Connecticut Gov. Ned Lamont gave his budget address before the General Assembly, highlighting the need to maintain fiscal restraints enacted as part of the 2017 budget and pushing for tax cuts for middle- and working-class residents and small businesses, combined with greater investments in housing.

“For the first time in over a generation Connecticut has enjoyed economic and population growth and more taxpayers, a growing economy, coupled with our shared fiscal discipline has resulted in four balanced budgets, soon to be five,” Lamont said. “Building off this momentum, my budget continues to grow the economy through a middle-class tax cut, investments in our young families, education, workforce training, workforce housing and helping families eliminate medical debt.”

Lamont has been pushing his tax reduction proposals over the last two months leading up to his overall budget proposal for the next biennium. The tax reductions total roughly $550 million and include reducing the income tax on joint filers making less than $100,000 per year, increasing the Earned Income Tax Credit for low-income families and increasing the pass-through entity tax credit for small businesses to its original rate.

Connecticut’s finances have experienced a rags to riches story over the last several years, boosted by federal COVID dollars, Wall Street earnings and increased revenue from Connecticut’s income, sales and business taxes during some tumultuous years when the pandemic fed fears of budgetary red ink.

Instead, surging revenues, particularly from income and sales taxes fueled budget surpluses in the billions, leading to Connecticut fully funding its budget reserve fund through the state’s volatility cap and paying down nearly $5 billion in pension debt. The pension debt paydown reduced the annual contribution toward that pension debt, freeing up hundreds of millions per year.

Lamont emphasized the need to retain the fiscal restraints, as some lawmakers and organizations have sought to loosen them.

“One of the smartest actions the General Assembly has taken over the last decade has been the enactment of fiscal guardrails that have provided predictability and stability to our budget process,” Lamont said, thanking the legislature. “These fiscal controls have ended the era of wishful budgeting and the so-called permanent fiscal crisis.”

Lamont also emphasized proposals to increase the number and diversity of teachers in Connecticut schools, funding childcare through the Care4Kids program and offering free school lunches throughout the remainder of the year, an issue the legislature is set to take up tomorrow. 

Despite calls by Democrats to speed up the state’s increasing grants to schools, the governor’s budget continues to maintain the current schedule, citing declining school enrollment.

The governor’s budget also includes tax credits to boost on-the-job training for Connecticut employers, who say there are still 100,000 unfulfilled jobs remaining in the state since the COVID-19 pandemic. Connecticut has yet to fully recover the jobs lost during the pandemic.

The governor is also proposing $600 million in housing initiatives to help facilitate more housing built in the state. The often-contentious housing issue has become a hot-button topic over the past several years following attempts by the legislature to loosen local zoning regulations in municipalities to encourage more housing to be built.

Lamont held back on calling for legislation to override local zoning commissions but said that Connecticut municipalities must do their part by reforming their own regulations and getting more housing built with their own plans.

Lamont also said that tomorrow he will be meeting with other New England governors in Washington D.C. to try work on energy prices and issues. Connecticut has one of the highest electricity costs in the country and despite numerous proposals to lower the costs and increase electric generating resources, solutions have been few and far between and generally far off in the future.

Lastly, the governor said he wanted to use $20 million to pay off “billions” in medical debt for Connecticut residents through essentially buying the debt for pennies on the dollar.

Republicans have been generally supportive of some of the governor’s proposals over the last few weeks, including reducing the income tax and maintaining the fiscal controls enacted by the 2017 bipartisan budget.

In a press statement, House Republican Leader Vincent Candelora, R-North Branford, said the budget wasn’t perfect, noting he saw little to alleviate energy costs, address public safety and workforce development. However, Candelora did say the budget reflected proposals made by Republicans.

 “The Governor’s plan offers the much-needed recognition that federal Covid recovery money is ending, and his commitment to the type of structural tax relief promoted repeatedly by Republicans makes his proposal an appropriate launching pad for the General Assembly to craft a budget and policies that help achieve, rather than undermine, the Governor’s central theme – to grow our state’s fragile economy,” Candelora said.

The Connecticut Conference of Municipalities (CCM) expressed disappointment the budget did not tackle the state’s high property taxes through reduced mandates on municipalities, but supported maintaining the fiscal guardrails and increasing education funding.

“We ask the Governor and legislative leaders to continue to work with our towns and cities to implement meaningful mandate relief and/or allow for revenue diversification. Without these needed reforms, by simply maintaining current levels of state aid to our towns and cities, simply increases the burden on the local property tax,” wrote Kevin Maloney of CCM.

With an anticipated $1.3 billion budget surplus, the governor hopes to pay down an additional $816 million in pension debt, free up $315 million in ARPA funds that will not be used for revenue replacement and retire $211 million in bonds.

The remaining federal COVID-relief dollars, totaling $433.9 million would largely go toward supporting higher education, human services and childcare, according to the budget presentation.

“This is a budget that is built to expand growth and opportunity for all our residents,” Lamont said, “anchored by a middle-class tax cut, keeping faith with and expanding assistance for those most in need.”

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Marc worked as an investigative reporter for Yankee Institute and was a 2014 Robert Novak Journalism Fellow. He previously worked in the field of mental health is the author of several books and novels,...

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