Gov. Ned Lamont is expected to avoid “broad-based” tax increases and use some anticipated funding from the federal government to close deficits in the two-year budget proposal he will release Wednesday.
As a result of the ongoing pandemic, Lamont will forgo the traditional in-person budget address to a joint session of the legislature. Instead, lawmakers will watch a pre-recorded speech from the governor at noon.
The governor’s second two-year budget proposal will need to close deficits of more than $1 billion in each of the next two years. The task will be somewhat easier given the state rainy day fund has exceeded $3 billion and budget shortfalls have shrunk amidst a high-performing stock market and better-than-expected tax returns.
Lamont’s proposal is the first step in a long budget-drafting process that will stretch until late spring. The legislature will receive the proposal and go to work crafting its own two-year plan. Some lawmakers within Lamont’s party have worried the Democratic governor will introduce a stingy plan that fails to spend enough money to help the state claw its way back from the pandemic.
Following a Tuesday briefing on the governor’s proposal, House Speaker Matt Ritter said the state budget needed to include adequate funding for issues raised by the pandemic. He pointed to health care, education, town aid, and social services.
“Nobody’s supporting an austerity budget. We have a responsibility to look at the impacts of COVID both in the previous year and going forward,” Ritter said.
Lamont has ruled out large-scale tax increases. He dismissed a proposal from Senate President Martin Looney to enact a statewide tax on houses valued at over $430,000. The governor is expected to propose some revenue ideas to support the state’s soon-to-be insolvent transportation fund, but highway tolls will not be on the agenda.
In recent months, Lamont has reassured municipalities that the state would not cut funding to towns and cities especially with regards to education cost sharing grants.
“We’re going to absolutely honor the ECS formula the legislature put in place now a few years ago which does increase the amount of funding that goes to those most distressed schools over a period of time,” he said Monday. In addition to holding the line on state funding, Lamont said school districts were getting hundreds of millions in federal CARES Act funding.
Federal funding will play a larger role in this year’s budgeting process and the potential for another COVID relief package from Congress remains a significant unknown as the state prepares a plan for the coming biennium. Lamont is expected to rely on that expected funding from the federal government to keep promises to towns and cities.
“Some initiatives may involve anticipated federal funding to make them happen in terms of education and municipal aid and things of that nature,” Looney said Tuesday.
Both Ritter and Looney said it was difficult to predict how the budget drafted by the legislature may differ from the one Lamont proposes Wednesday. Between the possibility of additional federal funds and tax revenue estimates the state will not have until April, the budget picture could swing dramatically in the months before lawmakers arrive at their own plan.
“Anybody who thinks they know where this is going to head doesn’t,” Ritter said. “Those two things are perhaps the single two most important things to determine how we’re going to adopt a budget and we don’t have the answers yet.”
Looking at the broad strokes of the governor’s plan, Ritter said he expected there to be areas of agreement and points of friction. “That’s very common for a governor and a General Assembly no matter who’s in charge,” he said.
Lamont’s proposal to the legislature is likely to include two potential sources of new revenue: recreational use of marijuana as well legalized online sports betting. There is an element of uncertainty to both concepts.
The effort to legalize recreational cannabis faces a tight vote in the state’s Democrat-controlled legislature. In the past, Ritter has given the proposal 50-50 odds of passing this year. Asked about it Tuesday, the speaker said he was worried there were too many competing proposals on the concept.
“The easiest way to kill a bill is to have a hundred different bills. I’m getting nervous about that,” he said. “We need to begin to fine-tune it and start getting people together around a consensus package here.”
The expanded gambling proposal depends largely on the result of ongoing negotiations between the Lamont administration and the two federally-recognized tribes who run Mohegan Sun and Foxwoods resort casinos. The tribes insist they have exclusive rights to operate legalized sports betting as a result of their compact with the state on casino gambling. Other parties, like off-track-betting operator Sportech and the Connecticut Lottery, say they have a right to participate.
Two weeks ago, Lamont and representatives of the tribes said they were confident a deal could be reached this year.