Gov. Lamont Pitches $50.5 Billion Budget, Including Income Tax Cut

CONNECTICUT — Gov. Ned Lamont unveiled his $50.5 billion biennial budget, which includes a $500 million state income tax cut proposal, extra funding for schools and a call to keep Connecticut’s fiscal restraints in check.

“This is a budget that is built to expand growth and opportunity for all of our residents, anchored by a middle-class tax cut, keeping faith with and expanding assistance for those most in need,” Lamont said in his budget address.

Altogether, Lamont proposed a $25 billion budget for fiscal year 2024, which is a 3.5 percent increase from the current budget year. Fiscal year 2025’s recommended budget would be $25.5 billion, which is another 1.8 percent increase.

“The centerpiece of our proposal is broad-based middle-class tax relief support for business and industry and continuing our investments in workforce, education and social services safety net,” Office of Police and Management Secretary Jeffrey Beckham said during a budget preview.

Lamont wants to extend the state’s spending and borrowing caps. One of the primary controls takes volatile revenue like stock market tax windfalls and puts it into the state’s rainy day fund. The rainy day fund is fully funded and billions of dollars has gone to paying off the state’s pension liabilities.

Lamont urged legislators to extend the fiscal controls for another decade, adding that they ended the state's, "permanent fiscal crisis."

Income tax cut

The centerpiece of Lamont’s budget proposal is a state income tax cut, which would be the first in nearly 30 years and the largest since the tax was implemented in the early 1990s.

“I want a sustainable tax cut that we can support in good times and not so good times. We’ve had a number of false starts, on again off again tax cuts – not this time,” he said.

Families earning less than $50,000 a year would pay no state income tax under Lamont’s proposal. Families earning less than $60,000 would experience a 20 percent tax cut, and families that make less than $150,000 would get a $500 tax cut.

The combined savings will amount to nearly $500 million a year.

Childcare

Lamont also wants to increase childcare rates for the state’s Care 4 Kids program by 10 percent each of the two budget years. The program helps subsidize childcare for low-income workers.

Lamont also wants to provide employers with a corporate tax credit of 25 percent of the cost of any childcare cost subsidies they provide to employees.

Schools, universal free lunch

The budget proposal also calls for an extra $135 million in educational cost sharing, which is one of the primary state funding programs for local education. The money would build on the $720 million in federal resources that will be invested in education over the next two years.

Lamont also wants the state to fund a universal free lunch program for the rest of the academic year.

“That means better performing students and one less expense for middle-class families to worry about while inflation is still high,” he said.

Housing

Lamont called for an additional $200 million for workforce housing programs, which allow the state to provide more housing options and more financing programs for developers.

However, Lamont stopped short of demanding towns change their zoning approval processes.

“I will also urge mayors and first selectmen to develop and act on a plan of their own where they will allow more housing in their community through friendlier zoning and expedited approvals,” he said. “Towns may submit their plans to facilitate housing on their terms. Doing nothing is not an acceptable strategy.”

The budget proposal also includes $50 million in extra funding for the Time-To-Own program, which assists low and moderate income families with down payment and closing costs.