Governor of Connecticut delivers budget address

Gov. Ned Lamont delivered his budget address on Wednesday during a joint convention of the General Assembly at the State Capitol in Hartford.

Today I will present the state legislature with a two-year budget proposal that is focused on increasing affordability and opportunity for all Connecticut residents.

📺 Tune in live today at 12:00 p.m. https://t.co/myEdWIuabK

— Governor Ned Lamont (@GovNedLamont) February 5, 2025

The governor's budget address

You can read the address, as prepared, below.

For many years, governors stood at this dais, confronted with a recession for which our state was totally unprepared. Today, we are much better prepared to manage the unexpected, within reason, thanks to all of you.

Mr. President, Mr. Speaker, Senator Harding, Representative Candelora, members of the General Assembly and people of the great state of Connecticut.

The last few weeks have been turbulent, and we can only guesstimate how changes in Washington will impact our budget over the next few months. Our proposed budget is our best effort to stay true to our Connecticut values while continuing to focus on affordability and opportunity for all.

It should be our seventh and eighth honestly balanced budget, which invests in the future without shortchanging the very real needs of today. Unlike other states, which are cutting back, our budget will increase by over $1 billion in each of the next two years, all the while making a transformative investment in early childhood education and another round of tax cuts.

We continue to move away from the days of the “permanent fiscal crisis,” and by year end we should have paid down $10 billion in pension debt, honoring our promise that pensions will be there when you retire, all while reducing the fixed costs, which were crowding out critical investments in our future.

I continue to be a strong believer in the spending cap, which simply restates the obvious: you can’t spend more than you earn.

Fortunately, our economic growth is still strong, second only to Maine in the region – they must’ve sold a lot of lobster last year – and our unemployment rate is the lowest it’s been in 25 years.

That means as a state, we are earning more, which means our general fund will grow 4.5% to 4.8% over the next biennium – more than inflation.

I want to give a shout out to you, House and Senate, Democrats and Republicans, who put us on the strongest fiscal footing in many years.

That said, we have earned the opportunity to rethink the volatility threshold, which are tax revenues considered too unpredictable to spend on operating expenses, that can also create big deficits in the out years. Many of you may remember those deficits all too well.

In my State of the State address, I pledged that opportunity and affordability would be our “north star.” And speaking of affordability, for countless families the cost of childcare can be not only burdensome but also keep them out of the workforce.

In close coordination with Treasurer Russell and Comptroller Scanlon, I am proposing we move an additional 3% of revenue from our pension paydown into the General Fund, and any surplus, which is estimated at $300 million per year, will be deposited in our brand-new Universal Preschool Endowment.

This fund will be a down payment on making pre-K and early childhood education affordable and accessible for all of our kids.

Three hundred million dollars from the fiscal ’25 surplus will seed the fund, and our budget anticipates almost $1 billion in the endowment over the next few years – God, the economy, and President Trump willing.

We are building this endowment for the long term. With a 10% spend rate, our budget will have an additional $30 million next year, $60 million in ’27, all with the goal of providing pre-K and preschool spaces at no cost to families earning up to $100,000.

Saving parents thousands of dollars and giving them the freedom to get back to work – because parents, businesses need you.

Finally, I appreciate that our blue-ribbon commission, co-chaired by Lt. Governor Susan Bysiewicz and Commissioner Beth Bye, along with childcare advocates, emphasized not just more spending, but smarter spending, easier accreditation for home-based centers, and better value per caregiver.

I am always sympathetic to smarter spending on our kids, and our endowment complements our at-home nursing support for first time moms on Medicaid, paid family and medical leave, and arguably the best K-12 schools in the country.

Thank you, teachers.

Yes, we will continue to aggressively pay down our pension debt, when I heard from many of you, that we need to expand investments in our younger kids at the same time.

And I heard from more than a few of you that we should consider a tweak (I love that word, “tweak”) in our pension paydown in order to cut taxes even further.

To date we have:

a. The middle-class income tax cut – largest in state history
b. Eliminated the income tax for working families, and
c. Eliminated tax on pensions and Social Security for most of our citizens.

Our budget proposes another increase in the property tax credit, which was $200 five years ago, and we’re proposing an increase to $350 – up $50 from last year.

We are trying to help our mayors and first selectmen hold the line on property taxes, which are high compared to our peers. We have significantly increased municipal aid over these eight budgets, including investments that have more than doubled funding for PILOT grants. This budget further increases total municipal aid by $230 million over the biennium.

But it will take more than state subsidies to get our property taxes under control. An expanding grand list helps, and our cities are growing.

It’s great having 169 towns, but that doesn’t mean we need 169 building assessors or 169 purchasing agents.

Our budget includes an additional $250,000 to each of our regional councils (a.k.a. the “COGs”) to assist your town in things like flood control and municipal waste or recycling efforts. Shared services reduce costs, and reducing costs reduces property taxes.

More state aid to education also helps your kids and your budget. We have proposed an additional $160 million in funding for our schools, which means that we have met the legislature’s 10-year timeline for education cost sharing increases two years ahead of schedule.

Special education is a promise we make to help our kids with special needs. I have seen and heard firsthand how the right program makes a lifelong difference for these special kids.

At the same time, we propose some cost-saving reforms, including capping out-of-district costs to private providers.

Additionally, we are proposing a $14 million incentive grants for districts to provide the highest quality special ed programming in-district, and our fiscal ’27 budget includes an additional $40 million to help you subsidize support for these special kids.

Superintendents are working to get smartphones out of most of the classrooms, and our budget provides resources to store those phones at the beginning of a “phone-free day, phone-free schools.” Remember those Yondr pouches?

Our capital budget includes $500 million for new schools, our biggest increase in years. Just ask what those projects will mean to students in towns like Torrington, Trumbull, Thompson and New Britain. New schools will also include solar panels and insulation to reduce costs, and air conditioning and ventilation to keep us safe, and keep you awake.

But you can’t save souls in an empty church and you can’t learn if you’re not in school. Our budget will double down on the LEAP program, knocking on the doors of families whose kids are missing too much school. Maybe it’s a teacher or a coach or a friend knocking on the door. Thankfully, more and more of our “disconnected kids” are coming back to school.

Unfortunately, with so much media attention around ICE and mass deportation, some of our kids are staying home and missing school. Our door knockers now have another message at the door: “You are safe in our schools, come back.”

Another reason to be in school? Our budget includes free breakfasts for all of our kids.

Speaking of disconnected kids and giving back, our budget continues to build on our youth service corps, under the leadership of Thea Montanez.

We are trying to better coordinate the after-school and summer programs that keep our kids busy and useful, including expanded internships and apprentice programs that can make schoolwork more relevant to the real world, and giving back is good for the soul.

Our budget doubles down on our commitment to AmeriCorps, providing hundreds of starter jobs to support our not-for-profits, public agencies, nursing homes, parks, summer camps and local businesses.

Our budget continues our commitment to higher ed, starting with UConn, nationally recognized for world-class education, which attracts students from all over the state, all over the country, and around the world.

Higher ed is a great competitive advantage for our state and our country, the “elevator of opportunity” for our students, and the key to our continuing economic growth, in terms of workforce and R&D and citizenship.

I believe the White House attacks on higher ed, including the temporary freezing of federal grants, are short-sighted and very damaging.

UConn and CT State have excellent faculty, but our colleges must focus on the students first, and the importance of higher ed does not exempt our universities from making sure that taxpayers and students are getting the best value. They should not be immune to reform, and CT State in particular must reimagine how we train our workforce for 21st century jobs.

Their student population is down 30%, most students don’t graduate, and costs keep escalating.

The university boards and leadership should be drilling down on the mix of courses, size of lectures, and teaching load. You can’t teach innovation if you’re hesitant about innovating.

Working with UConn and Yale, we will make over $100 million in key capital investments in quantum computing and Artificial Intelligence applications to keep our key industries ahead of the curve, including life sciences and fintech.

What else? Connecticut Innovations, led by Matt McCooe, is announcing a $50 million quantum AI fund to invest in some of our most promising startups. Our budget increases the biotech R&D tax credit from 65% to 90%, and it eliminates the capital stock tax so startups with no profits can raise capital without getting taxed on it.

Remember, hire a Connecticut grad, we pay your business to pay down their student loan. Another reason for them to stay here in Connecticut, and for your business to hire here in Connecticut.

College or not, we need you here and we’ll make it easier for you to stay. Nurses, dental hygienists, therapists, electricians, plumbers, HVAC, sheet metal workers, teachers: We are eliminating your licensing fees – yet another reason to be in Connecticut.

Just as we are bending the curve on pensions and bonded debt, healthcare costs are consuming our budget, especially Medicaid and pharma. We have the best healthcare in the world, if you can afford it. We have great hospitals and health insurance right here in Connecticut. We should be a leader, so let’s take the lead.

Our budget includes some initiatives that will drive the lobbyists crazy. Ask them if they have a better idea. If not, hang tough.

I am working with Comptroller Sean Scanlon, who oversees employee and retiree healthcare benefits with a focus on enhancing quality and saving you money. We are working with hospitals to control costs for employee hospitalizations.

Our proposed reference pricing at 240% of Medicare for our state employees and retirees would save you out of pocket and save taxpayers $100 million in costs. Paired with a projected increase in our federal Medicaid reimbursement, our hospitals will be made whole.

If you think we are being too bold, even “ruby red” Indiana is capping all hospital costs at about two and a half times Medicare rates. Our Medicaid study highlighted specialties where Medicaid rates need some catching up, so our budget includes an additional $70 million for Medicaid rate increases.

Our broader study of Connecticut’s managed fee for service shows we are very competitive, except when it comes to treating the chronically ill and seniors who seek an alternative to nursing homes. Andrea Barton Reeves is looking at alternatives that provide better wrap-around services, allowing you to age at home.

Pharmaceutical costs have jumped from 10% to 20% of our healthcare spend, and still more people are going to the hospital than ever before. The hospitals are blaming the drug companies, and the drug companies are blaming the PBMs and everybody is running to the taxpayer to make up the difference.

Unless you have a better idea, I propose that we cap generic drug cost growth at CPI. The drug companies got their rate of return during the patent period. We have held down costs for insulin and we can help with your other prescriptions.

We will continue to expand our ArrayRx discount card, making it easier and cheaper to use, which may save you 50% on cost at the pharmacy.

Our budget also includes funding to import pharmaceuticals from Canada at less cost, unless higher tariffs kill this option.

We have no idea how the feds will impact Medicaid costs, because the DOGE commission in Washington may root out fraud (and that’s good) or simply cost shift Medicaid expenses to the states (and that’s bad).

If all they do is cost shift, DOGE is just a dodge, which could cost our state hundreds of millions of dollars. Time will tell.

On a happier note, Access Health CT will be expanding ICHRA on July 1. ICHRA is a Trump-era program that reduces healthcare costs for small business on the exchange.

We will never forget the most vulnerable. Health is often impacted by environment, and we must make sure that those with addiction and mental health needs are taken care of, starting with a place they can call home.

The feds are pulling back on rent support, and at the same time strong demand and little inventory are driving up housing prices, and rents, and homelessness.

Attorney General William Tong won a case against Purdue Pharma, a purveyor of opioids, and the resulting opioid advisory council just approved the use of $58.6 million in settlement dollars to create 500 units of supportive housing across our state for the homeless, many of whom face addiction issues.

Seila and the Department of Housing are supporting Head Start families experiencing homelessness, and Brandon McGee over at the Social Equity Council is providing additional resources for rent support in those communities hardest hit by the war on drugs. It takes a village.

The severe flooding in the Naugatuck Valley destroyed countless homes and businesses. By the time they received the flood warning, the merchants were standing knee-deep in water. Almost no one had flood insurance, volunteers saved the day, and Dan O’Keefe and the team at Economic and Community Development got hundreds of $25,000 checks out within weeks to start the rebuilding. Then came FEMA and SBA.

How do we plan for those 100-year storms that seemingly occur annually?

1. We’re updating our flood map.
2. We’re proposing that insurance brokers must offer flood insurance.
3. Garrett Eucalitto and team DOT are building the roads and bridges back – building them higher to better prepare for the next surging river.

We will continue our $400 million investment per year in housing – workforce, affordable, supportive, multi-family. People want to be in Connecticut, move to Connecticut, and the only thing slowing us down is a lack of housing.

Last year we built 70% more housing than just eight years ago, and we will continue our Time to Own program, which has helped over 5,000 first-time homeowners from Stafford Springs to Danbury buy their first home, building wealth, with a stake in their community.

Most of the housing will be transit-oriented development, making our cities more walkable with less need for a car. New Haven will continue to be the major transportation hub of the state, with high-speed Amtrak service connecting Boston to New London to New Haven and Bridgeport, Stamford and New York, saving you 15 to 30 minutes on your commute.

Transit-oriented housing is being built big time in the Valley, thanks to more frequent rail service on the Waterbury Line, and along the New Britain Fastrak, and in New London, which is booming faster than any time since the heyday of whaling.

Double tracking on the Hartford Line will provide faster and more frequent rail service all the way to Windsor Locks and Bradley Airport, and along with Tweed Airport, our number of destinations have almost doubled, opening up our state to the rest of the country and the world.

We are confident that our roadway construction will continue – $1.5 billion in 2027, up 50% from eight years ago. Our roads and bridges will be safer, and faster, since many of the choke points will be fixed.

Our rail improvements are increasing to $1.2 billion in 2027, a three-fold increase from a few years ago.

Connecticut continues to win more than our per capita allocation from federal transportation dollars because:

a. We have more need
b. We have more pre-designed/shovel ready projects, and
c. Unlike six years ago, our transportation fund is fully funded, and we can make our 50/50 or 80/20 matches without contingences.

I am not as confident as I once was about the ongoing rebuild of our state because every day we get another curve ball from Washington.

Last week, the federal Department of Transportation circulated a memo notifying us that all road and bridge grant making will be subject to some revised economic principles.

Preference will be given to communities where marriage and birth rates are higher than the national average. Don’t tell anybody but we are lower than the national average, so my children, hurry up and get married, go forth and procreate, and your community may get a new bridge.

Preference will be given to states that implement user pay models, a.k.a. tolls. You can’t make this stuff up.

Preference will be given to communities that comply with immigration objectives specified by the president.

That’s a little vague. Of course, our cops round up the bad guys, regardless of immigration status. We get the bad guys off the street, and we work with any federal authorities to keep us safe. We don’t waste time on the immigration status of speeders and shoplifters, and our teachers don’t ask the immigration status of their students – teachers are pretty busy teaching.

And I want all of our kids, regardless of your background, to feel safe in our schools.

And just between us, we do have an equity and opportunity officer for state government, Mariana Monteiro, who makes sure we do the broadest outreach, from all neighborhoods and backgrounds, so it’s not just the usual suspects who know about an opening to be a traffic engineer, nurse, commissioner, or judge.

Talent is everywhere, and we make sure opportunity is as well. With Mariana, Argentina’s loss was America’s gain. Mariana learned her skills at “woke” companies like Sikorsky, which makes attack helicopters, and Pratt and Whitney, which makes fighter jets. You know why? They wanted the very best engineers regardless of background, and so do we. Mariana is our “Director of Meritocracy.”

And while we are securing the southern border, we also remember that the Statue of Liberty is not an old, rusted steel relic but a symbol for dreamers around the world, yearning to breathe free.

America is a symbol of hope and opportunity. That’s what makes us strong, that’s what makes America great, and these are the values I will fight for every day.

God bless the great State of Connecticut and our enduring values.