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As Gov. Ned Lamont prepares to introduce the first budget of his administration on Wednesday, his office has dropped a series of hints on how the budget will shape up.
The governor has issued a flurry of statements, including an op-ed in the CT Post and an open letter to Connecticut residents detailing components of the economic policy outlined in his budget. He has proposed instituting tolls on major highways, removing administrative barriers for businesses and increasing the sales tax to remedy the state’s financial woes. Lamont will present his proposed budget to a joint session of the Connecticut General Assembly on Feb. 20.
“My job on February 20 is to share with you a realistic and thoughtful budget that will jumpstart the Connecticut economy, and work for everyone – leaving no one behind,” Lamont wrote in the open letter to Connecticut residents on Feb. 11. “But my proposal is just the beginning of the conversation — not the end.”
During the campaign, Lamont declared his support for a toll on tractor trailer trucks only — the policy that neighboring Rhode Island follows. Last week, shifting from his earlier position, Lamont threw his support behind implementing tolls on all vehicles on highways such as the I-95, I-91, I-84 and the Merritt Parkway.
Lamont cited the state’s crumbling infrastructure system and “crushing congestion” on major thoroughfares to highlight the necessity of tolls — but not all Connecticut residents are on board. On inauguration day last month, several dozen protestors gathered outside the state Capitol building to protest the implementation of tolls — lamenting the additional cost to consumers and small businesses.
According to University of Connecticut economics professor Fred Carstensen GRD ’76, tolls would be capable of generating an annual revenue of about $1 billion for the state.
While his term started just recently, Lamont has already prioritized rebranding Connecticut as a business-friendly state — highlighting the state’s highly skilled workforce and proximity to major metropolitan areas for companies seeking a location for their headquarters.
In a statement on Feb. 14, Lamont announced the elimination of a biennial $250 business entity tax and an initiative to streamline administrative burdens for companies filing with the state.
“This is the beginning of our work with the business community — not the end — but I hope these proposals send a powerful message to entrepreneurs, small business owners and CEOs alike: Connecticut state government wants to be your partner, not your roadblock,” Lamont said in the statement.
In addition, Lamont also announced a “debt diet” to reduce long-term debt service payments, which he hopes will save $2 billion over the course of the next 10 years. In the last five years, the state has borrowed around $1.5 billion each year, as well as almost $1 billion a year in transportation bonds.
Although the newly elected Governor has promised to reboot the state’s economy, Carstensen expressed doubt about the state’s ability to choose projects that have the potential to generate the most economic development, noting that Lamont did not mention metrics or data his administration would use to make decisions.
“If you’re going on a diet, you have to measure calories,” said Carstensen. “I don’t see any real effort to measure calories here.”
The current administration is not the first to prioritize attracting companies to the Nutmeg State. In July 2011, former Gov. Dannel Malloy signed the First Five job creation initiative, which provides direct state aid and tax breaks to businesses that create a minimum of 200 full-time jobs in the state within two or five years. According to Malloy’s website, the program was designed to attract new companies from other states, retain companies already in Connecticut and encourage businesses to expand. However, during Malloy’s tenure, General Electric and Alexion were among several major companies that moved their headquarters out of Connecticut.
In his open letter, Lamont warned residents of the precarious state of the Connecticut economy and the importance of cutting costs.
“We are expected to end the fiscal year with a surplus. While that sounds like great news, I ask you to temper your enthusiasm for a few reasons,” Lamont wrote in his open letter. “The likelihood of a significant deposit to the Rainy Day Fund [should not] lull us into a false sense of security and sap the urgency we need to confront our fiscal crisis head-on.”
Negotiations between the two parties in the legislature — as well as the governor’s office — will start later this month, and they are expected to last for most of the legislative session. The legislators and Lamont have until July to come to an agreement before the new fiscal year starts.
The state’s economy is currently performing the worst in the nation and experienced the greatest reduction in the size of its economy among all 50 states. In fact, Connecticut’s economy is smaller today than it was in 2004.
Historically, budget negotiations have not gone down smoothly. In 2017, after a monthslong impasse, both parties in the legislature eventually locked the governor out of talks and passed a budget 123 days after the previous had expired.
The long period of gridlock in 2017 largely resulted from the even 18–18 split between Democrats and Republicans in the state Senate. In November, however, Democrats won big in Connecticut, leading to a 90–59 majority in the House and a 20–13 majority in the Senate.
The CGA regular legislative session will adjourn on June 5.
Nathalie Bussemaker | nathalie.bussemaker@yale.edu