Gov. Ned Lamont used a Thursday morning address to the Connecticut Business and Industry Association’s annual economic summit to preview a budget package he will propose next month that will recommend adherence to fiscal guardrails and minimal changes.
The governor sketched the outline of his budget plans for state business leaders, who crowded a conference room at the Hartford Marriott Downtown. Lamont will present his adjustments to last year’s two-year state budget in a speech before the legislature next month.
“My general gist will be, ‘let’s stick to what we said we were going to do nine months ago,’” Lamont said. “We have a pretty good budget. We did this together. We set in place the guardrails, we voted on that almost unanimously. Let’s keep to what we said we were going to do.”
The budget, adopted on bipartisan votes last year, included around $460 million in tax reductions, including the first reductions in state income tax rates in decades.
Policymakers also extended for five years a set of fiscal constraints, including spending and volatility caps, which are widely credited with helping to generate a series of budget surpluses and around $8 billion in additional payments on Connecticut’s unfunded pension liabilities.
The governor touted those payments during his remarks Thursday, saying the additional funding improved Connecticut’s previous standing as one of the worst-supported pension funds in the country.
“We still have a long way to go. Let’s face it, we’re still in the bottom 15% but that’s a lot better than where we were before,” Lamont said. “I like that momentum.”
Lamont’s cautious approach and his defense of the fiscal guardrails were received by a sympathetic audience at the CBIA economic forum. Business leaders stressed the importance of maintaining constraints on state spending during the event.
Chris DiPentima, the association’s president and CEO, named preserving the guardrails as the business group’s top priority for the coming legislative session.
“We will continue to vigorously advocate for those guardrails this year,” DiPentima said, crediting the constraints with putting the state on solid fiscal footing. “[The extension of the guardrails] gives Connecticut a viable, sustainable path for making investments while paying down our unfunded liabilities.”
The fiscal constraints — or Lamont’s strict interpretation of them — are not without critics, however. Some lawmakers have argued that policymakers should have more flexibility in how the constraints are implemented, potentially moving types of appropriations, like municipal aid, out from under the spending cap.
Meanwhile, advocacy groups have criticized the fiscal guardrails as preventing Connecticut from investing in long-neglected needs during a period of surpluses and flush budget reserves.
In a statement Thursday, Norma Martinez-HoSang, director of Connecticut For All, a labor-backed coalition of community groups, criticized Lamont’s strict adherence to the constraints.
“Governor Lamont is adhering to these guardrails in an unbalanced way that is preventing us from making the investments we need to create an equitable Connecticut that works for everyone – not just the ultra wealthy,” she said. “Residents across our state are beginning to feel the impacts of these rigid guardrails now, and it will only get worse.”
There will likely be countless causes and interests vying for additional funding in the coming session and lawmakers will have very little latitude to approve more state spending.
Last week, prior to the release of the most recent revenue figures, Sen. Cathy Osten, a Sprague Democrat who co-chairs the legislature’s Appropriations Committee, said the state budget was running over the spending cap by around $30 million, which she hoped could be mitigated by lapses and unfilled positions at certain state agencies.
Meanwhile, community nonprofit providers have asked for additional funding to support a 5% increase in pay meant to retain or attract staff. Lawmakers are also expected to seek additional funds to support higher education and child care.
The governor stressed the importance of improving access to affordable housing in his address to business leaders, but said the state’s investment would adhere to the $800 million approved in last year’s budget.
The budget left little room to increase spending, he said.
“I’ve got a tight budget. My tight budget is in the black, unlike some of the other states I’ve mentioned,” Lamont told reporters after the event. “They’re talking about cuts. I’m talking about, ‘steady as she goes.’”
