The two-year, $51 billion state budget is heading to Governor Ned Lamont's desk after the Senate and House passed the legislation, which includes a historic cut to the state's personal income tax.
The Senate began debating the bill late Tuesday morning, the penultimate day in a legislative session marked by bipartisan votes on some key bills.
The bill passed the Senate by a vote of 35-1.
The tax-and-spending package passed 139-12 in the Democratic-controlled House early Tuesday after a nearly three-hour debate that started late Monday. House Minority Leader Vincent Candelora, among the majority of Republicans who voted for the package, said he was pleased steps were taken to make Connecticut more affordable at a time when taxpayers are struggling with high inflation.
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“I’m appreciative that this budget recognizes that pain and does incorporate broad-based tax relief for middle and lower-income individuals,” he said during the debate.
First proposed by Democratic Gov. Ned Lamont, the planned tax reduction is predicted to benefit approximately 1 million of the state’s 1.7 million tax filers by permanently lowering marginal rates for the first time since 1996. It’s being billed as the largest reduction since the tax was first implemented in 1991.
“This budget will deliver the largest personal income tax cut in the state’s history,” Lamont said in a written statement issued before the vote. “This is not a temporary tax cut – it is designed to be sustainable for years to come.”
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He urged lawmakers to support the package, which increases spending by about 7.5% over two years. Lamont has previously noted the state’s fiscal health has improved to the point where it can afford to provide permanent tax relief. The plan lowers the 5% marginal income tax rate to 4.5% and the 3% rate to 2% for the income year 2024.
The plan also increases the income tax credit for low-income working families, benefitting about 211,000 filers, and freezes scheduled increases in the state diesel tax.
The two-year tax-and-spending package also boosts state aid for local school districts by an additional $329 million; funds the “baby bonds” program that sets aside up to $3,200 for infants in low-income families; creates a new 30% tax credit for pre- and post-Broadway productions and live theatrical tours; increases funding for ambulance services and child care providers; and expands an anti-gun violence program to more cities.
It also increases pay for inmates; provides funding for striking group home workers; includes funds to reduce a waiting list for residential services for people with developmental disabilities; restores Lamont's planned cuts to Metro-North commuter rail in fiscal year 2025; and includes additional funding for nonprofit social service agencies and state colleges and universities, although advocates contend it’s not enough considering the state’s resources.
Last week, state Comptroller Sean Scanlon projected the current fiscal year, which ends June 30, will end with a $1.6 billion budget surplus, an increase of $16 million from May. The budget deposits $3.3 billion into the state's budget reserve account.
Democratic Rep. Greg Haddad, co-chair of the legislature's higher education committee, said he voted for the bill because it was an improvement over alternative proposals. However, he argued it still falls far short financially, predicting there may ultimately be double-digit tuition increases, program cuts and layoffs. Haddad also criticized the budget for using one-time revenues to cover costs at the state schools.
“It's like we've found the potholes in the road and we've filled them with snow and spring is coming,” he said.
There are also concerns about whether there's enough money for the state’s new early voting program, which is expected to affect general elections, primaries and special elections held on or after Jan. 1, 2024. And advocates for low-wage workers argued that Lamont's “dogmatic insistence on a rigid implementation of Connecticut's spending cap” means only “small steps” are being made to meet the needs of the vast majority of residents.
“Indeed, in some cases it actually moves backwards - leaving critical programs closed due to understaffing, threatening layoffs, service cuts, and tuition freezes in public higher education,” according to a statement from the Recovery for All coalition.
The new budget, expected to be signed into law by Lamont, would take effect on July 1.
