Governor speaking
Gov. Ned Lamont gives the 2023 state-of-the-state address. Credit: Hugh McQuaid / CTNewsJunkie

Gov. Ned Lamont set a light tone for his second term in office during a Wednesday address before a joint session of the legislature that touched on cooperation, economic recovery, and a yet-to-be-detailed middle-class income tax cut.

The governor delivered a nearly 10-minute speech from the House dais shortly after being sworn in during a ceremony at the state armory. Lamont, who turned 69 this week, entered the House as legislators and guests sang “Happy Birthday.”

The mood was light and policy details were sparse. Lamont, fresh off a double digit reelection victory at the polls, spoke of transitioning his focus from navigating the viral pandemic that dominated much of his first term to fostering an economic recovery in its wake.

“Three years later, I still worry like heck about COVID but I worry even more that we will lose the opportunities as a state and as a country to lift families up,” Lamont said. “So the next four years should focus more on recovery and less on rescue. Less need for lifelines and more focus on ladders.”

Gov. Ned Lamont hugs Lt. Gov. Susan Bysiewicz on opening day 2023 (Christine Stuart photo) Credit: Christine Stuart photo

Lamont, who took office four years ago facing $4 billion in projected budget deficits, will now work to craft a budget proposal with surplus of about $1 billion and a Rainy Day Fund of around $2.87 billion. On Wednesday, he attributed that turn around to fiscal guardrails included in a bipartisan budget passed in 2017. 

“Thanks to our collective efforts, the era of Connecticut’s permanent fiscal crisis is over,” Lamont said. “It’s over as long as we maintain the same fiscal discipline that’s served us so well over the last four years.”

That means the governor will look to preserve the volatility and revenue caps that have restricted policymakers from spending and resulted in nearly $5.8 billion in additional payments on Connecticut’s unfunded pension liabilities. 

Although House Speaker Matt Ritter advocated preserving those guardrails earlier in the day, Senate President Martin Looney told reporters that he expected the volatility cap would stay in place while other elements would be argued throughout the session.

“We need to continue to keep the rainy day fund at the level where it is and we also need to continue contributing our pension funds because we have the problem for years and years of neglecting pension funds,” Looney said.

Gov. Ned Lamont gives his 2023 state-of-the-state address (Christine Stuart photo) Credit: Christine Stuart photo

Lamont’s commitment to preserving the fiscal guardrails was welcome news for business leaders. After the speech, Chris DiPentima, president and CEO of the Connecticut Business and Industry Association, said the governor outlined a strong framework for the coming budget. 

“They’ve got to be in place,” DiPentima said of the state’s fiscal restrictions. “If those guardrails go away — like the revenue cap, the bonding cap and the spending cap — we’re not in the fiscal situation like where we are today when we can make some investments.”

During his remarks, the governor reiterated his intent to craft a budget including a middle class income tax cut. In the past, Lamont said he expected the cut would impact families making between $150,000 and $200,000 per year. He offered no such details on Wednesday but will present a budget proposal to the legislature next month. 

“After many years of unfilled promises, now is the time to enact a meaningful middle class tax cut,” Lamont said. “That’s a reduction in tax rates, which the state can afford and makes your life much more affordable.”

Republicans have long sought to pass a cut in the state’s income tax rate and on Wednesday they applauded the proposal.

“I’m grateful that he’s now embracing that policy,” Minority Leader Vincent Candelora said. “It’s not about the amount of taxes that are given out, but we want to see a systemic change that can help a recovery and I think that proposal is one.” 

Democrats meanwhile were supportive of offering additional tax cuts but had yet to settle on a concrete policy for providing that relief. Rep. Maria Horn, a Salisbury Democrat who will co-chair the legislature’s tax-writing committee, said she had spoken with the governor and his administration regarding the income tax cut proposal.

“What it actually means is an open question and I imagine there will be different conceptions of it but I think we both have a commitment to trying to make our system of taxation in Connecticut more progressive than it is. A middle tax cut is part of that,” Horn said. “It’s also related to inflation, honestly, and how you define what middle class is, which is quite different today than it was four years ago.”