As the 2026 legislative session convened on February 4, Gov. Ned Lamont released details of proposed adjustments to the $28.7 billion fiscal year 2027 budget. Before Lamont addressed a joint session of the legislature to deliver the annual State of the State address, Office of Policy and Management (OPM) secretary-designate Josh Wojcik provided a briefing of policies included in the budget.

Wojcik said Lamont is proposing a “series of strategic investments focused on education, workforce development, and cost of living relief” that prioritize education, housing, and workforce development. He also said Lamont’s proposed adjustments show a “continued commitment to affordability and long-term stability”‘ and maintain fiscal discipline “while making targeted improvements.

The proposal includes a change of $85 million over the current budget, or 0.3 percent, and that Lamont’s proposed appropriations would grow current fiscal year 2026 appropriations by 5.7 percent.

If enacted as written, Wojcik said the state would remain $1.1 million under the spending cap and General Fund revenue would be reduced by $242 million as a result of a “variety of tax and revenue changes.”

Wojcik said the state’s “fiscal discipline” has left room for tax relief and combined with previous changes to the earned income tax credits and income tax cuts, Lamont’s proposal offered nearly $1.5 billion in tax relief. Wojcik said this would put “real and meaningful dollars back in the pockets of taxpayers.”

At the center of that proposal is a proposed one-time tax rebate check of between $200 and $400, which Wojcik said “seeks to provide meaningful relief in the face of spiking energy costs.” Single tax filers would receive $200 and couples filing jointly would receive $400 and is anticipated to be paid to roughly 1.6 million taxpayers.

The rebate checks would be funded with excess volatile revenue, which Wojcik said “continues to outperform expectations” due to increases in the stock market.

Lamont is also again proposing to eliminate occupational licensing fees for over 160,000 workers, with an anticipated savings of $15.9 million in fiscal year 2027 and $21.2 million in fiscal year 2028. Lamont has previously made similar proposals, but they have not been enacted.

Another proposal would increase taxes on hospitals between fiscal year 2026 and fiscal year 2027 by $100 million, while also increasing supplemental payments by $140 to leverage a federal matching program.

The Connecticut Hospital Association (CHA) has already voiced concerns about the proposal.

“This tax proposal continues to ask hospitals to shoulder higher taxes while making little real investment in patient care at a time when financial burdens are already enormous. The result will be fewer resources at the bedside, higher healthcare costs imposed on consumers, and more strained workforce.” Jennifer Jackson, the CEO of CHA, said via a press release.

Wojcik stated that the proposal would see the hospital industry gain a net $40 million and that the state would net $53.8 million after federal reimbursement.

Lamont is also proposing to expand the state’s research and development tax credit to include pass-through entities. Wojcik said the credit is often not available to early stage or high growth companies, such as biotech companies in New Haven, because they are not structured as corporations.

The proposal would require pass-through entities to have $70 million in sales. They would receive a credit worth 6 percent of their expenditures.

Wojcik also discussed proposals to increase funding or fund new programs across a variety of state agencies.

The Connecticut State Department of Education (CSDE) would receive over $100 million in funding for a variety of programs, including:

• $40 million to address excess costs
• $30 million to develop and expand special education programs
• $10 million to develop a new program to encourage in-district special education programs
• $7 million to create the Learner Engagement and Attendance Program to combat chronic absenteeism in 35 t0 40 high needs districts
• $12.5 million to fund universal free school breakfast
• $5 million to expand mental health and behavioral services programs piloted during the COVID-19 pandemic

Lamont will also shortly sign an executive order establishing a blue ribbon panel on K-12 education to evaluate the state’s education cost sharing formula

The proposal also includes increased funding for early childhood initiatives, including $38.4 million to fund the third-year of the Care 4 Kids program and offset rate increases, and $8 million to increase Early Start CT rates to 4 percent.

Wojcik said Lamont has increased support for early childhood programs by more than 11 percent each year sinc the first year of his first term.

The proposal also proposes a $10 million bond authorization to expand the Connecticut Higher Education Student Loan Authority (CHESLA). Leaders of the legislature’s Education Committee previewed a proposal to expand CHESLA’s authority to offer loans to graduate students in response to federal changes to student loan funding prior to the session start.

Other noteworthy proposals in Lamont’s budget adjustments include:

• $45 million to the Department of Health and Human Services (DHHS) to increase Medicaid rates to certain providers
• $3.3 million to fund 50 new positions in DHHS to address increased eligibility requirements for social services introduced in the “One Big Beautiful Bill Act”
• $892,000 to the Department of Public Health to create a pilot program to allow people who are uninsured or underinsured to receive flu vaccines at no cost
• $146,000 to fund a nonprofit policy coordinator with the Office of Policy and Management and to create a nonprofit advisory board aimed at reducing administrative burdens and helping nonprofits navigate changes to social services driven by federal changes
• $2.5 million for the Department of Transportation to reduce bus fares for students and veterans by up to 50 percent and $1 million to the Department of Veterans Affairs to fund free bus passes for veterans
• $9.86 million o the Department of Emergency Services and Public Protection for improvements to Connecticut State Police technology, including new software to improve video preparation in response to Freedom of Information Act requests and replacements for body worn cameras, drones, and other police technology
• $200,000 to the Department of Energy and Environmental Protection for an awareness campaign about bears

Lamont also made several legislative proposals. One would create portable healthcare benefits accounts tied to workers that follow them across jobs. Another would make adjustments to how legislatively directed funds are recorded by state agencies. Currently, many funds are placed in “other expense accounts” and comingled with funds for agency operations. The proposed changes would create a standalone appropriations account titled “various grants.” Wojcik said the change would increase transparency. Connecticut lawmakers have been under scrutiny as an FBI investigation into Hartford-area nonprofits gets underway, along with new revelations of how the distribution of millions of taxpayer dollars to those organizations came to pass.

During an address before a joint session of the legislature, Lamont referenced a number of his proposals.

Lamont opened the address by referencing Thomas Paine’s Common Sense, saying that 250 years later the state again finds itself in times that “times that try men’s souls,” referencing recent unrest over immigration enforcement and uncertainty coming out of Washington.

But Lamont said he was optimistic about the state’s future, stating that unlike other states, Connecticut is “stepping up to protect the most vulnerable” in the face of federal cuts. He said the state’s “strong economic growth” allows Connecticut “to do more without compromising our honestly balance budget.”

In addition to highlighting his proposed tax rebate checks, which he referred to as an “energy” rebate and his proposal to eliminate licensing fees, Lamont suggested the state should try to ban cellphones in school from “bell to bell” and ban children under 18 from accessing “dangerous apps.”

He also asked legislators to work together to create a “Connecticut option” for health insurance that would encourage employees and retirees to visit hospitals where they get “the best value.” Lamont said the plan would offer healthcare with no copays or deductibles for those who sign up.

UPDATE 4:35 PM

After Lamont’s address, the Senate reconvened to vote on an emergency certification bill that extends the $500 million emergency fund created by a legislative vote during a November 2025 special session. The fund was created in response to the threat of funding cuts amid the federal government shutdown, though a deal was reached prior to the legislature’s final vote.

The bill transfers the remaining roughly $330 million in the fund—Lamont has spent approximately $170 million—to a new fund, called the “Federal Cuts Response Fund.”

Those funds would be transferred to the Office of Policy and Management (OPM) to respond to any “action or inaction by the federal government that results in a reduction in funding for any program in this state.”

The initial bill authorizing the creation of the emergency fund, which expired when the legislature convened its session on February 4, had a more limited scope, limiting the expenditure of funds to cuts to the Supplemental Nutrition Assistance Program, the Low Income Home Energy Assistance Program, the Special Supplemental Nutrition Program for Women, or to health care, housing assistance, school meals, or childcare assistance.

The bill transferring the remaining $330 million to the new Federal Cuts Response Fund would extend OPM’s authority to disburse funds through the end of fiscal year 2027.

Like the initial bill, it included a mechanism for legislative leaders to vote to disapprove the disbursement of funds within 24 hours of being notified by OPM of its intention to spend them. 

The bill drew opposition from Republicans, who objected to the authority being given to Lamont to spend the funds even while the legislature was in session and introduced several amendments.

Sen. Ryan Fazio, R-Greenwich, said the bill would give Lamont unchecked spending powers and would violate the state’s fiscal guardrails, especially when coupled with a six percent spending increase in the last budget.

Sen. Rob Sampson, R-Wolcott, said Democrats were pushing for the bill to go through emergency certification, rather than follow a legislative process that involved public hearings, because they would be “embarrassed by the process.”

Sampson also said that Democratic legislators not in the party leadership should be upset by the bill because it cut them and their constituents out of the process.

Sampson offered an amendment to use the $330 million left in the emergency fund to issue rebate checks, saying he considered it to be excess revenue the state had collected that should be returned to taxpayers. That amendment failed on party lines, by a vote of 25 to 11.

Sen. Jeff Gordon, R-Woodstock, offered an amendment to prevent funds from being disbursed without a majority vote of both legislative chambers. Sen. Paul Cicarella, R-North Haven, offered an amendment preventing nonstate entities from receiving funds unless they first provided a detailed plan of how funds would be expended, as well as tax and financial information.

Both amendments failed on a party-line vote.

Speaking in support of the underlying bill, Senate Majority Leader Bob Duff, D-Norwalk, described the bill as an opportunity for the state to have flexibility to respond to changes coming from Washington, DC. He said it provides “real, needed” assistance to those in the state who most need it.

Senate Minority Leader Stephen Harding, R-Brookfield, noted while speaking against the bill that, due to his leadership position, he is among the legislators able to vote against the disbursement of funds. Harding said he had not done so because he thought the use of the funds had been appropriate.

However, Harding noted that the initial bill had a set expiration date, the same date the legislature was set to return, meaning legislators would be able to appropriate funds when needed. He said the proposed continuation of the fund made him question its purpose.

Senate President Pro Tempore Martin Looney, D-New Haven, spoke in support of the bill, saying the state’s experience over the last few months showed the fund is needed now more than when it was first past. Looney referenced recent changes in direction from the federal government that have alternately suggested funding for federal programs, such as food stamps, would be cut before that position was reversed.

The Senate voted to adopt the bill by a vote of 28 to 8. It will now head to the House of Representatives, which reconvenes on February 5.

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