State budget revenues continue to surge by nearly half a billion dollars as lawmakers and Gov. Ned Lamont head into budget negotiations.
The new numbers released last week three days after the May 17 tax filing deadline show that Connecticut is $1.6 billion ahead of where it was just one month ago. And Connecticut’s projected budget surplus for the current year increased sharply to $470 million.
“People are beginning to pay attention,” Lamont said last week during his COVID briefing.
He noted that the Wall Street credit rating agencies have improved Connecticut’s bond rating twice since the spring and the state has amassed a record $3.5 billion in its Rainy Day Fund. It’s projected to reach $4.5 billion with any additional money going to pay down the state’s pension debt.
That’s on top of the $2.8 billion the state will dole out in American Rescue Plan funds.
“I believe we don’t need any new taxes or tax increases,” Lamont said.
Budget negotiations began last week and House Speaker Matt Ritter and Senate President Martin Looney predicted that the increase in revenue would only help them reach a deal with Lamont before the end of the regular legislative session June 9.
However, some Democrats in the legislature continue to push for tax increases and Lamont has continued to oppose them. Democrats want to use the revenue from the tax increase on the wealthy to provide state income tax cuts for low- and middle-income households and more money for urban areas.
But neither side has enough support at the moment to get a budget over the finish line.
The 26 moderate Democrats in the House, who call themselves the Blue Dogs, are standing with Lamont against tax increases.
“With fiscally sound budgeting practices, the state has positioned itself with an unprecedented $3.5B rainy-day fund,” Rep. Lucy Dathan, D-Norwalk, said. “Combining this with a strong revenue outlook for FY21 and the incoming ARP funds, we are able to serve our residents and operate within our current spending cap. Now is not the time to raise taxes.”
Aside from moderate Democrats, Republicans would like a seat at the table, but have not been given one.
“This governor has been holding the line on income tax increases,” House Minority Leader Vincent Candelora said. “The Democrats seem very clear that that’s the direction they want to go, so I think it would probably behoove the governor to bring us in the room.’’