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GOVERNOR NED LAMONT

FISCAL YEAR 2024-2025 BIENNIAL BUDGET ADDRESS

Hall of the House of Representatives, State Capitol

February 8, 2023

Building Growth and Opportunity for All

Mr. President, Mr. Speaker, Senator Kelly, Representative Candelora, Lieutenant Governor Bysiewicz, members of the General Assembly, since I last joined you here in the people’s chamber, we lost a champion for Connecticut, Representative Quentin “Q” Williams.

Q fought for a more equal and just Connecticut. Let us all dedicate ourselves to that work.

My primary focus for the next two years, and beyond, will be economic growth and inclusive opportunity. That is what my proposed budget will deliver.

For the first time in over a generation, Connecticut has enjoyed strong economic and population growth – more taxpayers, a growing economy, coupled with our shared fiscal discipline, has resulted in four consecutive balanced budgets – soon to be five.

Building off this momentum, my budget continues to grow the economy through a middle-class tax cut, investments in our young families, education, workforce training, workforce housing, and helping families eliminate medical debt.

We continue to move from rescue to recovery, lifelines to ladders to opportunity. None of this would be possible if not for our collective hard work over the last four years which is the foundation of which our next chapter of growth and opportunity for all.

Now, let's get into the specifics.

One of the smartest actions the General Assembly has taken over the past decade is the enactment of the fiscal guardrails that have provided predictability and stability to our budget process. These fiscal controls have ended the era of wishful budgeting and the so-called permanent fiscal crisis. Together, we have made historic payments towards our unfunded pension liabilities – honoring our commitment to teachers and state employees and saving taxpayers billions of dollars in the future.

Tomorrow, you will have the opportunity to extend the bond covenants and related fiscal controls for another ten years. Every dollar we eliminate from fixed costs are dollars we can use to provide tax relief and additional services to the residents of our state.

These guardrails have contributed to a full rainy-day fund which provides protection in case of the unforeseen risk – whether that be another geo-political disruption, a recession, a pandemic, or a federal government shutdown. Connecticut is well positioned to weather that storm.

While we cannot predict the future, we have the responsibility to be ready for it. This budget builds on the momentum of the last four years – COVID be damned – and we are just getting started.

As a result of our sound fiscal management, today I am formally proposing that for the first time in nearly 30 years, we cut the personal income tax for working families and the middle class.

Currently, we tax families for 3% of their first $20,000 in income and 5% of their income up to $100,000 a year. My proposal will cut the current 5% rate by 10% and 3% rate by a third.

I want a sustainable tax cut that we can support in good times and not so good times. We’ve had a number of false starts, on again off again tax cuts – not this time.

For those families most in need we should go a step further. I am proposing a 31% increase in the earned income tax credit. Increasing this tax credit is one of the most impactful things we can do to target direct relief to more than 200,000 low-income workers who are struggling to provide for their families. Ninety-seven percent of EITC funding goes to families with children.

The EITC is one of the best anti-poverty tools we can use because it encourages work, boosts working families, and uplifts generations to come. It’s about time that we increase it.

Thanks to these two reforms, families earning less than $50,000 a year will pay no state income tax. Families earning less than $60,000 will receive a 20% tax cut. Less than $150,000, a 6.5% tax cut worth $500.

The combined savings for taxpayers for these two proposals is nearly $500 million per year.

While keeping more of what you earn helps, some people still cannot afford to get back to work. Affordable daycare is a precondition to young families being able to get back to work and giving their kids the very best head start in life.

Our commitment to daycare in this fiscal year kept more of our centers open, provided up to $70 million in wage support payments for childcare workers, and $25 million to subsidize 1,300 additional slots for infants and toddlers.

Our proposed budget increases childcare rates in the state’s largest childcare program – Care 4 Kids – by 10% a year for each year of the biennium.

Today, I am announcing that Commissioner Beth Bye will be convening a blue-ribbon panel including employers, providers, and families to focus on designing the next generation of childcare, with incentives for the business community to provide more on-site support and to ensure the childcare system works for all stakeholders.

Our proposed budget incentivizes employers to help their employees with childcare. I’m proposing to provide employers with a corporate tax credit of 25% of the cost of any childcare cost subsidies they provide to employees.

Our budget increases ECS by $135 million, in addition to the $720 million in federal resources still to be invested in education over the next two years. Recruiting and retaining the best teachers in the world builds on our strengths as one the first states to get our schools open – ranked some of the best schools in the country.

As we allocate the federal resources, Commissioner Charlene Russell-Tucker wants our superintendents to prioritize teacher recruitment, including recruitment from our historically Black colleges and the University of Puerto Rico. The most important education reform is a great teacher in the classroom.

Our budget allocates an additional $10 million for flexible grants that will help districts address staffing shortages. This is funding that districts can spend on programs like supporting apprentice teachers and accelerating the pipeline for the next generation of teachers. Earn while you learn and earn while you teach.

Too many of our kids are absent from school. My budget includes $7 million for the LEAP program – counselors knocking on doors to get our kids back in the classroom.

And tomorrow, you will have the chance to vote to provide students another important reason to come to school – universal free lunch for the rest of this academic year. That means better performing students and one less expense for middle-class families to worry about while inflation is still high.

The good news is that Connecticut still has a strong economy with almost 100,000 unfilled jobs. Our budget rewards employers who provide on-the-job training and expands the Office of Workforce Strategy to provide training to fill those jobs. A high-paying job in less than six months of training – that’s a pay raise for you, a stronger economy for all of us.

We will continue to develop short-term certificate training programs working with employers large and small – as well as the trades – to train the next generation of workers. Some of the major workforce industries of focus include manufacturing, healthcare, information technology, transportation, green jobs, and life sciences.

These are good paying jobs just waiting for you.

We are continuing to speed up certification for teachers and nurses and other in-demand professions, allowing them to get to work faster with less outstanding debt.

This budget will continue the 50% credit for Connecticut employers to help in-state graduates retire their student loan debt. This is one more reason for graduates to stay in Connecticut and for employers to hire in Connecticut.

Millions of dollars for workforce training will go to naught if we don’t have enough housing where workers can afford to live.

For the first time in a very long time, more and more young families are moving to Connecticut. Last year we built more market rate and affordable housing than any time this century, yet we are still desperately short of housing. Having just climbed out of a fiscal crisis, I don't want to fall into a housing crisis.

In addition to increasing investments in affordable housing, our budget proposes an additional $200 million for workforce housing, which will allow the state to provide more housing options for you and more financing options for developers, allowing them to build much more quickly.

We project increasing the number of new housing units built in Connecticut by 6,400 units over the biennium. Time is money and the housing trust fund will allow developers to move quickly, with an emphasis on multi-unit housing in downtown areas close to transportation.

I will also urge mayors and first selectmen to develop and act on a plan of their own where they will allow more housing in their community through friendlier zoning and expedited approvals. Towns may submit their plans to facilitate housing on their terms. Doing nothing is not an acceptable strategy.

More workforce housing in our downtown areas will energize our cities, most of which, by the way, are much smaller in population today than they were 50 years ago. They have room to grow.

The income and wealth disparity in our country has gotten worse over the last generation. Increasing minimum wage, debt-free community college, and no-cost workforce training that allows you to get a higher paying job in less time will all help address income disparities.

The key to building wealth for yourself and your children is ownership – owning your home and perhaps even owning your business. Not only does our budget provide for more housing options, we have increased our commitment to the Time-to-Own program to $50 million each year.

Time-to-Own assists low and moderate-income families with down payment and closing costs. Let’s say you have your eye on a $300,000 home which requires a 10% down payment; your new job will allow you to save $15,000 over time to pay for half of the down payment, and our Time-to-Own program will provide a forgivable loan for the other $15,000. Bingo, you just bought your first home.

Your new job may provide the insights and experience to start your own business. Our budget builds on $275 million in funding for small business across the state, with a special focus on those in low-income and historically underserved communities. Through the $150 million Boost Fund, more than 100 investments have been made to date, primarily to women and minority-owned businesses. To build long term wealth and stability, ownership of your home and even your own business are the building blocks to success – for every zip code in our state.

Not more taxes, more taxpayers – homeowners, business owners, this will allow you to build wealth, and a growing grand list reduces property taxes for all.

Housing will complement our major transportation hubs with over $800 million in additional federal support to strengthen and speed up our aging transportation system. Garrett Eucalitto, our commissioner of Transportation, and Mark Boughton, our infrastructure czar, are working with the transportation committee, mayors, our local councils of government to lay out a future transportation system that’s financially and environmentally sustainable, accessible for everyone who needs it, and above all – safe.

We have clear goals over the next ten years. We will reduce travel time from New Haven to New York City by over 20 minutes; run MetroNorth trains directly to Penn Station. You will see new and improved cars on the Hartford Line, and Metro North will have improved 5G connectivity – now the train can double as your high-speed office.

Investments in our rail service are already reaping dividends. The nearly 50% increase in rail service between Waterbury and Bridgeport is fueling 500 units of new housing.

And we haven’t forgotten about the roads. Our major roads and highways were designed 70 years ago for much less traffic, but our Department of Transportation has targeted the worst bottle necks and have a plan to make improvements. Extended on and off-ramps will reduce crashes and limit congestion, and more advanced traffic signals will speed up your commute to work, and more importantly your drive home.

If we want to keep our fiscal house in order, we need to remember there is no such thing as a free bridge, and new federal resources continue to require that Connecticut provide 20% to 50% local match, so we must be thoughtful about keeping our transportation fund solvent to take advantage of the next opportunity.

We have already begun reconstruction of the Gold Star Bridge between New London and Groton. Connecticut was one of only four states to receive an incredibly competitive $158 million Bridge Investment Grant – and we don’t plan to stop there.

Connecticut is also making a $55 million down payment on state electric vehicles and charging stations, which will speed our move to an all-electric, carbon free transportation future.

As we move away from fossil fuels, we must make sure that we have the necessary electric generating capacity, making us less dependent on foreign supply chains and giving us more control over our own future.

We have already doubled down on Connecticut’s own Millstone Nuclear Power Plant – always on and carbon free – with a below market, fixed-price contract extending through the end of this decade.

Our big investment in wind power should turn on over the next few years, again adding capacity at a fixed price.

Finally, Commissioner Katie Dykes has led our New England states in pushing for electric transmission lines between Quebec hydro and our New England grid. Hydro will be another very cost-effective leg of the energy stool, with Connecticut well positioned to have reliable electric generating capacity for the foreseeable future.

Tomorrow, I’m going to Washington, DC and will be meeting with New England governors for a meeting on regional energy strategy. Working together as a region, we will improve reliability and drive down costs.

We will maintain our energy efficiency fund, investing $200 million annually, which allows families living in older homes to greatly reduce their electric and heating use, saving money and reducing our carbon emissions.

While our electric prices are too high, our cost per home is about the same as Texas, which has lower prices but less efficient homes that drink more electricity per square foot. Efficiency works.

Beyond energy and housing, we must do more to make our state more affordable. Deidre Gifford is leading our healthcare cabinet as we try to tame the high cost of healthcare, which impacts families, businesses, and our state budget alike. Our Office of Healthcare Strategy is taking the lead as we set up our benchmarking price evaluator, where you can access the best healthcare by quality and at the best value, reducing costs to you.

We are using cash incentives to lead state employees to designated medical centers of excellence, and we will be rolling out a discount card which makes sure consumers can access the best price for prescriptions at their local pharmacy.

We have added $34 million to reflect additional enrollment in Covered Connecticut – our zero cost, Medicaid-like coverage initiative.

Record high numbers of Americans have put off care due to high co-pays and deductibles. My proposed budget includes a plan to use $20 million in federal funding to cancel an estimated $2 billion in medical debts for tens of thousands of Connecticut residents who are struggling to pay down their debt. You get out of the hospital feeling better, then that big hospital bill makes you sick all over again.

This initiative will not only help Connecticut residents who are saddled with debt, but it also lifts the significant emotional toll that this type of debt has on individuals who do not have the means to get out from under such crushing debt, especially for those who are still experiencing significant medical problems.

Medical debt is the leading cause of bankruptcy, and it hangs like a dark cloud as you try to get your health and bank account back in shape. The ultimate solution to this problem is affordable access to quality healthcare for everybody. We must drive down the unsustainably high costs of medical care so consumers never again accumulate such debt. I am calling on all parties, including insurers, employers, hospitals, and pharmaceutical companies to step up and be part of the solution.

As we have for four years in a row, I have proposed to you a budget for fiscal ’24 and ’25 that is in balance, honors the fiscal guard rails established in 2017, and makes the biggest investment in childcare, education, workforce, and transportation in our state’s history.

Some of you may say, “Ok gov, this is a good start but we have not gone far enough.” For those of you, over here, who may want additional spending, or over here, who may want a much bigger tax cut, fine. But, tell me how you want to pay for it. The fiscal year ‘24 budget is tight. Fiscal ‘25 may have more flexibility if the economy holds up, so let’s talk.

This is a budget that is built to expand growth and opportunity for all of our residents, anchored by a middle-class tax cut, keeping faith with and expanding assistance for those most in need.

This is my budget, and within it, our values. Each and every one aimed squarely at economic growth and inclusive opportunity.

God bless the great State of Connecticut.

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