Governor Lamont Unveils 2023 Midterm Budget Proposal

Flush with billions of dollars in federal relief funding and a swelling budget surplus, CT Governor Ned Lamont today unveiled a proposed $24.2 billion midterm budget for FY23 that increases spending by 2.4% over the FY23 budget adopted last year.   The budget proposal is $5.6 million below the Constitutional spending cap and has a built-in surplus of $296.4 million.

The plan provides a little something for everyone—easy to do when you are playing with house money, as one lawmaker remarked.

Lamont, who is up for re-election along with all 187 state lawmakers, is proposing $336 million worth of tax relief and $556 million in new General Fund spending on mental health, crime prevention, and workforce development initiatives, among others.  His plan also makes generous use of federal relief funding for new expenditures.

Revenues

The centerpiece of the Democratic governor’s tax plan involves the municipal property tax, which generates more revenue than any state or other local tax.  The Governor’s plan calls for:

1. Accelerating full eligibility for property tax credit by one year (currently scheduled to take effect in FY 2024) and expand the benefit from $200 to $300;
2. Accelerating the exemption for pension and annuity income to income year 2022 from 2025;
3. Expanding the employer tax credit for those assisting with CHESLA student loans to include all CHESLA loans.  Currently, this benefit only applies to refinanced CHESLA loans; and
4. Lowering the current property tax cap on vehicles from 45 mills to 29 mills.  This would cover passenger, commercial and combination vehicles and could affect 103 towns.

Spending

Lamont’s midterm budget blueprint proposes using some $1 billion in federal relief funding to finance key new investment in the following areas, among others:

1. Adult/pediatric mobile crisis intervention and alternatives to inpatient care, including new child psychiatric beds ($160 million).
2. Broadband and technology, covering charter schools, towns, libraries, low-income and mult-family residences, and commuter trains ($100.4 million).
3. Workforce development, covering health care, high-growth careers, federal infrastructure projects, and the CareerConnect initiative administered by the Office of Workforce Strategy ($87.4 million).
4. Early childhood, K-12, and Higher Education ($402.5 million).
5. Health and human services, including support for workforce stability; caregivers; community engagement initiatives for the intellectually and developmentally disabled; Covid-19 response ($503 million).
6. Economic development, including support for the Innovation Corridor; extension of the free-admission program for popular venues offered last summer; additional support for parks and other outdoor spaces ($104 million).
7. Affordable housing ($50 million).

Crime

Republicans have been beating the drum for criminal justice reforms in the wake of an uptick in car thefts and shootings.   The Governor’s package calls for spending $72.5 million, primarily using federal funding, to add more state and local police; eliminate court backlogs; provide support for crime victims; and re-establish a task force to track down the sources of confiscated, illegal weapons.

With the start of session and the budget address now behind us, budget negotiations between the Legislature and the Lamont administration begin in earnest, starting with public hearings before the Appropriations Committee, which will provide a more in-depth analysis of the proposed blueprint.  The Governor’s midterm proposal will serve as a baseline for these budget negotiations.  The ball is now in the Legislature’s court.  We will keep apprised of budget and other legislative developments as committee meetings and public hearings get underway.