Connecticut Senate passes $51 billion budget with historic tax cut, governor says he'll sign it

HARTFORD, Conn. — Connecticut’s two-year, $51 billion state budget — including a historic cut to personal income taxes — cleared the General Assembly with strong bipartisan support on Tuesday and now heads to the governor for his expected signature.

The tax-and-spending package passed the state Senate 35-1 following five hours of debate, and after clearing the House 139-12 early Tuesday where there was a nearly three-hour debate that started late Monday. Both chambers are controlled by Democrats.

“Now, that is a bipartisan vote,” declared Democratic Senate Majority Leader Bob Duff after the tally was announced.

Both Democrats, who control the General Assembly, and minority Republicans expressed support for the massive bill — described by one senator as a Russian novel. It boosts funding for public schools in hopes of addressing student's educational setbacks during the pandemic and lowers marginal income tax rates for the first time since 1996.

“Is this package perfect? No. Are there a lot of needs? Yes. We give money back to our taxpayers. Could we have done more? Maybe,” said Sen. Henri Martin, the top Senate Republican on the Finance Revenue and Bonding Committee. “I think this is a fair document, a good document.”

Other Republicans, however, argued that the tax cuts don't go far enough to make Connecticut more affordable.

“We could have, and should have, done so much more,” said Sen. Eric Berthel, the top Republican on the legislature's Appropriations Committee, who voted for the bill.

The Senate vote came on the penultimate day in a six-month legislative session marked by bipartisan votes on some key bills.

First proposed by Democratic Gov. Ned Lamont, the planned income tax reduction is predicted to benefit approximately 1 million of the state’s 1.7 million tax filers. It’s being billed as the largest reduction since the tax was first implemented in 1991.

“This budget will deliver the largest personal income tax cut in the state’s history,” Lamont said in a written statement issued before the vote. “This is not a temporary tax cut — it is designed to be sustainable for years to come.”

While the budget increases spending by about 7.5% over two years, it also remains under the state's cap on spending. Lamont has said the state’s fiscal health has improved to the point where it can afford to provide permanent tax relief. The plan lowers the 5% marginal income tax rate to 4.5% and the 3% rate to 2% for the income year 2024. Democratic Senate President Pro Tempore Martin Looney said he's pleased the change finally makes the nearly 30-year-old "highly imperfect" tax more progressive.

“Now we are focusing on the lower reaches of those tiers to provide more relief," said Looney, who said he would have preferred a higher rate for wealthier taxpayers to cover the tax reduction.

The plan also increases the income tax credit for low-income working families, benefitting about 211,000 filers, and freezes scheduled increases in the state diesel tax.

The two-year tax-and-spending package also boosts state aid for local school districts by an additional $329 million; funds the “baby bonds” program that sets aside up to $3,200 for infants in low-income families; creates a new 30% tax credit for pre- and post-Broadway productions; increases funding for ambulance services and child care providers; increases pay for inmates; and expands an anti-gun violence program to more cities.

It also provides funding for striking group home workers who've been holding a vigil at the Capitol in recent days. Additionally, it includes funds to reduce a waiting list for residential services for people with developmental disabilities; and restores Lamont's planned cuts to Metro-North commuter rail in fiscal year 2025. It also includes additional funding for nonprofit social service agencies and state colleges and universities, although advocates contend it’s not enough considering the state’s resources.

Democratic Rep. Greg Haddad, co-chair of the legislature's higher education committee, said during the House debate that even though he was voting for the bill, it still falls short. Haddad also criticized the budget for using one-time revenues to cover costs at the state schools.

“It's like we've found the potholes in the road and we've filled them with snow, and spring is coming,” he said.

The includes a new state-level voting rights act. It requires local governments to prove certain voting changes won’t harm voters of color before they take effect, among other provisions Advocates lauded it as a national model.

There were concerns, however, about whether there's enough money for the state’s new early voting program, which is expected to affect general elections, primaries and special elections held on or after Jan. 1, 2024. And advocates for low-wage workers argued that Lamont's “dogmatic insistence on a rigid implementation of Connecticut's spending cap” means only “small steps” are being made to meet the needs of the vast majority of residents.

“Indeed, in some cases it actually moves backwards — leaving critical programs closed due to understaffing, threatening layoffs, service cuts, and tuition freezes in public higher education,” according to a statement from the Recovery for All coalition.

Last week, state Comptroller Sean Scanlon projected the current fiscal year, which ends June 30, will finish with a $1.6 billion budget surplus, an increase of $16 million from May. The budget deposits $3.3 billion into the state’s budget reserve account.

Once signed by Lamont, the new budget will take effect on July 1.