The state comptroller and Gov. Ned Lamont presented an optimistic assessment of Connecticut’s finances Thursday, highlighting a budget they expect to withstand a looming recession and recent pension contributions projected to save taxpayers billions in the coming decades.
During a state Capitol press conference, Comptroller Natalie Braswell released the results of a recent analysis by Cavanaugh Macdonald Consulting, which expects extra contributions to state employee and teacher retirement funds to collectively save around $11.5 billion by 2048.
The contributions were required during the past three fiscal years as the state’s Rainy Day Fund has exceeded its $3.1 billion cap. The state expects to make a $3.7 billion contribution for the fiscal year that ended last week. That extra payment follows a $1.6 billion contribution last year and a $61 million payment the year before.
“These efforts are a huge relief to taxpayers in the coming decades and the benefits will start immediately,” Braswell said. “We’re going to free up about $1.2 billion in the next three fiscal years alone for immediate savings at a time when so many Connecticut families are struggling.”
Lamont, who is running for re-election this year, told reporters the state’s flush budgetary reserves will cushion Connecticut from an economic recession, which he expects is on the horizon.
The governor and his budget secretary Jeffrey Beckham said the current state budget had been built on conservative tax revenue estimates making policymakers less likely to require tax hikes or spending cuts in the event of a downturn.
Lamont said election year budgets are often built on more optimistic revenue estimates.
“Usually you would estimate revenues ‘the trees are going to grow to the sky and just keep on growing.’ Then, some time after the election, people are surprised and we have to recalibrate and talk about tax increases or spending cuts,” Lamont said. “I don’t think that’s where the state’s gonna be, even in the face of a recession.”
Beckham said tax revenues would need to take a more dramatic downturn than they did after the 2008 recession in order for the state to need to use its Rainy Day Fund to stay in balance.
“We would have to have revenue projections off by more than $3 billion before we would have any need to resort to the budget reserve fund, which as you heard moments ago is at capacity,” Beckham said.
In a statement issued through a spokesperson, Bob Stefanowski, a Madison Republican running for governor, said much of the state’s recent fiscal success could be attributable to federal aid.
“When you get six billion dollars from the federal government it’s pretty easy to balance your budget,” Stefanowski said. “But when I go around the state I hear from people who are making decisions about whether to put gas in their car, food on their table, buy their medicines or pay their utility bills. The Governor’s election year gimmicks aren’t cutting it.”
Lamont and legislative Democrats adopted around $650 million in temporary and permanent tax relief in the budget adjustment package passed this year. Among those policies was a proposal by the governor designed to reduce property taxes on vehicles by capping the mill rate at 32.46, reducing the car taxes in 75 towns and reimbursing municipalities for the lost revenue.
Stefanowski said those savings did not materialize for many Connecticut residents.
“People’s car tax bills came this week and their bills went up, and his answer is to blame Mayors and First Selectmen,” Stefanowski said. “Governor Lamont needs to take responsibility and do something to help people.”
Asked about rising car taxes in some towns, Lamont did point to local tax policies. Although the value of used cars has risen substantially, many towns have not reduced their mill rates to offset the increase, he said.
“[Some of the tax relief] is $100 million in 70 towns that have high mill rates so that their car taxes are reduced. Some people’s cars doubled in value so they’re going to still see an increase in a minority of cases,” Lamont said. “I’d like to get rid of this car tax but in the meantime, we’re making it a lot more palatable for more people.”