialty items from local partners, including Arethusa Farm old-fashioned-style ice cream and specialty cheeses, Bear’s seasoned wings, Liuzzi Italian specialties, Hummel Bros. frankfurters and quality meat products and Lamberti sausage, Deep River chips, Lyman Orchards apples and pies, Gina Marie Bakery traditional Italian products and Chabaso Bakery artisan breads.

“All of us at Big Y are very excited to serve and be a part of the Middletown community with our unique fresh and local offerings, trained experts and state of the art facility,” said Michael P. D’Amour, president and CEO of Big Y. “We are proud of our exceptional and knowledgeable employees who are poised and ready to provide our Middletown customers with a remarkable and personalized shopping experience.”

The company broke ground on the project in April 2023. The building offers new green features like eco-friendly equipment, including energy-efficient refrigerated cases, a full- store generator and electric vehicle charging stations in the parking lot. This and other recent store designs are part of the company’s broader strategy to modernize its retail spaces for customers and employees.

Grand opening festivities begin on July 11 and will include giveaways, offers and sample tastings. New myBigY members will receive 500 myBigY Rewards points for signing up. Discounts are available every day for myBigY members using their membership, based upon their grocery purchases.

This is the second market to open in the state this year. The Brookfield, Connecticut, location opened its doors in May. New locations are also underway in Westport, Connecticut, and Uxbridge, Massachusetts. These locations will bring Big Y’s number of supermarkets to 77.

Original article found at The Shelby Report.

Cingari Family Markets To Unveil New Identity, 2 Remodeled Stores

Cingari Family ShopRite, which owns and operates 12 ShopRite locations in Connecticut, is introducing a new “Cingari Family Markets” identity and a range of new, branded products.

Additionally, Cingari Family Markets will open two remodeled stores on June 17-18 – the ShopRite of Commerce Street and Grade A Market on Newfield Avenue in Stamford, Connecticut.

The ShopRite of Commerce Street, located at 1990 W Main St., will reopen on June 17 at a ribbon cutting ceremony at 9 a.m. with Stamford Mayor Caroline Simmons and members of the chamber of commerce. The community celebration will include family activities, a balloon artist, cupcake decorating and food samplings.

The supermarket has an upgraded, sleek exterior facade, modern interior décor and transformed produce, meat, seafood and bakery departments. The store also will feature “The Grill,” a new dine-in and take-out experience, a dedicated cheese monger, full-service butcher, expanded take-and-bake seafood options and a beer and craft brew center.

“We are thrilled to open the doors to a brand new shopping destination,” said Tom Cingari Sr., president and CEO of Cingari Family Markets. “The renovations have allowed us to create an unmatched experience with incredible service, quality and convenience for our customers.”

The Cingari family also will celebrate the opening of its renovated Grade A Market store at 9 a.m. on June 18 at 563 Newfield Ave. in Stamford. A Boars Head food truck will be on-site on grand reopening day to serve hot dogs and other samples to customers.

The store refresh brings updated décor and enhancements to the produce, seafood, floral and meat departments, as well as sustainable refrigerators and freezers throughout the store.

“The Newfield Avenue store has been an area staple for decades,” Cingari said. “These upgrades will allow us to continue providing the outstanding service and convenience customers expect, now within a completely modernized shopping environment.”

In addition to the remodeled stores, the grocer has also launched a range of gourmet prepared foods and products marketed under the Cingari Family Markets brand, including:

  • Ready-to-eat, restaurant-quality prepared meals;
  • Fresh-cut, pre-packaged produce;
  • Read to cook, marinated and seasoned premium meats;
  • Italian-imported organic extra virgin olive oil;
  • Italian-imported organic balsamic vinegar;
  • Jarred marinara sauce;
  • Jarred vodka sauce;
  • Organic coffees; and
  • Locally-brewed beers.

The chef-created line reflects the Cingari family’s Italian heritage and its decades-long commitment to quality and excellence. It also features a newly designed Cingari Family Markets’ logo inspired by the family business’ origin.

“The Cingari Family Markets products pay homage to our family’s history, and the new logos are inspired by the original design, materials and colors my grandfather used for the very first store, while embracing a modern aesthetic,” Cingari said.

“Everything we do is built on the expertise and heritage of our family, now spanning four generations. As new Cingari generations come in, we modernize our approach to meet the needs of our customers while staying true to our core values.”

Family-owned and operated for more than 90 years, Cingari Family Markets owns 10 ShopRite stores and two Grade A Market supermarkets across southwestern Connecticut.

Original article found at The Shelby Report.

Geissler’s Supermarket expands its reach in CT with the purchase of Simsbury grocer

A local supermarket chain is expanding its network of stores. Geissler’s Supermarket will acquire Simsbury grocery store Fitzgerald’s Foods, though the store will keep its name.

Geissler’s officials announced Friday morning that they hopes to retain the entire staff of Fitzgerald’s Foods, including its current owners, under a purchase agreement that is expected to close in mid-June.

The deal will expand on Geissler’s group of seven stores across Connecticut and Massachusetts, including in Granby, East Windsor, Somers, and South Windsor.

Fitzgerald’s Foods is currently independently owned and operated by Bryan and Sandy DeVoe, who purchased it from the Fitzgerald family in July 2010.

Geissler’s spokesperson Carol Carlson said Friday afternoon that the sale came about due to an existing close relationship between the two companies, including sharing the same wholesaler.

Carlson said Fitzgerald’s Foods will stay as Fitzgerald’s Foods once the sale is completed, “until or if ever comes a time to change it.”

Geissler’s plans to “bring the best of Fitzgerald’s and best of Geissler’s together to create a better shopping experience,” Carlson said.

Bob Rybick, president and CEO of Geissler’s, said in a statement that Fitzgerald’s Foods has a long history in Simsbury that Geissler’s plans to uphold.

“It was clear, early on, that we share the same commitment to fresh, quality foods and locally produced products as the DeVoes,” Rybick said. “We plan to continue those great traditions, and learn from their expertise in fresh to enhance both Fitzgerald’s and all the Geissler’s stores in the future.”

Geissler’s acquisition comes at a time of transformation for two of the company’s existing stores. The Geissler’s in Granby celebrated its grand reopening on May 4, adding on a new kitchen and expanded bakery and deli departments, while the South Windsor supermarket and its immediate surroundings could receive a major facelift as a development is planned for the plaza it occupies.

Carlson said the landlord of its South Windsor store and the developer looking to revitalize the property are working with the town on redevelopment plans.

“In the meantime, we will continue to support the South Windsor community,” Carlson said.

Original article found at CT Insider.

Big Y’s Store Remodels Focus On Sustainability First

Big Y has been making significant strides in enhancing its stores across the region, opening 26 locations since 2022. These remodels align with the company’s broader strategy to focus on sustainability and modernize its retail spaces to create a more enjoyable shopping experience.

The new store design incorporates modern elements to inspire guests and reflect each store’s local community. The remodeled stores have been strategically laid out to benefit shoppers and associates, streamlining operations and creating a more pleasant environment. They have also added major energy efficiency upgrades across Connecticut and Massachusetts.

“Whenever we remodel or build new stores, we always try to upgrade to energy efficient equipment, motors, refrigeration systems, etc.,” said Maggie D’Amour, senior manager of environmental social governance.

“Big Y’s commitment to sustainability and community-focused design is evident in these remodels. As we continue to invest in our stores, we aim to meet customers wherever they are, providing a modern, highly-connected shopping experience.”

Big Y has executed the following in each store it has remodeled:

  • High efficiency rooftop and refrigeration systems;
  • LED lighting interior and exterior (95 percent of stores);
  • Light dimming systems;
  • Energy Star certified equipment;
  • Building energy management systems;
  • Night curtains or glass door retrofits on open refrigerated cases;
  • High-efficiency motors;
  • Capture and utilization of waste heat;
  • Cycling anti-sweat heaters;
  • Waterless urinals;
  • Low-flow water controls on sinks; and
  • Energy-efficient hand dryers.

As a result, these stores are saving 9.3 million kilowatt-hours of electricity annually, the equivalent of reducing greenhouse gas emissions by removing 840 gasoline-powered vehicles from area roads for a year.

In addition to the remodeled storesBig Y also installed a 1.4-megawatt solar array on the rooftop of its new fresh and local distribution center. The installation is comprised of 3,100 solar panels and the renewable energy generated by the system will offset about 70 percent of the distribution center’s electric requirements.

Expanded in 2021, Big Y’s fresh and local distribution center provides local farmers and food producers with a one-stop location that saves them time and money as they don’t need to deliver to individual stores. In addition to supporting their communities, farms and other small businesses, it saves travel time, thus cutting down on greenhouse gas emissions. It also serves as a hub for all fresh fruits and vegetables throughout the year.

Over the past three years, there has been a company-wide effort to be Earth-friendly. These initiatives demonstrate the commitment to expanding solar energy adoption and addressing environmental challenges. Overall, these changes have reduced its total energy consumption by more than 17,800,000 kWh.

Original article found at the Shelby Report.

Study: 12 years after CT OK’d Sunday alcohol sales, neither supermarkets nor package stores cashed in

Sunday alcohol sales, allowed in Connecticut since 2012, benefited neither supermarkets nor package stores, UConn researchers found, feeding the ongoing debate over grocery store wine sales.

“Using nationwide data from 2004 to 2021, we find a short-term increase in beer sales post-policy change,” researchers wrote in a recently published study, “but no significant long-term economic effects on grocery and liquor stores. Our analysis also shows similar treatment effects for chain and standalone liquor retailers, suggesting limited lasting implications for the liquor retail industry’s performance and conduct after Sunday sale restrictions were lifted.”

The prohibition against selling alcohol on Sundays was one of the last of Connecticut’s puritanical Blue Laws.

The study counters package store owners’ dire predictions about beer sales lost to grocery stores on one of the week’s busiest shopping days. In 2011, when a proposal to allow Sunday sales died in the legislature, Carroll J. Hughes, lobbyist at the time for the Connecticut Package Store Association, called the decision a victory for corner stores throughout the state. Hughes told the Connecticut Post that mom-and-pop packies would have lost major business to supermarkets, forcing hundreds out of work. He also said estimates that the repeal would raise millions in added tax revenue were overstated.

“It doesn’t raise money and it certainly eliminates jobs,” Hughes said of the proposal. “I’ll lose 350 stores, probably 600 jobs in the wholesale-retail sector and we don’t need that right now, just for an experiment that somebody’s saying ‘let’s open up and try it.'”

UConn researchers, however, found “there is no statistical evidence of adverse or positive treatment effects on the long-term economic outcomes for grocery retailers and liquor stores after the policy change.”

Published in January in The Journal of Wine Economics, the study was done by Cristina Connolly, assistant professor of agriculture and resource economics in UConn’s College of Agriculture, Health and Natural Resources, and Ph.D. student Alyssa McDonnell, along with collaborators Sandro Steinbach from North Dakota State University, and Marcello Graziano from UConn’s Connecticut Center for Economic Analysis.

The Connecticut Food Association, an advocacy organization for grocery stores, highlighted the report on its website with the headline, “Study: If You Let People Buy Beer at Grocery Stores, the Liquor Stores Still Survive.” The organization is pressing for wine sales in grocery stores through a website, CT Wine Now, that notes 42 other states allow such sales.

The state legislature is not considering the issue in this session, but supermarket representatives across the state made a big push in 2023 to legalize the sale of wine in their stores. Ultimately, however, Connecticut’s 1,250 package store owners won the day, persuading lawmakers that wine and spirits should remain their market domain.

In an attempted compromise, the 2023 bill said no food store within 1,000 feet of an existing package store would be allowed to sell wine, and all wine in supermarkets would have to be from vineyards producing 100,000 gallons a year or less — about 43,000 cases. CT Wine Now cites the added convenience of wine sales in grocery stores and contends that people would not shop less at local liquor stores.

Advocates point to another UConn study released last year in which the Connecticut Food Association asked researchers to analyze the economic impact of allowing grocery store wine sales. The major findings, which included a household survey, were that a clear majority of almost 82 percent of the general public support grocery stores sales and that the policy would have little impact on consumers’ overall wine buying habits, UConn Today reported.

But package store owners have called the proposal a profit-grab by an industry dominated by national and multinational corporations, including Dutch-owned Stop & Shop.

“Convenience? Are you kidding me? There are package stores in 162 of the 169 towns,” Jean Cronin, a lobbyist and executive director of the Connecticut Package Store Association, said during the debate last year. “That’s a lot of access.”

About 100 package store owners and employees stood up in the hearing room as hundreds more, perhaps 500 or 600 in all, stood in the atrium downstairs, many of them from the recently formed Indian American Package Store Association of Connecticut. 

Consumers will be hurt, the liquor store representatives said, as the market-setting supermarkets look to sell just a few brands, making it unprofitable for distributors to keep offering some 50,000 varieties of wine in Connecticut stores.

“In many small towns, they are the last small business left on Main Street but this legislation could change all that,” Cronin said. “We are a fragile ecosystem.”

Original article found at CT Insider.

CT lawmakers seeking new options to work around budget cap

Despite the bipartisan praise lavished on Connecticut’s budget constraints, officials never have fully embraced them, spending hundreds of millions of dollars in recent years outside the “fiscal guardrails” — drawing from short-term sources.

But these temporary wells are running dry faster than many anticipated, setting the stage for a budget showdown this May, with funds for education, human services and health care hanging in the balance.

On one side, Gov. Ned Lamont, other moderate Democrats and most of the legislature’s Republican minority are pushing for stricter adherence to these fiscal controls.

On the other are most of Lamont’s fellow Democrats, who want to spend up to $400 million beyond official limits. But they note that besides shoring up core programs, this still would leave finances projected in the black — and poised to further reduce pension debt.

Options for working around the spending cap are shrinking

“I am not going to ask my caucus to vote for a budget that does not have $300 million to $400 million of extra spending,” House Speaker Matt Ritter, D-Hartford, told The Connecticut Mirror on Thursday.

But that’s not an easy task, given that the preliminary $26 billion budget for 2024-25 — the one that legislators want to enhance — already exceeds the state spending cap by $30 million. In other words, there’s no room to add even $1. And that plan only boosts General Fund spending by 2% above current levels.

Further complicating matters, Ritter’s comment came one day after Lamont’s administration reduced projections for this fiscal year’s operating surplus to just $109 million or one-half of 1% of the General Fund. Eroding sales tax receipts and cost overruns in human service agencies have steadily whittled down the $400 million cushion lawmakers built into the budget when they adopted it last June.

Why does this year’s surplus matter for next year’s budget?

Legislators were counting on that $400 million since carrying operating surplus from one fiscal year into the next is one of the chief tools used to circumvent the spending cap. Because those carry-forward dollars technically were appropriated in a prior year, they don’t count against future cap calculations when they are spent.

The legislature carried about $280 million from last fiscal year’s operating surplus into the current budget. That plan also was backed by $544.3 million of the nearly $2.8 billion in flexible pandemic relief Connecticut’s state government received from Congress in 2021 through the American Rescue Plan Act.

But those ARPA funds, which aren’t subject to the spending cap and are the second tool legislators use to maneuver around the guardrails, have nearly been exhausted.

Lamont’s budget office estimated in early February that only $55.7 million in previously allocated ARPA could be re-directed into the next budget, although that number might be slightly larger. The administration is preparing an updated tally and has asked all agencies to report on unspent funds by March 25.

Still, a $109 million surplus and about $56 million in guaranteed ARPA represents about $165 million that could be added to the next state budget without violating cap rules, far below the $300 million to $400 million legislative leaders insist is needed to address a plethora of issues.

Legislative leaders say available funds under cap aren’t enough

Public colleges and universities, which have been big beneficiaries of funds from these temporary sources in recent years, are projecting significant deficits after July 1, despite tuition and fee increases already ordered at community colleges, regional state universities and at the University of Connecticut.

The private, nonprofit agencies that deliver the bulk of state-sponsored social services estimate they lose $480 million annually because government payments haven’t matched inflation since 2007.

Legislators also want to boost funding for a child care industry that hasn’t fully recovered financially from the worst of the coronavirus pandemic as well as for various health care programs that are facing increasing demand.

And despite the shrinking operating surplus, that doesn’t mean the state finances are heading for a deficit. They may not have gotten worse at all.

Though the operating surplus has dropped from $400 million to $109 million, that’s not the only fiscal safety net Connecticut has.

A second program, which forces the state to save a portion of volatile income and business tax receipts, is expected to collect $480 million this fiscal year. Some legislators expect that number to grow in late April when analysts adjust projections based on income tax filings.

Most of that savings program involves capital gains and other investment-related earnings, and the markets have risen considerably since the fiscal year began.

The Dow Jones Industrial Average closed Thursday at 39,781 points, up 15.7% since last July, while the S&P [Standard & Poor’s] 500 is up 17.8% over the same period, according to marketwatch.com.

“If you look at the overall picture, it’s nowhere near as dire as if you look at isolated pieces,” said Senate President Pro Tem Martin M. Looney, D-New Haven.

But there’s still a problem: While the operating surplus can be carried forward to help next year’s budget, the volatility savings program cannot, except under special conditions.

Even if its potential growth in April outstrips the reduction in the operating surplus, the volatility savings program can’t help education, health care or social services. Under the guardrails system, the funds must be used to reduce pension debt or to increase the rainy day fund.

Connecticut already has a record-setting $3.3 billion budget reserve and has paid down an extra $7.7 billion in pension debt since 2020. Over the past four years, 21% of all revenues — excluding those assigned to special budget funds — have gone into the pensions.

Many of Lamont’s fellow Democrats say this system over-prioritizes debt reduction, and that they don’t want to stop saving — but just seek a more balanced approach.

Lamont and GOP say CT can’t lose sight of long-term challenges

Lamont and Republican legislators counter, though, that Connecticut is not out of the fiscal woods from a long-term perspective.

The state failed to save properly for pensions for more than seven decades prior to 2011, forfeiting billions of dollars in potential investment earnings — a gap current and future taxpayers must plug. The state’s unfunded pension obligations remain huge, topping $37 billion entering this year, according to the administration.

What happens if the global economy slides into recession next year, or if Washington begins to pull more funding for states back to pre-pandemic levels, as it did this past year with winter heating assistance, Republican state legislative leaders have asked.

If Connecticut Democrats increase spending as pandemic grants are exhausted, it will be even harder to sustain those investments if future challenges arise, said House Minority Leader Vincent J. Candelora, R-North Branford.

“The fundamental question that Democrats always seem to ignore around spending is sustainability, and that’s why the caps are there,” Candelora said. “If you can’t keep up with those spending levels year to year, you’re putting yourself in a long-term deficit. … This is the behavior we saw 20 years ago and we’re seeing today.”

“One thing that we can’t do is play fiscal gimmicks with these guardrails,” added Senate Minority Leader Stephen Harding. “We’ll be in far worse shape in the long run.”

The Lamont administration also hasn’t shown interest in carving out new ways to work around the cap.

“Any additional state funds that the General Assembly provides in any FY 25 budget adjustment will need to be consistent with a balanced budget that complies with all statutory and constitutional caps,” Chris Collibee, Lamont’s budget spokesman.

Democrats insist that whatever they do will absolutely be legal. The question, for some, is whether it will comply with the intent of the guardrails system.

The preliminary budget for 2024-25 has a built-in operating surplus of $300 million and expects to save another $450 million through the volatility program. Democrats say they don’t want to tap anywhere close to all of that $750 million projected cushion.

They’re exploring an “intercept” of revenue, an accounting maneuver that technically assigns a portion of some revenue source — tax receipts, interest earnings, fees — outside of the budget, as well as an expense that these intercepted revenues would cover. When the spending occurs outside the budget, it no longer counts against the spending cap.

Legislators and governors have used this technique before. A revenue intercept of roughly $150 million to $200 million, coupled with remaining ARPA funds and this year’s $109 million operating surplus, might be enough to resolve the next state budget before the regular legislative session ends on May 8.

To those who say this is a gimmick, Ritter’s response is: Check your history.

Democratic and Republican legislators both gave ground at the end of a nine-month-long budget debate seven years ago to establish unprecedented budget constraints.

“What has made Connecticut move since 2017 has been the compromises, the give and takes,” he said.

Some Democratic legislators insist closer to $1 billion needs to be added to the next budget, Ritter said, adding that caucus leaders, trying to compromise, already have shaved that down to $300 million to $400 million. But that’s as far as they will go.

“If people don’t like what we have, and don’t have better ideas,” the speaker said, “we will pass it [anyway] and see what they do with it.”

Original article found at CT Mirror.