As the 2024 legislative session began on February 7, Gov. Ned Lamont unveiled proposed adjustments to the 2025 budget, including a 3.1 percent increase in recommended appropriations from the 2024 fiscal year.
Following the enactment of the 2024-2025 biennium budget, the state was $11 million below its spending cap. According to Office of Policy and Management (OPM) Secretary Jeffrey Beckham, who held a press conference on the proposal shortly before it was debuted, the adjustments would put the state $1 million below the spending cap for fiscal year 2025. Beckham also noted that the governor’s proposal is balanced and adheres to all the state’s fiscal guardrails.
The proposal would transfer $45 million from the fiscal year 2024 budget and appropriate it for 2025, leaving the state with a $291 million surplus, all but $600,000 of which is unavailable due to the revenue cap.
The proposals would increase spending by eliminating $500 million in bonded debt from the Special Transportation Fund. It also utilizes unallocated pandemic-era funds, which expire soon, for various spending proposals.
Proposed revenue changes include a $45 million transfer in revenue from fiscal year 2024 to fiscal year 2025, a $16.3 million revision in the transfer between the General Fund and the Municipal Revenue Sharing Fund, and a suspension of initial occupational licensing fees for some nursing occupations, which is estimated to cost the state $3.5 million. The proposal would also suspend a $12 million transfer from the General Fund to the Tobacco and Health Trust Fund for fiscal year 2025.
Beckham also noted during the press conference that an existing stockpile of childhood vaccines means savings in an Insurance Fund program that pays to cover the cost of those vaccines. Due to the stockpile, the state does not have to make as large a purchase as anticipated.
Beckham also described the state’s Medicaid account as “the biggest problem.” The budget adjustment includes a projected $106.8 million increase in expenditures needed to cover Medicaid requirements.
The proposal also includes an $81.2 million adjustment needed to reflect new valuations to the employer contribution pension fund.
Other proposals focus on childhood and early education, utilizing an additional $43.3 million in state funding and funds from the American Rescue Plan Act (ARPA). Included in the budget adjustment is a proposal for increasing eligibility for the Care4Kids program from 60 percent of the state median income to 65 percent, with a cost of $12.9 million. $1.2 million from the General Fund would maintain access to the Smart Start pre-K program, replacing expiring pandemic-era relief funds. Another $3.8 million would to administrative costs for merging School Readiness and Child Day Care contract programs into a single funding stream. Another $1.8 million would go towards developing a mobile developmental screening tool for parents of children aged three and under.
The proposal would also use General Fund dollars to fully fund free and reduced price meal programs. Beckham noted that the program, funded by ARPA dollars, would otherwise expire this year. For 2025, the $11.2 million in funding would be split between the General Fund and ARPA.
In total, the proposed adjustments include $55.7 million in previously allocated ARPA funding that would go unspent. Federal guidelines require ARPA funds to be allocated by the end of fiscal year 2024 and spent by the end of fiscal year 2025.
Proposed allocations for ARPA funds include: $18.8 million for the Office of Childhood Education (OEC) for stabilization grants to childcare programs, $500,000 to the Department of Public Health to develop a public-facing tool to track nursing home quality of care, $1.5 million to the Department of Health to hire a contractor to develop an application to access federal, state, and local affordable housing choice vouchers, and $1.5 million to the Judicial Department to expand the Judicial Online Communication Exchange portal.
The allocations would make roughly $10.9 million available for other legislative priorities.
Also in the proposal is an income tax credit that Beckham described as an incentive for Connecticut resident to challenge New York’s “overreaching income tax laws.” New York taxes Connecticut residents who work remotely for firms in the state. The tax credit would be available to anyone who went to court and successfully challenged New York’s tax law for tax years 2020 through 2023. The credit would be equal to 50 percent of the additional tax Connecticut residents would have to pay due to no longer being able to claim credit on tax paid to New York should they successfully challenge the law. The Lamont administration estimates that, if successful, the proposal could generate over $200 million annually, as well as reduce the tax burden of Connecticut residents who work remotely for New York-based companies.
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