Blue Dog Democrats in Connecticut are warning against calls by their colleagues to increase taxes and adjust the state’s fiscal guardrails in response to “looming federal spending cuts,” saying state taxes and the budget should not be guided by “reactionary policy,” according to a press release.

“We share concerns raised about looming federal spending cuts and the pressure they could put on working and middle-class families,” the Moderate House Democrats caucus said in a joint statement. “But Connecticut is not served by reactionary policy. Now is not the time to raise taxes. We need thoughtful, measured action, not quick fixes that threaten our progress and potentially drive out our largest taxpayers out of the State.”

The statement by the Blue Dog Democrat caucus, who claim 22 members in the House of Representatives and is co-chaired by Rep. Kerry Wood, D-Rocky Hill, and Rep. Pat Boyd, D-Pomfret, comes amid a push by Democrats to loosen the state’s fiscal guardrails established under the 2017 budget, and to increase income taxes on the wealthy, as state leaders openly worry about potential federal funding cuts, particularly to Medicaid. 

Senate President Pro-Tem Martin Looney, D-New Haven, and Senate Majority Leader Bob Duff, D-Norwalk, announced a proposal to increase the income tax rate on the top two brackets for Connecticut residents, arguing those same residents had saved $1.3 billion in federal taxes under President Donald Trump’s 2017 tax cuts.

As the current Trump administration looks to continue that tax policy, lawmakers are worried those cuts will be balanced by reductions in federal programs, particularly Medicaid. Connecticut already has to make up for a $290 million shortfall in Medicaid due to increased pharmacy costs, enrollment, and home health care costs. 

State lawmakers are also concerned about federal education funding, particularly as the Connecticut State Department of Education recently declined to sign onto the Trump administration’s discrimination policies and could potentially affect $533 million in federal education funding.

“Connecticut families should have to pay the price for reckless decisions in Washington,” Duff said in a press release. “This is a proactive, conditional measure that protects core services, invests in education and infrastructure and maintains a level playing field. If the wealthiest once again get a massive federal tax break, then it cannot be at the expense of hard-working Connecticut residents.” 

Gov. Ned Lamont has resisted past calls for tax increases on high earners and in 2022 made the first cut to state income taxes for the working and middle-class since the income tax was enacted in 1991.

However, the governor has shown some leeway in adjusting the fiscal guardrails – which capture surplus revenue from income taxes tied to Wall Street earnings and use it to keep the state’s Rainy Day Fund full and pay down pension debt. In his budget, Lamont seeks to adjust the guardrails to free up enough money to create a universal preschool endowment, but more progressive wings of the Democrat party in the General Assembly, and even the state’s largest municipal association, are looking to use that surplus revenue for any number of social programs or to boost municipal education funding.

The Blue Dog Democrats, however, say the fiscal guardrails were a “significant step forward in stabilizing Connecticut’s finances,” and that any changes should be done after careful analysis.

“Any adjustments we make must be done slowly and with thorough analysis,” the Blue Dog caucus said. “We must make tough choices and prioritize spending like never before. We believe in helping working families, maintaining strong social services, supporting education, and fostering a strong economic environment. The best way to achieve this is by maintaining a predictable, stable fiscal foundation, not just for this budget but for future budgets as well.”

Republicans in both the House and Senate have pushed back against any changes to the fiscal guardrails or tax increases. In response to the most recent jobs report showing a decrease in jobs for February and March, Senate Republicans pointed to Democrat efforts to hike taxes and adjust the guardrails.

“At the State Capitol, majority Democrats want to hike taxes and even create new ones, like a mileage tax and a delivery tax on every package you receive. They want to dismantle the bipartisan fiscal guardrails, which will lead to even higher taxes,” said Senate Republican Leader Stephen Harding, R-Brookfield, in a press release. “It doesn’t have to be this way.”  

House Republican Leader Vincent Candelora, R-North Branford, has issued several statements saying he believes Democrats are “spinning fear about federal funding,” making “doomsday predictions,” and that Connecticut’s budget issues are largely self-inflicted.

Although federal cuts to Medicaid and other programs are, at this point, speculative, the Trump administration has cut back on $150 million in grants to the Connecticut Department of Public Health and the Department of Mental Health and Addiction Services, as well as some nonprofit organizations in the state.

“The real work is not done in social media threads or headline soundbites – it’s done around the table with facts, compromise, and with the long-term health of our state in mind while being thoughtful about short-term needs,” the press release said. “We are working every day within our caucus and alongside Governor Ned Lamont to ensure Connecticut continues on a path of fiscal responsibility.”

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