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HARTFORD — Gov. Ned Lamont is proposing a two-year budget that includes nearly $500 million of tax cuts and a boost to the Earned Income Tax Credit, $600 million of funding for housing programs including assistance for first time homebuyers, and funding for childcare including a bump in the business tax credit and a boost to the Care4Kids program.
The budget also includes nearly $150 million for the state colleges and universities, which are facing a $220 million deficit, as well as $110 million for the University of Connecticut.
Lamont told assembled lawmakers on Wednesday that economic growth was the underlying motivation for all of his proposals.
“We continue to move from rescue to recovery, lifelines to ladders to opportunity,” said Lamont.
But the Governor’s spending proposals on Wednesday did not include the $275 million boost to primary and secondary school funding to accelerate the state’s education cost sharing formula, which subsidizes financially disadvantaged districts – spending that had gained significant support from both Democrats and Republicans in the legislature.
State Rep. Matt Ritter, the House Majority Leader, told CT Examiner that the legislature intends to free up $200 million that could be directed to education by modifying budget safeguards put in place with the bipartisan budget agreement in 2017. That vote is scheduled for Thursday.
House Minority Leader Vincent Candelora, called out Lamont for failing to invest in the public safety workforce or to offset the increasing cost of electricity. But he also praised the Governor for cutting taxes and for moving away from reliance on federal COVID dollars, set to expire in 2024.
“The Governor’s plan offers the much-needed recognition that federal Covid recovery money is ending, and his commitment to the type of structural tax relief promoted repeatedly by Republicans makes his proposal an appropriate launching pad for the General Assembly to craft a budget and policies that help achieve, rather than undermine, the Governor’s central theme—to grow our state’s fragile economy,” Candelora said in a statement.
Democratic State Senate president Martin Looney, and State Senate Majority Leader Bob Duff, said they were “encouraged by the values” the Governor’s budget showed.
“Connecticut’s strong financial position means we can make critical long-term investments while also providing progressive tax cuts,” said Looney and Duff in a statement.
Taxes
According to numbers provided by the Governor’s Office, Connecticut residents making $500,000 a year or more account for just two percent of state income tax filers, but about 40 percent of the total income tax revenue for the state.
The Governor’s proposal includes multiple cut to income tax rates, including a permanent decrease of the personal income tax from 5 percent to 4.5 percent on the first $50,000 an individual earns, and a decrease from 3 percent to 2 percent on the first $10,000 that someone earns, beginning in 2024.
According to estimated provided by the Governor’s Office, about 1.1 million people will see their taxes decrease because of these changes. Married filers filing jointly could save up to $600 from the cut, and single filers could save up to $300.
The budget would also increase the Earned Income Tax Credit from 30.5 percent to 40 percent. According to Lamont, this credit would help about 211,000 families. The deductions to the personal income tax and the increased Earned Income Tax Credit mean that a family making $50,000 or less would not be responsible for any state income tax.
Childcare
Lamont’s budget will increase childcare subsidies for families who cannot afford the full price of childcare by 10 percent this year and an additional 10 percent next year.
Childcare workers have long said that the state’s Care4Kids program does not provide enough to give childcare workers an adequate salary. As of June 2022, childcare workers in the southwestern portion of Connecticut who care for an infant or toddler between 35 and 50 hours per week were receiving $270 per child per week through Care4Kids. That comes out to between $5.40 and $7.70 per hour for that child.
The budget will also subsidize an additional 1,300 slots for infants and toddlers — as of March 2022, the state was lacking 50,000 slots, using $35 million in federal coronavirus relief funds.
In addition, the state is increasing a tax credit for businesses who provide childcare subsidies or on-site childcare for their workers from 5 percent to 25 percent.
Education
Lamont’s budget includes an additional $135 million toward state education funding, which he said would be aimed toward recruiting and retaining teachers. $10 million will go toward grant money for an “education development workforce grant” to pay for academic support and the hiring of more paraprofessionals, as well as paying apprentice teachers who work in classrooms.
The budget also sets aside $7 million to continue the LEAP program — a home visiting program aimed at decreasing chronic absenteeism, which has more than doubled from 10.4 percent of students in 2018-19 to 23.7 percent of students last year.
Healthcare
The budget includes a plan to pay $20 million in federal coronavirus relief funds to a nonprofit that purchases and forgives medical debt, which Lamont said would result in $2 billion in forgiven debt for state residents.
Other funds will go toward expanding access to health insurance, including $10 million in federal coronavirus relief funds toward premium payments for people who can receive subsidies through the state insurance exchange, AccessHealthCT, and $34.4 million over two years in support of CoveredCT, designed for people who are just above the threshold for Medicaid.
The budget does not include funding for an expansion of HUSKY for immigrants without legal immigration status, a request that some legislators and the advocacy group HUSKY for All had proposed.
The Governor has also set aside $2.5 million for organizations that work against community gun violence, along with establishing a community gun violence intervention program overseen by the Department of Public Health that will give out grants and track results. Additional coronavirus relief funds are being used to invest in training mental health providers that specialize in early childhood.
Housing
In his address, Lamont said that more young families are moving to Connecticut but the state is “still desperately short of housing.” He projected building 6,400 new housing units in the state in the next two years.
The budget includes $600 million over two years to address the housing shortage, including $200 million for workforce housing development, $300 million for affordable and mixed use housing, and $100 million for Time-to-Own program , which provides downpayment assistance for qualified first-time homebuyers.
At the Capitol press briefing, Jeffrey Beckham, Secretary of the Office of Policy and Management, said that the funding is aimed at both affordable and market-rate housing – with an additional focus on transit-oriented development.
He said the state subsidies would provide developers with the “last dollars needed” to complete the financing for a housing project.
Transportation
Lamont said housing will complement the state’s major transportation hubs “with over $800 million in additional federal support to strengthen and speed up our aging transportation system.” He laid out what he called “clear goals” over the next ten years.
“We will reduce travel time from New Haven to New York City by over 20 minutes; run MetroNorth trains directly to Grand Central and now Penn Station. You will see new and improved cars on the Hartford Line, and Metro North will have improved 5G connectivity – now the train can double as your high-speed office,” said Lamont.
Beckham clarified that bus service has returned to pre-pandemic levels and the state is providing resources to expand bus service.
“This is an employment and workforce initiative to allow for employment seven days a week, greater access to second and third shift jobs, focused on expanding access to large business and employment hubs,” he said.
For rail, the budget includes $44 million in the first year and $56 million in the second year, said Beckham.
“We’re trying to fund schedules and routes that match the demand and the developing patterns of use, post-pandemic. Teleworking has changed things quite a bit,” he said.
The New Haven Line has reduced ridership at 68 percent of the pre-pandemic use, but the state has proposed funding for 86% service levels. The Hartford Line is at about 81 percent of pre-pandemic use and the state is proposing to fund at 100 percent service level. Shore Line East is down to 30 percent of pre-pandemic use and the state is planning to fund 44% service levels, said Beckham.
Lamont also said that the state is making a $55 million down payment on state electric vehicles and charging stations, “which will speed our move to an all-electric, carbon free transportation future.”
Energy
Lamont emphasized the need for electricity generating capacity going forward – using the Millstone Nuclear Power Plant, future wind power, and the possibility of hydro power from Quebec.
“Hydro will be another very cost-effective leg of the energy stool, with Connecticut well positioned to have reliable electric generating capacity for the foreseeable future,” he said.