CT Gov. Lamont unveils 2-year budget with tax cuts, funding for homeless, child care, regionalization
Gov. Ned Lamont unveiled his new two-year budget Wednesday with new and increased funding for several programs thanks to a 'tweak' to the state's fiscal guardrails, and tax cuts for middle-class families, workers across a multitude of industries and corporations to boost job creation.
Lamont proposed an increase in the popular property tax credit to $350, up from $300, per tax filer. The credit has gone up and down under the past four governors, based on the state's fiscal health at the time, and it peaked at a maximum of $500 under then-Gov. M. Jodi Rell.
The latest change is expected to help 800,000 tax filers, officials said, as the income eligibility will increase – an issue that has restricted the credit in the past.
Guardrails
After a debate that has lasted for a year, Lamont is proposing a change in the fiscal guardrails that includes the 'volatility cap' that would allow more spending by the Democratic-controlled legislature. The proposed change would allow $593 million in additional spending over the next two years that would not have been possible without the changes. The move requires a 60% vote in both houses of the legislature, rather than a simple majority.
Lamont's budget director, Jeffrey Beckham, described the change as a 'one-time upward adjustment' in the cap.
Since the budget was prepared by Lamont's budget team starting in October, the final product does not list specific contingencies regarding potential budget cuts by the administration of Republican President Donald J. Trump. Lawmakers, however, say that the state could dip into its rainy day fund for fiscal emergencies if the federal cuts in the coming months are deep.
'The last few weeks have been turbulent, and we can only guesstimate how changes in Washington will impact our budget over the next few months and the next few years,' Lamont said at the beginning of his speech. 'Our proposed budget is our best effort to stay true to our Connecticut values while continuing to focus on affordability and opportunity for all.'
Hospitals
Even before Lamont's speech began, the Connecticut Hospital Association was blasting his budget proposal.
'Governor Lamont's budget proposal contains policies that are devastating to hospitals, their workforce, and their patients,' said Jennifer Jackson, the hospital association's chief executive officer. 'These proposals will add significant financial burdens on local hospitals at a time when they are already struggling, making it more difficult for hospitals to meet their mission of caring for communities, improving quality, growing and supporting the healthcare workforce, and investing in innovation to advance care.'
Jackson added, 'The governor's budget increases the taxes paid by hospitals, reduces their reimbursements for providing care, and hurts patients, while doing nothing to address the $1.4 billion annual Medicaid shortfall, increase access, or define a long-term vision for healthcare. We ask Governor Lamont to reconsider these proposals and work with us to build a budget that protects patients, supports care delivery and the healthcare workforce, and plans for Connecticut's future.'
Republicans
Lamont unveiled his budget on the day after Senate Republicans called for tax cuts of $1,000 for middle-class families that would be paid partly by a two-year wage freeze on unionized state employees.
While the amounts would differ by income, Republicans said the average family would receive a cut of about $1,000 from the state income tax and a slight decrease in the current payroll tax of 0.5% that funds the state's paid family and medical leave program that is running a surplus.
Although Democrats said the Republican tax cuts are designed to help millionaires and billionaires, the structure of the Republican proposal blocks income tax cuts for millionaires because they do not pay the 4.5% and 3% rates that are being reduced. Instead, millionaires pay the top rate of 6.99% on all of their income and do not pay the lower blended rates that middle-class workers pay and that are being cut.
The latest numbers from Lamont's budget office show that the top 2.5% of tax filers paid 41% of the state income tax in 2022. At the other end, the bottom 49% of filers — representing essentially half of filers statewide — paid only 2.9% of the income tax.
The latest estimates from state Comptroller Sean Scanlon show there is a projected surplus in the state's general fund of $443 million and a surplus of $159 million in the once-troubled Special Transportation Fund.
Besides the income tax cuts, Republicans want to reduce licensing and filing fees for workers and small businesses. They also want to cap local property tax increases at 2% per year.
Christopher Keating can be reached at ckeating@courant.com
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