Connecticut lawmakers ended their session and sent a balanced budget of $43 billion for FY20 and FY21 to Gov. Ned Lamont. Democrats, who hold a majority in both legislative branches, said the budget erases a deficit without raising tax rates. Progressive Democrats in the General Assembly unsuccessfully pushed to tax the wealthiest Connecticut residents on investment income.
The effort to tax the wealthy fizzled but may come up in the future as state finances continue to be a balancing act. Without adjustments to the new budget, the state stands to be in the hole for a projected $3.7 billion. If revenue projections hold up, by Sept. 30, the state will add $2 billion to the rainy day fund and possibly an additional $900 million over the course of the biennium. Spending growth is limited by a state spending cap passed in 1991 in response to Connecticut voters who were outraged that a new state income tax was adopted. Under the cap, spending growth is limited to 1.7% in FY20 and to 3.4% in FY21.
The budget closes a $3.7 billion hole by passing additional taxes and fees. New sales tax items include interior design, ridesharing services, parking, alcohol, laundry and dry cleaning services, as well as digital downloads, for example, via Netflix and Hulu. The budget also calls for raising business filing fees from $25 to $60 while eliminating the $250 business entity fee to help employers adjust to the gradual increase in the minimum wage and a new paid family and medical leave plan. Car dealers will be required to pay a $100 fee for trade-in vehicles, up from $35. Plastic shopping bags will be taxed at 10 cents per bag and after two years, banned outright.
Also, built into the new two-year spending plan are estimated savings, which target the state pension fund and state employee healthcare costs. Contributions to the state pension fund will increase but at a slower rate. Healthcare costs will be reduced without employees losing benefits. Incentives include negotiating with providers for less costly health insurance plans and negotiating discounts for health care services and prescription drugs. Budget writers estimate $181.5 million in savings from these two areas.
In passing a paid family and medical leave program, lawmakers approved what appears to be the most generous program in the country. Connecticut joins California, Massachusetts, New York, New Jersey and the District of Columbia in approving paid family and medical leave. The bill provides for 12 weeks of paid leave over 12 months. Employees will fund the program by contributing 0.5% of their income through a mandatory payroll tax. State employees who belong to unions are exempt. Should there be inadequate funding for the program, benefits will be reduced.
The increase in the minimum wage will begin in October 2019 when it goes from $10.10 to $11 per hour. In each successive year, the minimum wage will increase by $1 until 2023 when it reaches $15 per hour.
A plan for cost-free college is in the budget but funding for the program hinges on approval of online lottery sales. The governor must meet with the Connecticut Lottery Corporation and request that a determination be made to offer lottery games online or through a mobile application.
Rep. Gregg Haddad, a NEBHE delegate and chief proponent of the program maintains if done right, this initiative could increase enrollment at the state’s community colleges. The Connecticut General Assembly’s Office of Fiscal Affairs estimates that the program would bring in $2.1 million to $7.7 million in federal aid and other financial assistance provided to students during FY21, depending on how many additional students enroll. The number of eligible students could range from 10% to 45% from the previous year. States with similar programs, such as Rhode Island, Tennessee and Oregon saw enrollments increase.
Among other highlights, lawmakers passed legislation to:
- Increase in the minimum wage to $15 by 2023.
- Establish paid family and medical leave program
- Increase in the age to purchase tobacco products from 18 to 21.
- Require gun owners to safely store firearms. (The bill was a response to the death of a 15-year-old who accidentally shot himself at a neighbor’s house.)
- Ban the use of bumpstocks
- Provide free tuition for community college students
- Allow qualified undocumented college students access to a form of financial aid
- Provide for a cost-of-living wage for nonprofit social workers
- Extend the time for reporting sexual harassment to employers.
Lawmakers rejected efforts to:
- Legalize marijuana sales
- Import prescription drugs (Senate failed to take up a House-passed bill to provide a federal waiver for Connecticut to be the fourth state in the U.S. to import prescription drugs)
- Allow sports betting (no agreement was reached between the governor and the Mashantucket Pequot and Mohegan tribes which would have allowed them and other groups to offer sports betting in the state)
- Introduce highway tolls (Republicans wouldn’t support tolls on each of the four interstate highways which Lamont and most Democrats say is necessary to fix the state’s broken transportation system. At a meeting with legislative leaders on June 23, Lamont outlined a new toll proposal in which low- and middle-income Connecticut residents would see lower taxes and a credit to pay for an EZ Pass. No date has been set for a special session.).
Carolyn Morwick directs government and community relations at NEBHE and is former director of the Caucus of New England State Legislatures. Visit here for summaries of the legislative sessions in other New England states.
Addition, June 27, 2019: Gov. Lamont also signed into law a bill from Sen. James Maroney to make Connecticut the first state in the nation to require teacher-preparation programs to include instruction in how to teach coding and programming in their existing computer and information technology skills curriculum. The legislation SB 957, also requires the Connecticut Department of Education to create an endorsement and certification in teaching computer science and calls on the Connecticut Office of Higher Education to work with the Department of Education to develop an alternative route to certification program for computer science teachers to include mentored apprenticeships ad program admission criteria. Maroney’s legislation will be a topic for discussion at the fall 2019 meeting of NEBHE’s Legislative Advisory Committee on which he sits.