(HARTFORD, CT) – Governor Ned Lamont today announced that he has signed into law the fiscal year 2023 budget adjustment bill, which includes more than $600 million in tax cuts – the largest tax reduction in Connecticut’s history.
Tax cuts in the package include suspending Connecticut’s excise tax on gasoline through November 30, 2022; enacting a $250 per-child tax credit for lower and middle-earning families; funding payments for earned income tax credit eligible households; increasing the property tax credit from $200 to $300; and speeding up a plan to eliminate taxes on pensions and annuities. In addition, bus fares on all public buses statewide will continue to be suspended until December.
Notably, it also reduces property taxes on motor vehicles in 75 cities and towns by capping mill rates at 32.46 and reimbursing the municipalities for the lost revenue. For example, if a town has a mill rate of 50, motor vehicle owners will pay a rate of 32.46 and the state will reimburse that town for the remainder.
The legislation is House Bill 5506. It was approved with bipartisan support of legislators.
“This bipartisan budget gives taxpayers their largest tax cut in history, while paying down approximately $3.3 billion in unfunded liabilities, making groundbreaking investments in childcare, crime prevention, environmental protection, and caring for our most vulnerable residents,” Governor Lamont said. “We are transforming Connecticut, making it a place where people and businesses want to grow and set down roots. I want to thank the members of the General Assembly, town leaders, and everyday residents who raised their voices in support of this budget.”
“The passage of this 2023 budget, a budget containing over a half a billion dollars in tax cuts, is the beginning of providing significant tax relief for Connecticut’s working people, middle class, and retirees,” Lt. Governor Susan Bysiewicz said. “When Governor Lamont and I took office in 2019, our state was facing a $3.7 billion budget deficit. We will be making a historic contribution towards paying down our long-term unfunded pension liabilities, while maintaining one of the strongest rainy day funds in the country. I applaud our state legislature for getting these initiatives over the finish line. We still have work to do, and the governor and I will continue our work to provide the best quality of life for our Connecticut community.”
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Connecticut’s Transformative Budget: FY 2023 Budget Adjustment Summary
Tax Cuts and Paying Down Our Long-Term Liabilities
- Budget is bold, balanced, and bipartisan, providing the largest tax cut in state history of more than $600 million
- Extended gas tax holiday, child tax credit of $250, EITC payment, car tax mill rate decrease, property tax credit increase, and pension and annuities exemption
- Anticipate additional contributions to the pension funds this fall to exceed $3.3 billion
- That is on top of transfers of more than $1.6 billion in total contributed last fall and in 2020 – over and above the amount the state is required to contribute
- In total, approximately $5 billion in additional contributions to the teachers’ and state employees’ retirement systems
- As a result of those transfers, required contributions to the funds will have been reduced by more than $430 million per year for 25 years compared to requirements had those extra contributions not been made
- $40 million reduction in state UI taxes on employers
Investing in Our Children
- Provides approximately $100 million in new investments in childcare
- $25.3 million to increase the number of infant and toddler slots at state-funded childcare centers by 1,300 (over an 80% Increase)
- Provides more than $83 million in federal American Rescue Plan Act investments for early childhood, including stabilization grants for school readiness providers, funding for Care 4 Kids, and investments in infrastructure
- Provides $26.2 million to support the Sheff settlement to end more than 30 years of litigation
- Expands state funding for special education by $15.5 million
- More than $97 million in federal American Rescue Plan Act funding for various K-12 initiatives and organizations, including providing $30 million for additional free school meals over the next year, $28 million for mental health-related grants, and $11 million to subsidize magnet school tuition during this time of recovery
Cutting Crime
- Support regional in-state strategies to reduce auto theft and violence
- Promote safety on rural roads by stepping up speed enforcement
- Fill federal funding gap to victim service providers
- Expand services and supports for domestic violence victims
- Invest in evidence-informed community violence intervention programs
- Establish a community gun violence intervention and prevention program under the Department of Public Health
- Provide a public health response to reducing homicides
- Strengthen Project Longevity with resources to reduce group and gun violence
- Increase law enforcement training on community relations, use of force, and new law and policy
Creating a Sustainable State Employee Workforce
- The budget invests in protecting state services and retaining the valuable employees who provide those services
- The agreement helps attract and retain talent by providing reasonable increases over a 3-year period, and provides recruitment and retention incentives, especially for hard-to-recruit, in-demand occupations
- Increases are far less than the inflation rate, and the less than likely result had contracts gone to arbitration
- Prevents the brain drain that would have occurred approaching the July 1 “retirement cliff”
Transportation Investments
- Free bus service until December 1
- Express train service to New York City
- Federal infrastructure bill support to leverage billions in investments
Housing Investments
- $50 million to support and invest in the creation of additional affordable housing across the state, including 350 new units of affordable housing
- $5 million to support the homeless population, $1 million for homeless youth transitional housing, and $1 million for the Rental Assistance Program
Protecting Our Environment
- $10 million in vouchers for commercial electric vehicles
- $12.5 million in federal American Rescue Plan Act funding to support outdoor recreation
- Funding for environmentally-informed winter salt operations
Taking Care of Our Most Vulnerable Residents
- 150 new slots in the Department of Social Services for the autism waiver
- Recreational and community engagement opportunities in the Department of Developmental Services to facilitate socialization and connections for individuals with intellectual and developmental disabilities
- Infrastructure improvements for public/privately-provided Department of Developmental Services camps
- Unprecedented Private Provider COLAs, plus additional one-time stabilization funding
- Support transition to acuity-based nursing home rates
- Expand the capacity of Child Abuse Centers of Excellence for expert pediatric consultation and training on cases of suspected child maltreatment
- Expanded Mobile Crisis–statewide 24/7 coverage and linkages with schools and police
- Developed children’s behavioral health urgent crisis centers
- $15 million for a new 12-bed psychiatric/medical unit at the Connecticut Children’s Medical Center
Healthcare Investments
- Support for Federally Qualified Health Centers to ensure immediate availability of long-acting reversible contraceptives
- Increase Medicaid rates for family planning clinic services
- Additional funding for early screening and detection of breast and cervical cancer
- Increase Medicaid rates for mammograms
- COVID-19 Preparedness: $157.5 million in federal American Rescue Plan Act funding for testing/kits and state agency expenses
- $30.0 million in federal American Rescue Plan Act funding to strengthen response to lead poisoning and achieve lead safe homes
- Fully fund per capita formula grants to local and district departments of health
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