Gov. Lamont stresses need for fiscal discipline in CT’s coming legislative session

CT Insider – Tuesday, December 3, 2024
By Ken Dixon

HARTFORD — Gov. Ned Lamont on Monday didn’t exactly tip his hand on priorities for the next two-year budget, but he admitted that expanded child care and home ownership opportunities could be among his chief goals when the next legislature meets in January.

“I’ll challenge the legislature to say I love current services, but I also don’t like the status quo,” Lamont said, stressing he will open the General Assembly with a State of the State message in January, then propose a new $52-billion-plus spending package in February. He said that savings over the last seven years from fiscal restraints have allowed more spending for social services.

He recalled the $400 million income tax cut for the middle class from last year. “We’ve definitely increased day care and child care,” he said. “That I’d like to see continued as well. And beyond, we’ve talked about helping people start up their own businesses, owning their own home, the sort of investments that give people opportunity. I want this to be the opportunity state. I want this to be the most family-friendly state.”

But he stressed his commitment to retaining the kinds of fiscal discipline that has paid down billions of dollars in pension debt since 2017.

“I’m pretty strict on this stuff,” Lamont told reporters on a day when his financial team announced a $190.3 million surplus in the General Fund and another $149 million surplus in the transportation fund. “We’re going to continue to make the investments we need to make a difference in people’s lives. I want to do everything I can to make sure our fixed costs are not an increasing piece of our budget that crowds out all the important social spending.”

In a Capitol meeting room flanked by state Treasurer Erick Russell and Comptroller Sean Scanlon, Lamont said that while the state will save $737 million a year until 2049 for a total of $18 billion, Connecticut’s under-funded employee and public school teacher retirements are still among the most-vulnerable in the nation. Over the last six years the state has invested an extra $8.5 billion in surplus funds to the pensions.

“This all is incredibly good news and it means we’ve gone from being the third-worst funded pension in the country to the sixth worst,” Lamont said. “We have a long way to go and the rest of the country is watching. People know this is a state that has an honestly balanced budget, not just for today, but for tomorrow. For 20 years every other TV ad was somebody kicking the can down the road. Well we’ve stopped kicking,” “

“I think it’s important for people to understand the gravity and the magnitude of the can kicking that went on in this building for a long time,” Scanlon said. “And between ’71 and 2010, when Gov. (Dannel) Malloy took office, the answer was they put aside next to nothing. It’s only been since 2011 that we’ve made the actual actuarial-determined contribution each year toward our pension debt.” The state’s pension fund totals about $60 billion.

“For decades Connecticut under funded its pension funds, jeopardizing the retirement security of retired teachers and state employees and sticking generations of taxpayers with growing debt,” Russell said. “That version of Connecticut government no longer exists.” He stressed that the State Employees’ Retirement System’s latest valuation grew by more than $2.7 billion because of strong investment performance, while the assets for the Teachers’ Retirement System increased by more than $2.6 billion over the year. The funding ratios are now more than 55 percent and more than 62 percent, respectively.

“We went about 70 years without properly funding our pensions,” Russell said. “It takes a long time to dig out of that hole. Our budgetary decisions can now be made from a stronger position rather than a constant position of fiscal crisis. That’s providing more capacity for us to prioritize things like education and child care and housing in our state.”

Russell said that because the stock markets are now in a period of rising, the state has been able to make an 11.5 percent return on investments, up from an 8.5 percent performance in 2023. Russell said the returns are among the highest in the nation. “My main point is that whether the market is up or down, we want to make sure that we’re in the spot to perform the best as we can as a pension fund.”

In response to Scanlon’s fiscal report, minority Republican leaders in the state Senate on Monday stressed that the financial restrictions occurred back in 2017, when there was an 18-18 tie in the Senate, the first time GOP weren’t a minority caucus since 1996. “Spending discipline works,” said the Republicans led by Minority Leader Stephen Harding. “It works in family budgets. Spending discipline works in state government as well. We are chipping away at our state’s crushing credit card debt. We must stay the course and preserve that discipline in our budgeting.”

In the recent election, Republicans lost seats in the House and Senate. When the General Assembly meets on January 8, Democrats will hold a 102-49 majority in the House and a 25-11 edge in the Senate.

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