Press Releases

Governor Ned Lamont


Fact Sheet: Biennial Budget Agreement Stabilizes State Finances, Makes Key Investments With No Income or Sales Tax Rate Increases

This fiscal year 2020/2021 biennial state budget agreement closes a $3.7 billion deficit without tax rate increases or significant cuts to essential services. It invests in the future through increases to education and workforce development while protecting our most vulnerable communities leaving no one behind. It is a foundation from which our state can grow by demonstrating we are serious about stabilizing our finances. It is balanced honestly and puts us on a sustainable path to a more competitive future. Importantly, this budget was agreed to and will be passed on time, giving first selectmen and mayors the confidence of knowing what their budgets will look like for the next biennium.

The budget also comes on the heels of a landmark agreement negotiated by Governor Lamont and Connecticut’s hospitals that will save taxpayers billions of dollars in the future and eliminates the prospect of ongoing litigation.

  • Delivers stability and predictability to taxpayers and businesses by addressing the fixed costs that stunts the state’s growth year after year
    • Makes changes to state employee and retiree healthcare programs that will result in a savings of $185 million over the next two years.
    • Makes a $75 million payment toward the historic cumulative GAAP deficit.
    • Sets aside $381 million to provide a clear path forward to restructuring the Teachers’ Retirement System, allowing the state to mitigate the potential cliff as it would have faced in the late 2020s and early 2030s when annual payments could have tripled.
    • Puts Connecticut on a course for the most robust savings the state has ever had, and placing it among the best states in the country in terms of budget reserves.
  • Fully funds the Special Transportation Fund (STF)
    • Brings the STF into balance over the next five years to make necessary repairs to our roads, bridges and highways.
    • Fully implements the car sales tax into the fund by 2023.
  • Holds the sales tax rate flat while taking steps to modernize our tax policy
    • Generates revenue from areas of growth, such as digital downloads and services, equalizing the policy with brick-and-mortar retail.
    • Begins to broaden our sales tax base by including interior design, dry cleaning and parking in a way that chooses fewer winners and losers.
  • Does not increase the income tax rate for anyone for the first time in four years
  • Protects and supports Connecticut’s working families and vulnerable communities
    • Allocates funding to enact two historic pieces of legislation – increased minimum wage and paid family and medical leave – both designed to help lift families out of poverty, combat persistent pay disparities between races and genders, and allow individuals to take time to care for themselves or their loved ones.
    • Includes $29M in funding over two years for wage increases for nursing home workers and expands eligibility for HUSKY A adults to 160 percent of the federal poverty level.
  • Holds Connecticut cities and towns harmless
    • Keeps municipal funding flat over the next two years. Contains no reductions from FY 2019 municipal aid payment lists and adjusts car tax formula to reflect year-over-year grand list changes.
  • Increases funding for public education and workforce development
    • Honors the ECS formula and provides an additional $112M over two years.
    • Includes a plan for Debt-Free Community College beginning in 2020 and adds $250,000 to the Minority Teacher Incentive Program.
    • Connecticut will invest more money into education and workforce development to strengthen the existing pipeline between our public education institutions and areas of growth such as advanced manufacturing and biotechnology.
    • Creates a partnership with Dalio Philanthropies that will provide matching funds for disconnected and disengaged youth.
  • Supports Connecticut businesses
    • Eliminates the $250 business entity tax – a tax that is mainly paid by small businesses.
    • Phases-out the Capital Base tax under the Corporation Tax by January 1, 2024.
  • Modernizes state government
    • Provides over $6M in funding for a digital front door - a new digital service that will move the public’s interactions with state government online, and provide services that are personalized, more secure, efficient, and cost-effective.
  • Protects the environment and invests in clean energy
    • Establishes targets and requires agency studies for increasing zero-emission vehicles in the state fleet, and provides funds for the state’s zero emission vehicle program to incentivize state residents to purchase such vehicles.
    • Imposes a $0.10 tax on environmentally unfriendly plastic bags for two years, followed by an outright ban.
    • Protects the state’s ratepayer funded energy efficiency and green bank programs.
  • Promotes health and wellness
    • Raises the age for the consumption of tobacco products from 18 to 21 years old.
    • Places a new ten percent wholesale tax on e-cigarettes and a 40 cents per mL tax on “open” e-cigarettes to bring e-cigarettes closer in line to the state’s cigarette tax.

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