
HARTFORD, CT — Gov. Dannel P. Malloy reminded lawmakers Monday that at least one Wall Street credit rating agency captured the “sobering and credible view” of the budget challenges Connecticut faces.
The report published on April 5 spelled out how Connecticut will have to resolve its budget deficit at a time when the economy is weak and its fixed costs are high.
Marcia Van Wagner, a Moody’s vice president and senior credit officer, said Connecticut’s fixed costs command roughly 30 percent of the state’s $18.9 billion in revenues, which is the highest percentage in all 50 states.
Malloy warned that if the bond rating is lowered it will make closing a two-year $3.6 billion budget deficit that much harder.
“Moody’s affirms that addressing the state’s fiscal challenges through responsible and recurring changes — rather than significant revenue increases or one-time budget gimmicks — is the right and necessary path for our state,” Malloy wrote in his letter.
Van Wagner said the state’s economy has entered a “new normal” of slow job growth and income growth. The state’s finance sector has shed 11 percent of its jobs since 2007 and Connecticut was one of only four states to lose population annually since 2013.
Connecticut is losing about 575 residents per week to other states, according to 2016 U.S. Census data. Between July 1, 2015, and July 1, 2016, Connecticut’s total resident population fell by 8,278 people.
To address fiscal sustainability, according to Moody’s, Malloy has proposed an executive budget featuring extensive structural changes that would shift and reorder state aid to local governments and demand significant cost savings from collective bargaining agreements for state employees.

A program of this magnitude would cut $1.36 billion from the budget in fiscal 2018 as the budget pegs labor savings at $700 million, which could consist of a wage freeze and benefit changes.
Van Wagner concluded that structural changes will improve the state’s finances but could impact the credit rating of municipalities who are being asked to take on more responsibility by paying for one-third of the Teacher’s Retirement System. Malloy’s budget proposal would reduce state aid on net to about 130 out of 169 towns in the state, with varying degrees of credit impact, Van Wagner said.
House Majority Leader Matt Ritter, D-Hartford, thanked Malloy for the letter.
“We all understand our reality,” Ritter said. “But there’s nothing wrong with reminding people about the seriousness of the situation.”
However, Senate Republican President Len Fasano, R-North Haven, said every time Republicans mention these issues they’re somehow “rooting for failure” and all hope of a serious discussion is dismissed.
Malloy in his letter to legislative leaders also reminded them that revenue increases at this time are not the answer. Malloy, who approved the two largest tax increases in the state’s history, has not ruled out revenue. But he has been adamant that it’s not where he plans to start.
Malloy’s budget would increase taxes on lower and middle income residents because it eliminates the $200 property tax credit that can be claimed by those making under $100,000 a year.
It also reduces the Earned Income Tax Credit claimed by the working poor, who don’t pay income taxes, but generally pay more in sales and other taxes. The co-chairs have discussed broadening the sales tax, but have not discussed possible increases in the income tax for Connecticut’s wealthiest residents.
Support authentic, locally owned and operated public service journalism!
Legislative leaders have left it up to the co-chairs of the Finance, Revenue, and Bonding Committee to decide whether to increase taxes.
Ritter said the Democratic caucus is very aware of the state’s fiscal situation and are thinking about it every day.
“We all remind each other of our priorities,” he said.
Those priorities will begin to emerge at the end of April when the legislature’s two budget writing committees propose their own budget in response to the one Malloy unveiled in February.
More State Budget news

Lamont Signs The Budget
Alongside Democratic legislative leaders, Gov. Ned Lamont signed the $24 billion budget adjustment Monday that includes $600 million in tax relief. That’s more than they anticipated they would be able to offer Connecticut residents this Election year because revenue came in higher than expected, but it still creates about an $800 million deficit in 2024. …
Keep reading
ANALYSIS | It’s A Wrap: The Winners and Losers of the 2022 Session
It was a short legislative session, but the House and the Senate were able to move a lot of business this year, including the passage of a $24-billion budget with around $600 million in tax cuts.
Keep reading
Connecticut Acts To Help Its Lead-Poisoned Children
After decades of inertia, Connecticut is finally moving to help its thousands of lead-poisoned children and prevent thousands of other young children from being damaged by the widespread neurotoxin.
Keep reading
Bill Bolstering Contracting Oversight Board In Jeopardy After Lamont Administration Raises Concerns
It passed unanimously in the Senate, but a bill that would give the State Contracting Standards Board greater oversight over state contracting appeared stalled in the House Wednesday on the last day of session. “The governor and I have not talked about the bill,” House Speaker Matt Ritter said. “The commissioners have sent us a…
Keep reading
Senate Approves Tax Cuts, Sends $24B Budget to the Governor
The state Senate gave final approval late Tuesday to a $24 billion election year budget plan that includes around $600 million in tax relief while enabling the state to make an $3.5 billion payment on its unfunded pension debt. Senators voted 24-12 at around 10:30 p.m. to send the midterm budget adjustment to the desk…
Keep reading
House Green-Lights $24B Budget
On a party-line vote early Tuesday, the House passed a $24 billion budget adjustment package containing more than $600 million in tax cuts which Democrats heralded as “historic” and Republicans derided as temporary. Lawmakers voted 95 – 52 at around 12:20 a.m. to send the 673-page budget document to the Senate for consideration before the…
Keep reading
Budget Materials
The General Assembly is preparing to debate adjustments to the $24 billion state budget. Below are a few of the documents we’ve been provided as back-up materials. The budget, HB 5506. Town runs. Car tax impact on municipalities. Finance Committee Power Point.
Keep reading
Lawmakers May Vote for First Pay Increase in 20 Years
With legislative retirements mounting, lawmakers on both sides of the aisle were considering Monday raising the salaries of General Assembly members for the first time in more than two decades and indexing their pay in the future. During a morning press briefing, House Speaker Matt Ritter told reporters that funding for pay raises had been…
Keep reading
Amid Surging Revenue, House Prepares to Vote on Budget Adjustments
Connecticut’s House of Representatives was expected to vote Monday on a $24 billion budget adjustment package, buoyed by revised revenue predictions that exceeded expectations by more than $350 million. The revised consensus figures released Monday confirm the surge in revenues that enabled Gov. Ned Lamont and legislative Democrats to reach an agreement last week on…
Keep reading
Dems Detail Budget Deal With $500 Mil in Tax Cuts, Extension of Gas Tax Holiday
Legislative Democrats and Gov. Ned Lamont’s administration announced Wednesday the details of a $24.2 billion budget adjustment package, which they say provides around $500 million in tax relief including extending a gas tax holiday until December. Lamont and legislative leaders outlined the agreement during an afternoon press conference in the state Capitol building. Both chambers…
Keep reading
Health Care Workers Call for New Hires
After a record number of health care workers are expected to retire this year, health care staff called on Gov. Ned Lamont to commit to filling 1,000 vacant positions by August 1 of this year. A record 1,137 state workers who notified the state that they will retire this year comes at a moment of…
Keep reading
Senate Joins House And Votes To Give Raises, Bonuses To State Employees
The Senate gave final approval by a 22-13 vote on a plan to give unionized state workers a set of raises and bonuses. The plan, negotiated by Gov. Ned Lamont’s administration and a coalition of public sector labor unions, provides three years of 2.5% raises and step increases as well as a total of $3,500…
Keep reading
House Advances Labor Deal In Historic Vote
Lawmakers in Connecticut’s House of Representatives signed off on a plan to give state workers a set of raises and bonuses Thursday in a mostly partisan vote on a negotiated labor agreement. The House voted 96 to 52 in support of the deal with 1 Republican, Rep. Tom Delnicki of South Windsor, joining all Democrats…
Keep reading
Republicans Propose Last-Minute Tax Package
Legislative Republicans pitched a $1.2 billion tax relief plan Thursday which reduces state income, sales and gas taxes and proposes to join other states in suing the federal government to challenge restrictions on spending pandemic relief funds. House and Senate Republicans announced the plan during a state Capitol press conference Thursday morning. It cuts the…
Keep reading
The Budget Battle Begins To Take Shape
Tax collections have improved and pushed Connecticut’s budget surplus to $4 billion, but the state budget still relies heavily on federal funding and without it the state would end up running a “sizeable operating deficit.” The Office of Policy and Management told state Comptroller Natalie Braswell Wednesday that if not for the use of the…
Keep reading
Ritter: Time Is Running Short For Budget Agreement
The legislature will have a difficult time approving a state budget before the end of its session in two weeks if lawmakers and Gov. Ned Lamont do not reach an agreement in the next 48 hours, House Speaker Matt Ritter told reporters Wednesday. During a morning press briefing, Ritter said the legislative schedule was looking…
Keep reading