(The Center Square) — Connecticut will end the fiscal year with a record surplus, according to a new report, which is fueling calls by progressive Democrats to roll back the state’s spending controls.
The consensus revenue forecast, released by the Office of Policy and Management and Office of Fiscal Analysis on Monday, shows the state is likely to close out the fiscal year more than $645 million above initial budget projections. That’s a roughly $1 billion surplus through 2026, according to the report.
Gov. Ned Lamont praised the report, saying it shows “Connecticut’s finances remain steady, strong, and in balance.”
“While other states are cutting services and raising taxes, Connecticut is doing the opposite, which is what happens when we work together on a bipartisan basis to develop policies that benefit all of Connecticut,” Lamont said in a statement.
But he urged legislative leaders not to tinker with the fiscal “guardrails” — which set spending limits and require the state to put aside large swaths of tax revenue — as they consider how to spend the surplus revenue over the next fiscal year.
“This consensus revenue forecast reinforces that we are on the right path and that the progress we have made should not be undone by reversing course from what has worked the past few years,” the Democrat said in a statement.
In 2017, Connecticut set new fiscal controls that include a spending cap that keeps budget expenditures in line with changes in personal income or inflation, whichever may be larger, and a cap on the value of bonds the state government can issue to finance school construction, renovations to public buildings, open space and other capital projects.
The fiscal “guardrails” are credited with helping Connecticut climb out of a financial hole by generating annual surpluses, building up reserves and accelerating payments on the state’s pension debt, one of the highest in the nation. In February, Lamont and legislative leaders agreed to keep them in place for at least another five years.
But the record level of surplus funds is fueling demands from progressive Democrats to ease the spending controls, which they argue have starved crucial state programs of much-needed revenue.
Lawmakers want to add between $300 million and $400 million to the $26 billion budget for the 2025 fiscal year that begins July 1, and have been negotiating with the Lamont administration.
House Speaker Matt Ritter, D-Hartford, and Senate President Pro Tem Martin M. Looney, D-New Haven, told reporters earlier this week that easing the volatility, and spending cap could be part of the equation to fund education, healthcare, and other areas of the state budget.
House Minority Leader Vincent Candelora, R-North Branford, said Lamont and other Democrats should focus on reducing spending next year, not trying to find a way around the fiscal guard rails.
“As our surplus shrinks and our state’s financial picture changes, it’s critical that we live within the means Connecticut taxpayers can afford,” he said in a statement. “The fiscal guardrails should force all of us to reprioritize how we spend money.”
