Gov. Ned Lamont SOM ’80 unveiled his budget on Wednesday, promising fundamental changes to reboot Connecticut’s floundering economy.
The governor presented his proposed biannual 2020–2021 fiscal year budget before a joint session of the Connecticut General Assembly in a speech that highlighted his success in the private sector and his confidence in his administration’s ability to bring more businesses to Connecticut. The budget, which will begin July 1, includes proposals to restructure the state’s teacher retirement system and the employment retirement system, as well as policies that Democrats in the legislature have called for — including a $15 minimum wage and a paid family and medical leave program.
“Today, I am presenting you a budget which gives us the best chance to get this state growing again,” Lamont said in his address. “I will not allow this budget to be another scene from Groundhog Day, where I come to you year-after-year hat-in-hand lamenting the fact that we still haven’t addressed our structural deficits.”
Lamont proposed to reduce state pension payments by requiring that municipalities take on a greater share of the burden, which would be implemented gradually over a period of three years. Towns that pay above-average salaries would contribute more.
Republicans were quick to denounce the move, calling it unfair to struggling municipalities.
“I am extremely disappointed that Governor Lamont has decided to propose that municipalities cover 25% of teacher’s pension obligations,” said state Sen. Tony Hwang, R-Fairfield, in a statement responding to Lamont’s budget address.
The budget also includes models for two new tolls — one which Lamont supported during his campaign and covers only tractor-trailer trucks, and one which covers all vehicles. The latter model has faced criticism from some Republicans. Lamont, however, has defended the proposal by saying that Connecticut drivers and other frequent drivers would receive significant discounts. Lamont added that 40 percent of drivers on potential toll roads come from out of state and do not pay taxes that contribute to state infrastructure.
The proposed budget projects’ total revenue is to be around $21.2 billion in fiscal year 2020 and around $22 billion in fiscal year 2021, with estimated expenditures for each year roughly equaling revenue. The increase in projected revenue stems largely from Lamont’s proposed changes to the state sales tax, which would end many exemptions without raising the sales tax rate.
University of Connecticut professor Fred Carstensen GRD ’76 noted that the sales tax has deteriorated as a revenue source since 2012 due to the enormous number of exemptions that Connecticut has allowed in the past, costing the state hundreds of millions of dollars annually.
The budget also includes a proposal to raise the minimum wage to $15 per hour, which would affect around one-third of Connecticut workers, according to Lamont’s speech. Of the workers affected, about one-third are women, 40 percent are black and more than half are Hispanic.
Lamont also endorsed a paid family and medical leave program, which would allow workers to take time off without loss of pay when a new baby arrives or when recovering from illness.
State Senate President Pro Tempore Martin Looney, D-New Haven, applauded Lamont for incorporating policies to help working families while still creating a fiscally realistic budget.
“Governor Lamont put forth a responsible budget that addresses our deficit and invests in our economy,” Looney said in a statement responding to Lamont’s address.
According to Connecticut’s Office of Fiscal Analysis, the state is expected to end the fiscal year with a surplus of $487 million in the general fund, a surplus of almost $70 million in the special transportation fund and a deposit of more than $1 billion into the state’s budget reserve fund.
However, Lamont has warned Connecticut residents and legislators not to celebrate too soon. The state’s economy is still struggling in the wake of the 2009 recession: Connecticut was one of only three state economies that shrank in 2018.
As a result, the budget proposes to reduce long-term debt service payments by 40 percent — saving the state around $2 billion over the course of a decade. According to analysis in the budget, around 43 percent of the current capital budget goes to municipal purposes while 37.6 percent goes to transportation and 6.6 percent is classified as “environment and energy.”
Although several Republicans countered some of Lamont’s proposals, several expressed optimism about Lamont’s ability and willingness to work toward a final budget that would please both parties.
“I appreciate Governor Lamont’s genuine and thoughtful approach and I eagerly look forward to being a part of the bipartisan solution that is urgently needed to move our state forward,” Hwang said in his statement.
Lamont called upon members of both parties to come together and voice their concerns about the budget sooner rather than later.
“Let’s try a different type of politics, and let’s not wait until the summer to do it,” he said, referencing the last set of budget negotiations under former Gov. Dannel Malloy, which resulted in a 123-day period without a budget.
However, not everyone is sure that negotiations will be that simple.
Sacred Heart University professor Gary Rose pointed out several potential obstacles to a quick passage for the budget, including the provisions specifying the $15 minimum wage, new tolls and the paid family and medical leave program.
“There are a lot of land mines here,” Rose said.
The complete proposed budget is 282 pages long.
Nathalie Bussemaker | nathalie.bussemaker@yale.edu