Connecticut policymakers from both sides of the political aisle gathered at the state Capitol Monday afternoon to watch Gov. Ned Lamont sign a two-year state budget including broad income tax cuts into law following its bipartisan approval by the legislature.
The governor put his signature on the $51.1 billion tax and spending plan during an afternoon ceremony surrounded by legislators. The budget passed with strong bipartisan support in the House and Senate last week during the final days of the legislative session.
The 832-page document will fund state government and services for a two-year period beginning next month and includes the first cuts to Connecticut’s marginal income tax rates since the 1990s.
“I think it makes a difference in this inflationary environment,” Lamont said after the ceremony. “It sends a signal, especially to working families and the middle class. This is a state that’s on the mend, getting our fiscal house in order and you’re going to share the benefits of it.”
The cuts are aimed at middle-class filers making less than $150,000 and joint filers making under $300,000. The budget will reduce the current 3% rate to 2% while dropping the 5% rate to 4.5%. Other tax policies in the plan include a more flexible tax credit for retirees and increases in the Earned Income Tax Credit for low-earning working families.
The spending package will also support large increases in funding for local school districts, which will receive around $150 million more than previously scheduled increases. Senate President Martin Looney called it a “significant infusion of new money.”
“We recognized a need — a post-pandemic need there is even greater than it was,” Looney said. “Those problems have been pointed out to us with kids returning to school, having their education disrupted.”
The budget strictly adheres to spending constraints that have been in place since 2017 and which many policymakers credit with helping Connecticut amass billions in budget surpluses over the last several years.
House Minority Leader Vincent Candelora and Rep. Holly Cheeseman, R-East Lyme, were among the legislators to attend Monday’s event. They said this year’s budget negotiations were a collaborative process.
“This document does reflect collaboration and input from the Republican Party,” Candelora said and thanked the governor. “It certainly is a continuation of the spirit of those fiscal restraints that we put in place to be able to now extend tax relief to our residents.”
Although the plan received overwhelming support in the legislature, it received a mixed reaction outside the state Capitol.
Advocates of many causes argued it failed to adequately fund programs and services in a number of areas including to a network of nonprofit organizations that provide social safety net services once offered by state government. The budget also included less money than administrators of Connecticut’s public higher education institutions have said they needed in order to avoid drastic cuts.
Progressive groups like Recovery For All and the Working Families Party denounced the budget last week for its adherence to fiscal constraints over additional support for state residents.
“Our state deserves more than some small tax cuts and yet another austerity budget,” Sarah Ganong, state director of the Working Families Party, said. “We deserve an equity agenda and a moral budget that brings everyone to the table and has working families at its center.”
The Connecticut Business and Industry Associations, meanwhile, applauded the budget guardrails while arguing state policymakers missed an opportunity to provide more assistance for the state’s small businesses.
“Those hard-won bipartisan reforms provided long-needed stability and a platform to cut taxes and invest in childcare, education, and workforce development,” Chris DiPentima, president and CEO of the association, said.
On Monday, proponents of the budget focused on its sustainability and its iterative progress on policies advanced during the last few budget cycles.
“When you add up three years and four years of stability and successes without rolling back the investments that we made, that’s how you get a really good product,” House Speaker Matt Ritter said.