CT budget expected to hit $27B. What lawmakers say as we face among highest cost of living in nation

Hartford Courant – Monday, January 13, 2025
By Christopher Keating

From education to affordable housing to child care, Gov. Ned Lamont is challenging the state legislature to tackle some of the state’s most long-lasting problems over the next five months in the 2025 legislative session.

Lawmakers began the session last week with high hopes of crafting solutions, but the veteran lawmakers realize the difficulty of untangling a sticky wicket of competing agendas as scores of divergent interests battle for funding in the next annual state budget that is expected to reach $27 billion.

Multiple mayors visited the state Capitol on opening day as they collectively seek billions of dollars in operational and bond funds for everything from public schools to paving local roads.

Lamont called on the legislature to tackle the high costs of electricity, health care and housing in a state where rents and mortgages are higher than many others across the nation. In an unusual move during his 28-minute State of the State Address, Lamont called on individual committees by name and asked them to find solutions.

“Insurance committee, very few of the businesses and homes which were impacted or destroyed by flooding in August had any flood insurance. What say you?” Lamont asked in the historic Hall of the House in Hartford. “Judiciary committee, how can we better protect our civil liberties, including reproductive rights, in the face of threats from Washington? … Education committee, let’s build on the blue ribbon child care commission. Let’s make a down payment on affordable, accessible early child care for all of our families.”

While Lamont offered various questions, Republicans charged that he did not provide enough answers.

“I think the speech didn’t say a lot,” said House Republican leader Vincent Candelora of North Branford. “I think he is clearly sending a message that he wants the legislature to do the job, and that concerns me.”

Senate Republican leader Stephen Harding of Brookfield agreed, saying Lamont should have provided more details.

“There was very minimal substance to it,” Harding said. “You can give us challenges, but give us some ideas with it. He basically just referenced the problem, and said, ‘You guys figure it out.’ That’s not an idea. That just says there’s a problem. We’re already aware what the problems are. Give us some ideas of what your vision is to fix the problems of the state.”

But Senate President Pro Tempore Martin Looney, a New Haven Democrat, rejected Republican complaints by saying that the State of the State Address sets the tone and the annual budget address in February would provide a deep level of financial detail on scores of departments and agencies.

“I thought it was a very good opening day speech,” Looney said. “The major themes he hit were excellent. This was a general, thematic speech to start the session, not a nuts-and-bolts budget speech.”

Early childhood education

Looney noted that Lamont has made early childhood education a high priority in an attempt to help the youngest students who have already fallen behind by the time they reach kindergarten.

“Those 4-year-olds today that are not prepared for kindergarten next year are the ones who, a dozen years from now, would be part of that cohort of those 16 to 24-year-olds who are disengaged, not in school, not working, not employable in some ways,” Looney told The Courant in an interview. “So we need to make sure we have a massive level of engagement with young children so they are not — 12 years from now — the next cohort of disengaged kids.”

Guardrails

One of the key issues that Lamont did not mention in his speech is the so-called fiscal guardrails that have limited spending and poured an additional $8.5 billion into the state pension funds that had been largely neglected for 70 years by previous governors and legislators.

In the coming months, liberal Democrats are expected to clash with Lamont and Republicans over the guardrails.

Lawmakers will be debating the “volatility cap,” which blocks the legislature from spending any money above a certain threshold that is collected under the “estimates and finals” portion of the state income tax. The money includes capital gains that are largely paid by millionaires and billionaires in Fairfield County, a total that has exploded in recent years with large gains on Wall Street

The guardrails have become an all-encompassing issue at the Capitol that comes up on a constant basis.

“I know there’s a game out there: Drink every time you hear the word guardrails,” said House Majority Leader Jason Rojas, an East Hartford Democrat.

Among Republicans, both Candelora and Harding said it was a missed opportunity for Lamont to reiterate his support for the guardrails in front of a large audience.

“I think it was an opportunity to send a clear message to the legislature and the residents of Connecticut that we are going to live within our means,” Candelora said. “It’s opening day. Maybe he wants to keep it light.”

But Lamont’s press office said he has not changed his position on the guardrails and does not have to mention the topic in every speech. Lamont has consistently reiterated his view recently, noting that the legislature re-approved the guardrails last year by extending them for another five years with an option for an additional five years.

Despite any thought to the contrary, Looney said Democrats are not interested in blowing up the guardrails completely.

“We recognize the merit of what the guardrails have done for us in the last seven years,” Looney said in an interview. “Building up a healthy rainy day fund of over $4 billion. Increasing the percentage of funding for both our state employee pensions and our teachers’ pensions. Those are substantial achievements. What we’re saying is we may be facing a huge fiscal crisis brought on by declining federal funding in so many areas because 2025 is not 2017. We need to look at the realities as they exist today. There may need to be some discussion on the guardrails and also whether or not federal cuts will constitute enough of an emergency that we have to look at the rainy day fund. We don’t know any of that yet.”

Potential changes in the guardrails, he said, are not drastic.

“I refer to it as a minor modification,” Looney said. “We would still have a volatility cap. We would still have a spending cap. We would still have a revenue cap where we commit not to spend 100% of the revenue that we anticipate coming in. The Republicans are trying to say the sky is falling if we even mention the word modification. But that’s part of their game, and it’s not real.”
House Republican leader Vincent Candelora of North Branford was concerned that Gov. Ned Lamont did not mention the fiscal guardrails during his State of the State Address. Here, Candelora nominates Rep. Matt Ritter for a third term as Speaker of the House during the opening day of the 2025 legislative session in Hartford. (Aaron Flaum/Hartford Courant)
House Republican leader Vincent Candelora of North Branford is concerned that Gov. Ned Lamont did not mention the fiscal guardrails during his State of the State Address. Here, Candelora nominates Rep. Matt Ritter of Hartford for a third term as Speaker of the House during the opening day of the 2025 legislative session in Hartford. (Aaron Flaum/Hartford Courant)

Electricity

Another vexing problem facing the legislature is the high price of electricity, which has been a problem for decades.

Among the disputes is whether the chief regulatory agency, the Public Utilities Regulatory Authority, known as PURA, should have three commissioners or five. Lamont has steadfastly maintained that only three regulators are needed, but the current state law says there shall be five members.

Sen. Norm Needleman, an Essex Democrat who co-chairs the energy committee, agrees strongly with Lamont, even if some other Democrats do not.

“The more people you have on a board, the more difficult it is to get consensus,” Needleman told The Courant.

But Sen. Ryan Fazio, a 34-year-old Greenwich Republican with detailed knowledge of energy issues, agreed with Republicans and some Democrats that the authority under the law should have five fulltime commissioners.

“The law, which we are all obligated to follow, prescribes five members to PURA,” Fazio said after Lamont’s speech. “I believe in following the law, and if people think it’s better with a different number, then they should change the law. Otherwise, they should fill the spots with five energetic and intelligent regulators who will protect consumers and enforce the law as it is. It’s not what I want or not. It’s what the law says.”

Behind the scenes, Republicans and Democrats have been working to gauge the political support for increasing to five seats, up from three. They have also been working to gain a spot on PURA for former state Rep. Holly Cheeseman, a veteran lawmaker from Niantic who lost her bid for re-election in November and is available to take a fulltime job on the authority. A package deal that could have placed Cheeseman on the board was not completed before the legislative session began Wednesday.

Another key point is that ratepayers were outraged during the summer over a large spike in their electric bills at a time when many residents learned for the first time about the “public benefits” charges on their bill that they had often overlooked.

Republicans want the charges taken off electric bills and instead switched into the expenses of the $27 billion annual state budget, where ratepayers would no longer see the charges on their monthly bills.

The public benefits charge is being paid over 10 months to cover a deal with the Millstone nuclear power plant and also unpaid bills for customers who avoided shutoffs for four years due to the coronavirus pandemic and its aftermath. Millstone represents 77% of the current public benefits charge, and the other 23% pays for various bipartisan programs that include recovering charges from the four-year moratorium in which the utilities were blocked from shutting off various customers.

In addition, state utility regulators approved a plan for Eversource and United Illuminating to be repaid about $3 per month per residential customer — depending on their level of usage — in the public benefits charges for their costs in the electric vehicle charger program. That became effective on September 1 and will last until April 30, 2025.

Shifting the costs to the state budget, Fazio said, should be an early move by the legislature.

“It would make the most progress for consumers because those costs basically equate to a tax in the electric bill for discretionary budget programs,” Fazio said. “It would permanently reduce electric bills by hundreds of dollars per year for the average resident in the state, based on my calculations.”

The idea will not go away because it will be mentioned by lawmakers over the next five months in bills and amendments at both the committee level and on the floor of the House and Senate.

It was highly important, Fazio said, that Lamont immediately addressed energy costs in the opening minutes of his State of the State Address.

“Mentioning electricity as the first issue,” Fazio said, “reflects the fact that it is an issue at the top of voters’ minds.”

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