State budget analysts predicted Tuesday that Connecticut’s revenue collection will push the budget surplus to a near record-breaking $3.1 billion.
That would give Gov. Ned Lamont and lawmakers an additional $600 million in revenue as they craft a budget for the next two years. Last year before the election Lamont and lawmakers offered $600 million in tax breaks, but they were temporary and scheduled to expire.
Lamont, who entered his second term this month, said he wants to offer middle class families making less than $200,000 a year a break on their income taxes, but he hasn’t offered up any specific details. He’s expected to do that when he unveils his budget proposal next month.
The additional revenue “will allow me to present a budget with a sustainable middle-class tax cut, pay down legacy pension debt, support education, childcare programs, workforce development, new housing, essential social services, and public safety programs, as well as preserve the fiscal guardrails that have been so critical to our recent budget stability,” Lamont said Tuesday.
But there’s also concern that global economic conditions could change and alter the amount of tax collections.
According to the consensus revenue report, revenues are $287 million higher in fiscal years 2023 and 2024 and about $313.5 million higher in 2024 and 2025.
Lamont’s Budget Director Jeffrey Beckham said the numbers will help guide their crafting of the two-year budget.
“It is important to remember there will be another consensus revenue forecast before the end of this legislative session that will include additional data regarding the health of our economy,” Beckham said. “We are closely monitoring global, national, and state economic forces that could positively or negatively impact the final state budget. Now is not the time for new unsustainable spending, but rather continued sound fiscal management.”
Rep. Holly Cheeseman, ranking Republican on the Finance, Revenue and Bonding Committee, said she’s “cautiously optimistic but am concerned that the increased revenue is boosted by historically high state sales tax collections.”
Inflation which is at 6.5% has increased the amount of sales tax the state collects because the cost of goods and services are much higher.
“This windfall of sales tax revenue is driven by the state’s high inflation on goods and services and shines a bright light on the financial burdens Connecticut families face daily.This underscores the need for the legislature to provide tax relief to state residents,” Cheeseman said.