Connecticut Legislative Committees Release Biennial Budget Proposals

This week, the Appropriations and Finance, Revenue and Bonding Committees released their fiscal year (FY) 2026/2027 biennial budget proposals.  The committees’ spending, revenue, and bonding plans build a blueprint to guide negotiations with legislative leaders and Governor Lamont to finalize the state’s budget for the next two years.

The Appropriations Committee’s $55.5 billion two-year budget would spend $27.1 billion in FY 2026 (beginning July 1, 2025) and $28.4 billion in FY 2027.  The proposal increases spending 4.3% over current levels in the first fiscal year and 4.9% during the second year of the biennium.  In total, the proposal spends $300,000 more than the governor’s budget proposal released in early February.

Generally, the Appropriations Committee’s two-year spending plan uses budget maneuvers to make changes to the state’s “fiscal guardrails” by: not budgeting for yet-to-be agreed upon raises for state employees; creating a new off-budget account to expand child care services while circumventing a spending cap that keeps budget growth in line with household income and inflation; under-funding guaranteed health benefits for retired state employees by almost $230 million; and moving about $300 million earmarked to reduce pension debt back into the General Fund this fiscal year.

The Finance, Revenue and Bonding Committee released a revenue package including joint favorable substitute (JFS) language modifying the governor’s budget bill SB 1246, An Act Concerning Revenue Items To Implement The Governor’s Budget, and advanced multiple bills implementing proposed revenue changes.  Proposals advanced include establishing a child tax credit for low- and middle-income families, higher taxes on capital gains, adjusting the volatility cap threshold, eliminating certain occupational license fees (same as governor).  The package also reflects the governor’s proposed hospital tax rebasing, a policy Connecticut hospitals have strongly opposed.

The committee also released a bonding package as JFS language on SB 1247, An Act Authorizing and Adjusting Bonds of the State, that would increase bonding over the governor’s proposal in multiple areas including bonding for hospital construction of facilities for adult inpatient psychiatric beds of $2.5 million each year, UConn Health Center maintenance and infrastructure improvements, Aging in Place initiatives, economic development and housing infrastructure in rural areas, grants-in-aid for nonprofit security projects, supportive housing for persons with intellectual disabilities, and grants for urban development projects.

Impact on Hospitals and Health Systems

The legislative committees’ budget bills include  some of the Lamont administration’s harmful proposals related to hospitals and healthcare, including rebasing the hospital tax and reducing payment for state employee/retiree care.  The committee budget bills do not contain out-of-network caps on rates for inpatient and outpatient services, a policy that healthcare providers have strongly opposed.  They also do not contain funding to implement notice of material change legislation that would have added more burdens on and delays to healthcare transactions.  

The Connecticut Hospital Association (CHA) thanked lawmakers for their collaboration on healthcare legislation and raised significant concerns about multiple proposals in the budget in a press statement.

“Increasing taxes and cutting hospital payments, as proposed in this package, would make healthcare less affordable and less accessible for everyone in Connecticut,” CHA said in a statement in response to the Appropriations Committee spending package released on Tuesday. 

“We thank the committee for their efforts to reject more damaging proposals offered by the Governor’s administration earlier this year, including harmful out-of-network caps, which would severely hurt healthcare affordability and access, and avoiding additional regulatory burdens that would delay or impede critical healthcare transactions.  However, we must emphasize that adopting the administration’s proposed tax increases and payment reductions will result in devastating effects that will worsen financial burdens on hospitals at a time when they are already struggling. 

“These policies, on top of no action to increase Medicaid reimbursement for hospital care, will make it more difficult for hospitals to meet their mission of caring for communities, growing and supporting the healthcare workforce, and investing in innovation to advance quality care.”

CHA also indicated that while Governor Lamont’s administration has paused discussions with hospitals, hospitals and health systems remain committed to continuing to work with all policymakers to find solutions to ensure the stability of Connecticut’s healthcare delivery system and public health infrastructure and support Medicaid rates that cover the cost of care.

• Click here to read CHA’s full statement on the Appropriations Committee’s budget
• Read the Appropriations Committee’s biennial budget proposal summary from the Office of Fiscal Analysis (OFA) here
• Read the Appropriations Committee’s biennial budget bill here
• Read the biennial budget proposal’s fiscal note here
• Read the annual deficiency bill (which outlines overspending in the current fiscal year and was also voted on by the Appropriations Committee today) here