There’s a 1992 vote limiting CT spending. Why it’s a central issue in coming state budget battle

Hartford Courant – Sunday, April 27, 2025
By Christopher Keating

Gov. Ned Lamont says he consistently maintains two guiding principles as his mantra in restoring Connecticut to fiscal health after years of budget deficits: Don’t raise taxes and don’t break the state’s spending cap.

Now, Lamont is facing fellow Democrats who have voted to disregard both principles.

The legislature’s budget committee voted last week for a two-year budget that blows through the spending cap, and the finance committee voted to raise taxes on the state’s wealthiest residents. Lawmakers voted to impose a capital gains surcharge of 1.75 percentage points on top of the 6.99% rate that the wealthiest earners currently pay, meaning that the new rate would be 8.74%.

Known for a non-confrontational style in negotiations, Lamont did not use the word “veto” but he made it crystal clear that he is against raising taxes and against breaking the cap.

“Obviously, I’m a little stricter about the spending cap than people on both sides of the aisle,” Lamont told reporters last week in Cheshire. “But we’ll be able to get there.”

Asked by The Courant if he would continue his seven-year stance against capital gains tax increases and other revenue hikes, Lamont responded, “I think you’re correct on that. We’ve got a good budget. It’s balanced. We don’t need to raise any revenue.

“As you know, I’m not somebody that goes for tax increases. What I have done is cut taxes for working families and the middle class. I think that’s the best way to get progressivity into our system without scaring people out of state.”

A resident of Greenwich for more than 40 years, Lamont has watched fellow wealthy residents move to low-tax states like Florida, including some who keep their home in Fairfield County and still declare residency in the Sunshine State by staying there for six months and one day.

“Look at the numbers,” Lamont said. “Look at the 10 states that are adding population. They either have zero or lower income tax than we do. And they’re not all Sun Belt states. They’re not all going there for sunshine. People are leaving California. That’s got some sunshine, too. There are a variety of reasons that people move. For the first time in a long time, people are moving to Connecticut and more likely to stay in Connecticut. We need this [wealthy] population. That’s how we keep our economy growing.”

Lamont said he also opposes a separate Democratic plan to increase the state income tax on the wealthiest residents if they also receive federal tax cuts from President Donald J. Trump and the Republican-controlled Congress.

Tax compromise

In a sign of a potential compromise, Lamont seemed open to trading a new child tax credit that Democrats favor for the property tax credit that he proposed. Lamont’s budget called for increasing the property tax credit on the state income tax to a maximum of $350 per year, up from the current $300, but the Democratic-controlled tax committee last week ignored the request.

Instead, Democrats approved a child tax credit against the state income tax that has relatively few credits and deductions when compared to the federal system.

Democrats have been pushing for years for a child tax credit, and the latest proposal calls for a permanent, refundable credit of $150 per child for a maximum of three children, or $450 per year. That represents a sharp drop from an original proposal of $600 per child for an overall total of $1,800 per year. With various pressing needs on the tax and spending sides of the complicated state budget, lawmakers say they are often unable to award as much tax relief as they would like.

The full tax credit would be available to single parents earning up to $100,000 per year, heads of households earning up to $160,000 per year, and couples filing jointly earning up to $200,000 per year, according to an analysis by the legislature’s nonpartisan fiscal office. The credit would start on Jan. 1, 2026 and would save families a combined $82.7 million per year.

Lamont seemed prepared to trade off the two tax cuts in a possible exchange that could lead to the enactment of the child tax credit for the first time in state history.

“It’s a responsible number. It fits within the budget,” Lamont said of the $150 credit. “They took away the property tax credit, which we had, as one way to pay for it. So that’s just a political discussion. … If the legislature thinks we should do a little more [for children], and we’ve got a way to pay for it, let’s look at it.”

Lamont added, “I kind of like my proposal because it helps out folks who are getting squeezed by property tax. You can’t do everything. If the legislature feels more strongly about a child tax credit than cutting people’s property tax, we’ll work with them.”

The Tax Equity Caucus, a liberal Democratic group led by Rep. Josh Elliott of Hamden, has pushed for both the capital gains surcharge and the child tax credit.

“We need to make these changes this year because we are not only seeing incredible amounts of dysfunction coming from the federal government, but we want to show the people of Connecticut that we are elected as Democrats for a reason,” Elliott said recently.

A recent study by the liberal Connecticut Citizen Action Group and Americans for Tax Fairness showed that the net worth of Connecticut’s 14 billionaires, who largely live in lower Fairfield County, increased by $33 billion, or 61%, since Trump assumed office in 2017.

At the same time, Republicans say that the wealthiest residents are already paying the largest proportion of the state income tax, which includes capital gains taxes. The latest statistics from Lamont’s budget office show that the top 2.5% of tax filers paid 41% of the state income tax in 2022. At the other end, the bottom 49% of filers — representing essentially half of filers statewide — paid only 2.9% of the income tax.

Less than 3% of the state income tax is paid by 830,000 filers who are earning less than $50,000 per year in adjusted gross income — for both singles and couples filing jointly. Filers earning more than $100,000 per year pay 85% of the income tax, while those under $100,000, representing 72% of filers, pay the remaining 15%, according to the statistics.

While some Democrats are pushing hard for the capital gains tax, some insiders say it would be difficult to reach the two-thirds vote in the state House of Representatives to override a veto by Lamont on capital gains. Democrats have 102 members in the House and would need 101 votes to override.

Moderate Democrats could block the override, and moderates like Reps. Kerry Wood of Rocky Hill and Jill Barry of Glastonbury voted last week against the capital gains surcharge and the overall tax package.

Personal pleas on spending

Lawmakers clashed sharply over spending in the budget committee with Democrats saying they wanted to help the poor and Republicans saying they support taxpayers who voted by more than 80% in a statewide referendum in November 1992 for the constitutional spending cap.

The Democratic plan, which allocates millions more than Lamont proposed in his budget in early February, calls for a spending increase of 4.35% in the fiscal year that starts on July 1 and 4.9% in the following year.

Two of the committee’s leaders, Democratic co-chairwoman Sen. Cathy Osten of Sprague and Republican Rep. Tammy Nuccio of Tolland, spoke passionately and in sometimes personal terms about the amounts of money the legislature would be spending that totals $55.5 billion over two years.

Speaking in defense of the responsibility of government to help the poor, Osten said lawmakers must step forward and spend money for residents who are scraping by and having difficulty surviving.

“I listen to people tell me they don’t have food. In my own family,” Osten told colleagues during the budget debate at the state Capitol complex. “When I’m providing food for different people in my family, they don’t have the money for it. … This last weekend, it was Easter, and for me, that’s a big deal. Not for everybody, but for me, it’s a big deal. I went to someone’s house. She’s close to 80. I’ve been trying to get her to get the mold removed from her house for two years now. I had to get her to sign some papers, and she said, ‘I don’t want to be embarrassed by asking for help.’ … She has given to this state and this community for 50 or 60 years, and these are things that government does to help people out. Now, we could say we don’t need any of that, and we should take all of that out of this budget and not help any of these people out.”

Osten added, “There’s a section in the Bible that says when I was hungry, you fed me. When I was incarcerated, you visited me. That passage means so much to me. It’s how I’ve lived my whole life. … I just can’t see that government is always bad. … There is a reason for good government, and this is a budget about real people with real families and real problems. … I’m going to do what my grandmother did, and she never let anyone in the Depression leave her door without getting a bowl of soup. That’s the kind of person my mother raised me to be — to always help those out. I’m not going to let them die on the vine.”

After Osten’s impassioned speech, Nuccio talked about her childhood and said the government simply cannot afford to meet every need. Too much money, she said, is being spent on various state programs.

“I was just as poor. Welfare mom, four kids. The whole deal,” Nuccio said of her early days. “I was the kid getting free lunch. My mother was single at the age of 27 years old with four kids. I understand the social net. … There is a lot in this budget that is not just to help a needy person. … There is no way that I can support something that is so far over the spending cap. … We don’t have the revenue in the governor’s package to pay for this level of spending. It’s not there. … It’s discouraging that this is where we are at. … We are in this budget blowing through the constitutional amendment that says we have to stay within that limit.”

Nuccio added, “We are basically spitting in the face of residents” who voted for the spending cap in 1992.

Fiscal concerns

With dozens of groups seeking money at the state Capitol, various organizations have been disappointed by the decisions made so far by the legislative fiscal committees. Those groups are expected to continue lobbying over the next six weeks.

The Connecticut Hospital Association says the appropriations committee made progress, but not enough, as the hospitals will continue to lobby the legislature.

“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 health care affordability and access, and avoiding additional regulatory burdens that would delay or impede critical healthcare transactions,” the association said. “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 health care workforce, and investing in innovation to advance quality care.”

The budget committee voted to restore Medicaid money for ambulance providers, which “sends a strong signal that the state budget should prioritize the services we provide to people who are most in need,” said Bill Schietinger, the regional director of American Medical Response, who serves as chairman of the Connecticut EMS Advisory Board. “Connecticut’s ambulance services are always there when someone needs us, yet Connecticut reimburses EMS providers for only a portion of the services we provide.”

Looking ahead

Concerning the spending cap, Lamont said it is uncertain what might happen in the future regarding federal budget cuts, which some have said could range from $200 million to $1 billion for Medicaid alone.

“But we don’t do it now as the normal course of business,” Lamont said of blowing through the cap.

Despite any differences, Lamont described the legislature’s work as “a good start.” He expressed optimism that he and the legislature can reach a final compromise on the two-year budget by the time the General Assembly adjourns the regular session on June 4.

“We’re pretty close,” Lamont said. “They’re a couple hundred million over the spending cap. That’s within the context of a $26 billion budget. We’ll be able to figure this out.”

Access this article at its original source.