On Monday, Connecticut lawmakers and budget officials announced that the state had paid down billions of dollars in pension debt over the last few years.
Some officials, including Gov. Ned Lamont (D), in part credited the state’s controversial fiscal guardrails.
Connecticut has a higher unfunded pension debt than most states in the country. Budget officials have blamed former administrations' poor money management.
But on Monday, state Treasurer Erick Russell (D) announced the state has continued to pay it down this year.
“The State Employees Retirement System added $2.7 billion in assets in fiscal year 2024, improving the funded ratio to 55.2%, which is the highest it has been since 2003,” Russell said. “The Teachers Retirement System similarly added $2.6 billion in assets, improving its funded ratio to 62.3%, which is the highest funded status that it has had since 2008.”
According to an analysis by actuarial fund Cavanaugh Macdonald, the contributions will translate to more than $18 billion in annual payment savings and interest.
“It's a far cry from where we were seven years ago,” Lamont said. “When I was running for governor seven years ago, I kept hearing from my Republican candidates, ‘We may just have to file for bankruptcy as a state so we can get away from these pension obligations that we'll never be able to meet.’”
“I think they were wrong,” Lamont said. “I think we've shown that we can manage our house.”
When asked if he would advise the general assembly against amending the fiscal guardrails in the 2025 session that starts in January, Lamont didn’t seem ready to give an answer.
The spending laws were passed on a bipartisan basis in 2017. They keep state spending in line with what families can afford (based on income and inflation), require the state to save a piece of earned tax revenue, set aside 1% of the state’s income in each budget for the rainy day fund, and limit borrowing for projects.
They were cited, in part, as a reason for the fiscal success.
State Republican lawmakers supported the measures and released a statement in favor of them on Monday.
“We are chipping away at our state’s crushing credit card debt. That paydown is not only lessening our budget burdens, It is freeing up money for vital human services to help support our most vulnerable residents. It also enables much-needed tax cuts,” GOP Sens. Eric Berthel, Henri Martin and Stephen Harding said. “We must stay the course and preserve that discipline in our budgeting. Any Democrats who say they want to ‘adjust’, ‘tweak’ or ‘update’ our common sense fiscal guardrails in 2025 also want to raise our state taxes. It’s as simple as that.”
Some of his fellow Democrats, who have large majorities in the House and Senate, have said they favor amending them to spend more on human services like education and housing.
Lamont is expected to give his State of the State address on the first day of the 2025 legislative session on Jan. 8. He said on Monday that he will give his budget address in February.