Connecticut Governor Ned Lamont delivered his State of the State address on Wednesday to kick off the legislative session.
Lamont said his proposed adjustments to the second year of the state’s biennial budget increase spending on education, social services and housing.
But they don’t get rid of the fiscal guardrails that have helped the state pay down its pension debts and create a buoyant rainy day fund.
“Paying down our debts, and a robust rainy day fund, that doesn’t shortchange our programs,” Lamont said. “It has resulted in six years of consistent increases in our social programs, rather than that herky-jerky boom and bust cycle from yesteryear.”
Lamont’s speech was briefly interrupted by a group of protesters chanting, “Ceasefire now.” Lamont responded that he had attended anti-war protests, but that disrupting the legislative business was “disrespectful.”
Republican leaders applauded Lamont’s commitment to maintaining the fiscal guardrails.
“The governor is recognizing that we have a budget in place and we don’t need to reinvent the wheel,” said House Minority Leader Vincent Candelora. “And I think he is appropriately looking at areas where we could enhance and work on. But we definitely have to get our spending under control.”
Democratic leaders, including Speaker Matt Ritter, argue it’s time to revisit the guardrails.
“There are some people who argue that if you touch the guardrails, the state will collapse,” Ritter said. “Well, that’s not accurate. Paying down debt, creating spending cap room, that’s the most liberal thing you can do.”
Ritter said negotiations on whether to tweak the fiscal guardrails will be a major issue for lawmakers in their three-month session that ends in May.
Office of Policy and Management Secretary Jeffery Beckham spoke with reporters about Lamont’s budget proposal for fiscal year 2025 before his address.
The state is projected to spend just under $90 million more than originally planned. In total, the state is projected to spend more than $26 billion in fiscal year 2025.
The state’s highest budget increases were due to costs associated with Medicaid, pension funds and higher education retirement.
New policy proposals, including those in early childhood education and tourism, are also set to receive increased funding.
The proposals keep spending under the cap.
Beckham said there are no new taxes in the proposed budget.
“The budget is balanced,” Beckham said. “It complies with all constitutional statutory fiscal guardrails. We continue to make investments, historic investments, across a variety of policy areas of concern to our citizens. We're paying down decades of unfunded pension liabilities, and we're continuing to make progress toward making our state a more desirable place to live and work.”
It does, however, include a new proposed tax break: an income tax credit for residents working remotely for New York businesses.
Remote workers employed by New York firms are currently subject to New York taxes — which are higher than Connecticut taxes.
Beckham said residents would have to challenge the tax in court, which could take years before a decision is reached. But if they are successful, they would benefit financially — and so would the state.
“They will, if they win, receive a refund from New York and then receive a one-time 50% credit when they have to turn around and pay taxes to Connecticut,” Beckham said. “It covers for three completed tax years, 2020 to 2023.”
Beckham said the proposal could generate more than $200 million in future fiscal years.
New Jersey passed similar legislation in 2023.
