CT Legislature Approves 2-Year $46.4 Billion Budget

CONNECTICUT — The state Senate approved a two-year, $46.4 billion budget on the final day of its regular session.

The spending plan received bipartisan support in both chambers. The Senate approved the budget, 31-4 Wednesday afternoon, while House lawmakers passed it early that morning 116-31, with 22 out of 53 Republicans joining 94 Democrats.

The bipartisan skids were greased somewhat by the fact that the budget does not call for a tax hike, a feat accomplished in no small part through a $1.75 billion in injection of federal coronavirus relief funding. It also allocates an extra $1 billion toward paying off Connecticut's unfunded pension debt.

Gov. Ned Lamont has already said he will sign the bill. Once he does, the budget will go into effect July 1. The first fiscal year calls for a draw down of $22.7 billion, an increase of 2.6 percent over the current plan. The second year will see an increase of 3.9 percent. This remains $22.2 million under the state-mandated sending cap in fiscal 2022 and $35.7 million under the spending cap in fiscal 2023.

Lamont called the spending plan "the most progressive, transformative, and life-changing budget our state has ever seen."

The budget also manages to leave the state's so-called rainy day fund brimming at a historic high.

Although the budget sparks no new official tax hikes, earlier in the week the Legislature approved a highway usage fee bill which would establish per-mile tax rates that increase based on vehicle gross weight. The governor is expected to sign this into law as well.

The road to the bipartisan agreement has been a rocky one for Democrats in the progressive corner of the legislature. Earlier variations included new taxes on the state's highest earners and a surcharge on the state's tax on investment income; both provisions were struck from the bill last week.

Local municipalities are on track to score big with much larger grants set to be poured into the PILOT program. These "payments in lieu of taxes" reimburse local coffers for revenue on property exempt from taxation.

The state's Earned Income Tax Credit is also poised to jump under the new budget, from 23 percent of the federal income tax to 30.5 percent. Estimates put an additional $40 million into the pockets of nearly 195,000 lower-to-moderate income Connecticut households.