Gov. Ned Lamont pitched a two-year, $46 billion budget Wednesday that seeks to close a $4 billion deficit over that same time period.
The deficit Lamont seeks to close is larger than the one projected by his own budget office and the legislature’s Office of Fiscal Analysis. Updated revenue numbers won’t be available until April and budget analysts say the pandemic is making it harder to predict what will happen to Connecticut’s economy so they are being conservative in their estimates.
The budget address was pre-recorded due to the COVID-19 pandemic, which Lamont addressed with a combination of the $3 billion Rainy Day Fund and anticipated federal funds from Washington. The budget relies on $1.75 billion in anticipated federal aid over two years and in the absence of more stimulus that state would need to tap into the Rainy Day Fund — that would require a three-fifths vote of the General Assembly.
“COVID-19 continues to throw wild cards into the deck, but the federal government is getting much closer in deciding how it will support our state and local municipalities. Connecticut will have to remain agile in meeting these changing circumstances, but that being said, I would not change our hand with any other state in the country,” Lamont said during his budget address.
“There are no broad-based tax increases nor changes to income or sales tax rates,” Lamont’s budget reads. “The largest single component of these revenue initiatives is the expectation that the Biden Administration and Congress will approve unrestricted aid to states to compensate for the drop-off in revenue related to the pandemic.”
Lamont also looks to add revenues from recreational marijuana and sports betting and iGaming.
Lamont made legalizing marijuana a priority last year , but the session was cut short due to COVID-19. His enthusiasm for the policy hasn’t waned.
Lamont includes about $3.2 million in fiscal year 2022 and $18.9 million in fiscal year 2023 in tax revenue from legal cannabis. Licensing from cannabis will bring in about $4.8 million in 2022 and $2.2 million in 2023.
Sports betting and iGaming is expected to generate about $47.3 million in 2023.
In order to address the deficit in the Special Transportation Fund, which helps pay for road improvements, the state creates a new highway milage-based user fee for tractor trailer trucks. The new fee is expected to raise $90 million. The governor said the new funding would help the state leverage $1 billion in projects in the next five years.
“If the thinking had been, ‘If it ain’t broke, don’t fix it,’ then that thinking needs to change. This is personal. Annie and I went over the Mianus River Bridge down in Greenwich a few hours before it collapsed a generation ago. So I know,” he said.
Joe Sculley, president of the Motor Transport Association of Connecticut, says it’s an awful idea.
“It is disheartening, but not surprising, that Governor Lamont has chosen to once again target the trucking industry to try to cover up the fiscal woes of the transportation fund,” Sculley said. “The workers in an industry that he himself declared ‘essential’ have been among the heroes of the COVID-19 pandemic, bringing vaccines, medications, hospital equipment, and groceries to locations all across the state.”
Lamont scrapped a proposal to install truck-only electronic tolls on highways two years ago when he couldn’t get the legislature to go along with the idea.
But that didn’t slow the growing deficit in the Special Transportation Fund. The reduction in residents gassing up to get to work during the pandemic and an increase in electric vehicles has sped up the pace of the deficit.
The budget expects the passage of legalized recreational marijuana. In his remarks, Lamont pointed to revenues lost to Massachusetts, where the substance is commercially available. Massachusetts-based distributors already advertise in Connecticut, the governor said.
“Rather than surrender this market to out-of-staters, or worse, to the unregulated underground market, our budget provides for the legalization of recreational marijuana,” he said.
Lamont plans for half of additional tax revenues generated by marijuana sales to go toward municipal aid payments. Towns will also have the option of a 3% local excise tax, he said. The proposal also aims to automatically erase marijuana-related drug charges from the records of people with past convictions, he said.
The proposed budget also assumes the governor can reach a deal on legalizing online sports betting with the state’s two federally-recognized tribes who run Mohegan Sun and Foxwoods resort casinos. The Lamont administration has been negotiating with the tribes, who say they have exclusive rights to operate legalized sports betting under their casino gambling compact with the state, while other parties like off-track-betting operator Sportech and the Connecticut Lottery, are seeking to participate.
Lamont said he was submitting a proposal “which reflects what I believe to be the best bet in ending this stalemate of inaction in a way which is in the best interest for the entire state.” The bill only proposes to amend the state’s existing compact with the tribes or create a new one.
As far as education is concerned, Lamont’s budget dedicates $6 million in each year of the biennium for the Pledge to Advance Connecticut (PACT) program to provide last-dollar scholarships to qualifying students. And it creates a Higher Ed Relief Fund of $140 million to help students having trouble affording education during these times.
Lamont will maintain the education funding cities and towns currently receive so municipalities can hold the line on property tax increases.
Lamont is also proposing to raise the reimbursement for charter school students. The budget also includes an additional funding for Danbury and Norwalk that will allow 50 students in each community the opportunity to attend a neighboring district while alleviating overcrowding.