State Budget Facts and Numbers

Bipartisan $51.1 Billion Budget Highlights

Source:  Office of Governor Ned Lamont

Governor Ned Lamont is commending the overwhelming majority of bipartisan lawmakers in the Connecticut General Assembly who voted to approve a biennial state budget for fiscal years 2024 and 2025 that includes the largest cut to the state’s income tax rates in Connecticut history and increases to the Earned Income Tax Credit for low-income working individuals and families, while also providing significant increases in funding for K-12 education, child care programs, affordable housing units, and nonprofit providers.

The budget bill – House Bill 6941 – passed the House of Representatives on a vote of 139-12 and it passed the Senate on a vote of 35-1. Now that both chambers of the General Assembly have approved the bill, it will soon be transmitted to the governor’s desk and he will sign it into law.

“We are delivering the largest cut to Connecticut’s income tax rates in state history,” Lamont said in a statement Tuesday late afternoon. “We are able to do this as a result of the fiscal discipline that we implemented over the last several years that turned around what some once labeled a permanent fiscal crisis and has ended years of instability and deficits. The fiscally responsible policies that we enacted over these last few years were done with the goal of getting us to where we are today. I feel very good knowing that here in Connecticut we can successfully work across the aisle in a bipartisan manner to do what is right for the residents of our state. I thank the leaders of both parties for working with my administration to get this biennial budget approved, and I applaud all of the lawmakers who saw to it to vote in its favor and send it to my desk.”

The budget calls for $25.1 billion in state spending in the first year, and $26 billion in the second year.

Middle-class residents will be the beneficiaries of the tax relief, which in some cases will see taxes cut by nearly 50% for single filers, and an even higher percentage for some joint filers. (See the tables below on how much you may save).

“The broad-based middle-class tax relief included in this budget agreement is the direct result of the fiscal guardrails that have transformed our fiscal outlook over the last five years and that were extended earlier this session unanimously,” said Office of Policy and Management Secretary Jeffrey Beckham. “Governor Lamont has been clear about what he wanted to see in this budget – sustainable and broad-based tax cuts, adherence to the fiscal guardrails, and sustainability in the out years. This budget accomplishes those goals, providing predictability and stability for essential services in future years.”

Lamont added that the budget:  Increases to the Earned Income Tax Credit for low-income working individuals and families, while also providing significant increases in funding for K-12 education, child care programs, affordable housing units, and nonprofit providers.

Reductions in rail service:  The budget keeps in place steep cuts in rail service along the Shore Line East route between New Haven and New London, which Lamont proposed as a response to faltering ridership figures.

Service along the more popular New Haven Line, meanwhile, will undergo a temporary 14% cut in the upcoming fiscal year that advocates warned could impact dozens of daily commuter trains running between Connecticut and New York City. The line will return to full funding in the second year of the biennium, beginning in 2024.

The Hartford Line will not face any cuts to service as a result of the budget.  Lamont’s Department of Transportation has pointed to a relatively robust return in ridership along the line following the pandemic as the reason for keeping it fully funded.

Total funding for rail operations amounted to $516.5 million over the coming two years.

Housing:  Provides $810 million over the biennium in capital support towards housing development and housing financial assistance, including:

• $150 million ($75 million annually) towards the state’s popular Time-To-Own program. This level of funding is expected to assist in the purchase of more than 1,250 homes annually.
• $200 million ($100 million annually) to expand workforce development housing, which is expected to provide an additional 2,000 units of housing.
• $200 million ($100 million annually) for the Housing Trust Fund, with an emphasis on multi-unit housing in downtown areas close to transportation.
• $200 million ($100 million annually) for flexible housing.
• $50 million ($25 million annually) for the Housing Receivership Fund. This funding will provide state resources for rehabilitation of existing housing that have been put under court ordered receivership.
• $10 million ($5 million annually) for low-interest loans to Time-To-Own recipients for unanticipated capital improvements to their newly purchased homes.
• Provides $2 million in FY 2024 only in ARPA funds to invest in the flexible funding subsidy pool of housing and homeless support to subsidize housing and provide flexible assistance to help individuals, families and youth overcome financial barriers and expedite solutions to homelessness.
• Provides funding of $1 million in both FY 2024 and FY 2025 in ARPA funds for housing support services.
• Provides funding of $10 million in FY 2024 in ARPA funds for various housing initiatives.
• Provides funding of $1.1 million in FY 2024 and $1.38 million in FY 2025 in General Fund dollars for the 24/7 operation of the 2-1-1 Housing Crisis line.
• Provides $5 million in FY 2024 in the General Fund for shelters.

While these investments won’t make Connecticut more affordable overnight, Lamont said he hopes it will have a meaningful effect over time.

The new budget includes several provisions aimed at reducing health care costs for Connecticut residents, particularly those with lower incomes.

Health Equity, Affordability, and Access:  Through a combination of General Fund and ARPA, there are many initiatives that address health equity, healthcare affordability, and avoid loss of healthcare coverage as a result of the unwinding of the public health emergency.

Minimizes health care disruptions by:

• Providing targeted outreach to individuals with serious chronic health conditions who are losing Medicaid coverage ($1 million in ARPA).
• Increasing support for CoveredCT, which provides zero-cost, Medicaid-like coverage for individuals just over income limits for Medicaid ($11.7 million in FY 2024, $22.7 million in FY 2025).
• Providing two months of premium payments for individuals eligible for federal subsidies under Access Health CT ($10 million in ARPA).
• Providing $17 million in additional support to the state’s two financially distressed, independent hospitals (Day Kimball and Bristol) to preserve access to essential health services and help ensure financial viability.
• Erases hundreds of millions of dollars in medical debt that disproportionately impacts Black and Latino families ($6.5 million in ARPA).
• Expands HUSKY C income eligibility to 105% FPL, after all income disregards ($8.5 million in FY 2025).
• Extends state HUSKY coverage for undocumented children from age 12 to 15, with continuation of coverage for participants through age 18 ($3 million in FY 2025).
• Funds a comprehensive evaluation of Medicaid rates to inform future rate increases, with a focus on access barriers and equity considerations ($3 million in ARPA).
• FY 2025 includes $12 million in Medicaid to begin addressing rate disparities.
• Align adult complex care rates to pediatric rates ($600,000 in FY2024, $1.35 million in FY 2025).
• Provides one-time grants to Federally Qualified Health Centers ($32 million).
• Improves prescription drug affordability by facilitating participation in a multistate consortium to negotiate discounts on prescription drugs.
• The state will spend $6.5 million to pay down hundreds of millions in medical debt for state residents, through a partnership with a nonprofit that purchases medical debt at a fraction of its original cost, then forgives borrowers. A Lamont spokesperson said Tuesday that the investment should be enough to wipe out all medical debt for Connecticut residents with incomes below 400 percent of the federal poverty line.
• Eligible residents will not have to apply for relief and will simply receive a letter informing them their debt has been erased. They will not have to pay taxes on the canceled debt.
• The budget also increases eligibility for HUSKY C — a form of Medicaid — to blind and disabled people earning up to 105 percent of the federal poverty level (about $15,300 annually for a single person or $31,500 for a four-person household). It also expands HUSKY coverage to undocumented children up to age 15, as opposed to 12 under current law.
• Additionally, the state will increase support for CoveredCT, which provides free health insurance for people just above Medicaid cutoffs.

Municipal Aid

• Provides a $45 million combined increase in Tiered PILOT and Car Tax.
• Streamlines major municipal aid grants into one appropriated fund.
• $1.8 million to help fund early voting for towns.

K-12 Education

• Provides $25 million in additional Special Education funding in FY 2024 and FY 2025.
• $48 million in FY 2024 and $96 million in FY 2025 to continue the ECS formula phase-in.
• $6.6 million in FY 2024 and $13.2 million in FY 2025 to hold towns harmless from ECS declines.
• $150 million in FY 2025 for Education Finance Reform.

Childcare

• Provides $14.2 million and $53.3 million in FY 2024 and FY 2025 to fund rate increases of 11% for licensed providers and 6% for unlicensed providers in the Care4Kids system. This is supplemented by a $35 million ARPA allocation.
• $15.5 million to increase Infant Pre-K rates to $10,500 per pupil in School Readiness and Child Day Care Contract programs in FY 2025.

Higher Education

• Funds the state’s portion of collective bargaining increases for all constituent units.
• Provides an increase of more than $500 million over the biennium in one-time operating support to help UConn and CSCU transition back to a sustainable level of state support.
• Restructures fringe benefit funding to the constituent units to ensure that the state’s unfunded pension liability is not being passed on to students and make the universities more competitive for federal grants.
• Provides $6 million for student loan reimbursements.
• Includes permanent funding for PACT and expands PACT to include students returning to college after being previously enrolled. Increases minimum PACT award amount.

Tax Relief

• Reduces the state income tax by lowering the 5.0% rate to 4.5% and the 3.0% rate to 2.0% for the income year 2024. The benefits will be capped at $150,000 for single filers and $300,000 for joint filers.
• One million tax filers will benefit from the rate cuts – nearly 60% of all filers.
• 82% of the benefit will go to filers making less than $150,000.
• Increases the Earned Income Tax Credit from 30.5% to 40%.
• 211,000 filers will benefit from the EITC increase.
• Eliminates retirement income tax cliff by adding a phase-out for allowable pension and annuity and IRA distribution deductions against the Personal Income Tax.
• Total personal income tax relief between the above three items is approximately $460.3 million.