A recently released fiscal report card on America’s governors from the libertarian Cato Institute gave Gov. Ned Lamont a “C” grade.
The report focused on “short-term taxing and spending actions to judge whether governors take a small-government or big-government approach” and looked at a number of variables related to spending, revenue, and tax ratings.
Lamont’s actions earned a score of 59 out of 100 for spending and 49 out of 100 for revenue. According to the report, he has proposed spending changes totaling 3.7 percent of per capita spending, and spending policies he has signed into law account for 3.5 percent of per capita spending. Revenue from proposed and enacted tax changes has dropped by one percent according to the report.
While Lamont has previously earned a lower grade, the report describes his “C” score as “middling.” It cites Lamont’s June 2023 extension of the 10 percent corporate tax surcharge for three years as part of the fiscal year 2024-2025 budget as a reason the grade was raised.
“This was a bad policy decision, as Connecticut’s business tax climate is ranked the fourth-worst in the nation by the Tax Foundation. The state has a high corporate tax rate and a punitive property tax burden on businesses.” the report notes. It cites other recent tax increases, including the 2019 paid leave program that “imposed a wage tax on employers to raise more than $400 million a year” and a delayed tax phaseout of the corporate capital tax in 2021 as negatives.
Fiscally positive steps noted in the report include 2022 tax rebates that came following a budget surplus, including a temporary suspension of the gas tax, expansion of the earned income tax credit, and reduced taxes on retirement income.
Further, it cites 2023 individual income tax cuts that saved lower-income and middle-income households $370 million annually. However, it notes that savings from the tax cut were “partly offset” by the extension of the corporate tax surcharge.
The report found Connecticut has one of the highest total liabilities for bond debt and unfunded retirement obligations across all states. In 2022, the state’s debt was 10.9 percent of its gross domestic product and unfunded pension obligations accounted for 12.7 percent. In total, the state’s liabilities accounted for 29 percent of its gross domestic product. It was behind only Hawaii, at 29.2 percent, in this metric.
Of New England States, both New Hampshire and Rhode Island governors also earned a “C” grade. Vermont and Massachusetts performed the best, earning “B” grades. Maine earned a grade of “F.”
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