Governor Lamont's Fiscal Year 2022-2023 Biennial Budget Address
Delivered via video
Governor’s Office, State Capitol
February 10, 2021
Mr. President, Mr. Speaker, Senator Kelly, Representative Candelora, members of the General Assembly, Lt. Governor Bysiewicz and the people of the great State of Connecticut.
As your governor, one of my top priorities has been to get Connecticut’s fiscal house in order. My first stop two years ago was the state’s budget. For decades, Connecticut was defined by one fiscal crisis after another. Which is why when I spoke to you at my first budget address, I challenged us to pass an honestly balanced budget on time.
The budget we passed together, on a spring day rather than in the middle of an autumn night, resulted in a small surplus in year one and, so far so good, a bigger surplus in year two.
We did so without broad-based tax increases, without cuts to public services or cuts to our cities and towns, and we did so while building the largest budget reserve in our state’s history.
Despite a global pandemic which threatens every aspect of our society and economy, we stayed the course, weathering the storm and our state has begun to find its economic footing.
True enough, our original path to solvency had some twists and turns thrown in, but we got to our final destination, and the rest of the country has taken notice. Yep, there’s more work to do, but Connecticut has made significant progress in getting its fiscal house in order.
Our budget is much more than a list of expenditures and revenues. Rather, it is a reflection of our shared values, as we are collectively deciding not only what we are funding, but why we are funding it. It is a document that defines who we are as a state and a society. Inevitably, there will be tradeoffs, just like the many families across this state do with their own budgets. And just as those same families are managing and struggling through the economic implications of a global pandemic, so are we.
COVID-19 continues to throw wild cards into the deck, but the federal government is getting much closer in deciding how it will support our state and local municipalities. Connecticut will have to remain agile in meeting these changing circumstances, but that being said, I would not change our hand with any other state in the country.
Due in large part to the steps we have taken to mitigate the spread of the virus and manage our state’s finances, Connecticut is one of the best positioned states in the country. Thanks to the good people of this great state who took the public health precautions seriously, we have been able to keep more of our economy open safely with a lower infection rate than almost any other state.
The pandemic reminds us that this is no time to limit our ambitions. Rather, the pandemic drew into sharp focus our racial health disparities and educational inequalities, as well as the fragility of our families and small businesses where women, and especially women of color, took the biggest hit during this pandemic.
They were usually the first ones on the front lines taking care of our children, our parents, our sick, or just trying to keep their business going to keep employees paid and their families fed.
We owe them more than just our gratitude, and their faces are reflected in our budget.
But let’s face it, the Connecticut budget is still burdened with high fixed costs accumulated over the decades, and these costs plus a COVID economy result in deficit projections in each of the next two years.
With our continuing success in streamlining government, we have reduced projected deficits to less than $1 billion annually, which will be balanced by either:
- a gradually growing economy;
- state and local aid from Washington; or
- a partial drawdown from our $3.5 billion rainy day fund.
These realities, however, must not come at the cost of our core Connecticut values. Therefore, the budget I am submitting is anchored in five priorities:
- Defeating COVID-19: Because if we don’t, nothing else matters;
- A More Affordable Connecticut: An intense focus on making Connecticut more affordable for our middle class through investments in education, early childhood care, support for our small businesses, workforce development, and more affordable healthcare;
- Investing in Our Future: With a 21st century upgrade to our transportation, energy, and broadband infrastructures;
- Modernizing State Government: Creating an improved customer experience and faster service at less cost to our taxpayers; and
- Economic Growth and an Economy That Works for All.
And, as we accomplished two years ago, my budget achieves this without broad-based tax increases, reducing municipal aid, or cutting any existing services. These are commitments I will not break.
As I have said, defeating COVID-19 is the top priority. We were also able to support the additional demand on our social services, allocating funding for nonprofit providers and nursing homes to provide stability and needed resources.
And we will continue to build on our $500 million investment in a robust testing program and continue to ramp up our COVID-19 vaccination program, both of which have been rated as among the best in the country.
The past year has been an exceptional challenge to our cities and towns. There isn’t a single mayor who in 2019 budgeted for a pandemic in 2020, and they are struggling to build this new reality into an already tight budget for 2021 and beyond.
In addition to facing increased public health and safety costs, our most distressed municipalities are also facing diminished tax bases due to tax exempt properties, and we will help them shoulder some of this burden next year by allocating an additional $100 million to 25 distressed cities and towns, on top of the projected federal support for our local municipalities. Our budget also includes an increase in PILOT funding – payment in lieu of taxes – funding in the out years with 50 percent coming from our cannabis revenues to further support our cities and towns.
A More Affordable Connecticut
Our starting point for strengthening our middle class. For me, that is education.
We need to be doing everything we can to help our kids, many of whom have not been in the classroom for many months. With strong federal support in excess of $400 million, our budget provides all the resources our schools need to let our kids stay in school safely.
With many of our urban schools crowded and their suburban schools with extra capacity, my budget proposes an expansion of the open choice program, beginning in Norwalk and Danbury, so these kids and those in surrounding communities can go to school in a more diverse environment with greater opportunity.
And as promised two years ago, Connecticut has implemented a teacher recruitment program with an emphasis on hiring more teachers of color, which is now approaching 10 percent statewide. We still have a long way to go.
In 2021, education doesn’t stop when a student graduates from high school. And I am sending the legislature a bill that will increase postsecondary enrollment and success, particularly for first-generation, low-income, and minority students. It ensures the students complete the student aid applications that will bring millions of additional federal dollars to our residents and educational institutions.
It also streamlines the admissions process at our state universities to ensure the students in every district get connected to high-quality state higher ed programs.
Building on our best-of-class state university system, the new federal Higher Ed Relief Fund will provide $140 million for public higher education, which covers higher COVID-related costs and support for Connecticut students who are having a difficult time affording their education during these tough economic times.
And we will continue to maintain our commitment to the educational cost sharing formula, with additional monies provided by federal resources, so every kid gets the best opportunity at the starting line of life, regardless of zip code.
The additional education funding also will allow our towns and cities to hold the line on property tax increases, doing more to keep Connecticut affordable for you.
And speaking of that starting line, my budget continues my commitment to high-quality early childcare and education.
In order to ensure that Connecticut emerges from the pandemic with a stable, nation-leading system of early childhood education, we put our money where our mouths are and invested over $125 million in state, federal and philanthropic funds over the last year alone. And state subsidies for childcare hold down the costs for our working families, allowing them to get back to work.
Supporting Small Businesses
One of the many lessons reinforced by this pandemic: the importance of our small businesses – not only to the economy, but to our communities. Small businesses are so much more than places of employment, they are the bedrock on which our towns, cities, and neighborhoods are built.
So, we used our state resources to do everything we could to keep our small businesses afloat during the pandemic until the federal Paycheck Protection Program could kick in, not once but twice, with the hope that this time the vaccine will make the recovery more permanent. Our service sector, especially restaurants and bars, airlines and hospitality, they’ve been hard hit, which drives up unemployment and reduces tax revenues to the state.
For this reason, in addition to the Paycheck Protection Program, over 10,000 of our businesses were the recipients of $85 million in small business grants. This support provided a small shot in the arm to help our small businesses keep their doors open.
This past summer, I announced the creation of Business.CT.gov, an online one-stop-shop where entrepreneurs can easily find information and complete everything required to start up and manage their businesses here in Connecticut. More than 44,000 new businesses were registered in the state last year – one of our best years ever.
Last fall, I announced the formation of the Office of Workforce Strategy, with a dedicated focus on the current and future workforce needs of the economy.
As a state, we need to educate and train our workforce for these future opportunities.
My proposed budget, and supporting legislation, reflects the continued commitment.
Kelli Vallieres, Connecticut’s first Chief Workforce Officer, will serve as my principal advisor on workforce policy and strategy.
Kelli and I will be working with our community colleges and the Connecticut State Colleges & Universities system to build on our certificate programs to provide the skill set for jobs which are in high demand for skilled workers, such as advanced manufacturing, coding, construction, nursing, digital media. The certificate program provides you with a path to a job at less cost in less time than a traditional degree.
A high-quality workforce development program will ensure better outcomes for our state’s residents and help our businesses to hire from and continue to grow here in the state.
This is all the more necessary and urgent given how many of our residents have suffered from unemployment due to the COVID pandemic.
Investing in Our Future
We do not need COVID to remind us of the need for access to fast and reliable internet in Connecticut.
President Joe Biden celebrated Connecticut for expanding access to education through the distribution of tens of thousands of devices and hotspots to bridge the digital divide for our school children.
Our state was an early adopter of telehealth, allowing patients and providers the ability to access their doctors from the safety of their homes.
We also embraced telecommuting both across the private sector and state government.
And what do they all have in common? The need for accessible, reliable, and high-speed internet.
I am reminded of the saying, “If you build it, they will come.” When it comes to broadband, “If you don’t build it, they won’t have a chance.”
I am sending a bill to the legislature to provide expanded broadband access for those communities large and small which have been left behind in the digital revolution.
Look, we’re by no means certain how pandemics are accelerated by changes to our environment. Our environmental efforts continue to be viewed through the lens of public health, new green-jobs and environmental justice, which means reducing our dependence on out-of-date energy solutions, such as coal and antiquated trash-to-energy plants, which are spewing pollution particulates into the air. This airborne pollution hits our urban communities the hardest, creating those same comorbidities which make you much more susceptible to disease and infections, like asthma and COVID-19.
As for our transportation infrastructure and funding, if the thinking had been, “If it ain’t broke, don’t fix it,” then that thinking needs to change.
This is personal. Annie and I went over the Mianus River Bridge down in Greenwich a few hours before it collapsed a generation ago. So I know.
The Special Transportation Fund is broken and it needs to be fixed.
This comes at the very time the federal government is ready to provide significant funding to streamline transportation systems, but only if our state can pay its share.
The current state of our transportation fund keeps us from accessing these federal funds and risks our ability to fund infrastructure projects we desperately need to revitalize our economy.
So, I will propose two new sources of revenue that, combined, sustainably fund investments in Connecticut’s transportation future:
- Connecticut can join the multi-state Transportation Climate Initiative, along with neighboring states live Rhode Island and Massachusetts, which will reduce carbon emissions while raising over $80 million for climate change and public transit investment throughout our state; and
- Connecticut can implement the tractor trailer mileage-based fee, which is already in place in New York and Oregon. The mileage fee would raise $90 million annually and apply only to those larger heavy-weight trucks, which can cause the vast majority of the damage to our highways. Mayor Pete, our new transportation secretary, as well as top Republicans in Washington, support this approach to funding transportation investments. And this funding allows Connecticut to leverage for $1 billion worth of projects over the next five years.
With these two alternatives, we can maintain our project schedule to keep or bring our roads and bridges up to a state of good repair and speed up your commute.
Making Healthcare More Affordable
COVID-19 reminds us that healthcare is a human right and that we all have a stake in keeping our neighbors healthy.
Healthcare savings continue to be a big driver in our effort to balance the budget without tax increases and make healthcare more affordable and accessible across the state.
For our state employees and retirees, our push for more competitive pricing represents $89 million in savings in the current budget and $186 million in savings in the next biennium.
This budget reduces the rate of growth in healthcare cost of active and retired state workers, driving down our fixed costs and saving taxpayer dollars.
Healthcare savings are also important to family budgets across Connecticut.
Last September, working on behalf of those families, my administration reduced rate increases for 2021 and saved 200,000 residents nearly $100 million in health insurance costs.
We need to do more to rein in costs. So, working in concert with Massachusetts, my affordable care package will limit price increases on pharmaceuticals and our premium support leveraged with significant federal dollars will lower costs for all of our families and small businesses.
Finally, we need to promote private sector innovation to make healthcare more accessible and affordable. Connecticut’s insurance industry is rolling out new products that will save small businesses and young families money through smart plan design and 21st century personal technology starting this year.
Two years ago, we repaired our frayed relationship with our hospitals and the state immediately partnered with them in managing the pandemic, making sure that nobody was denied COVID-19 treatment.
Testing was made available at no cost to all of our diverse communities, helping Connecticut provide more testing per capita than almost any other state in the country.
And today, we are using that same testing model to make COVID-19 vaccinations widely available at hospitals and clinics, stadiums, as well as bringing the vaccine to our hardest hit communities.
Modernizing State Government
Improving our infrastructure is more than expanded broadband and streamlining transportation. And my administration worked throughout the pandemic with all of our agencies to ensure that they held the line on spending and planned for more efficiencies.
We will continue to upgrade our outdated IT systems across state government, fulfilling my commitment of getting residents out of line and instead online to do business with the state. This also enables our state employees and agencies to provide better service for our taxpayers at less cost.
For example, the Department of Motor Vehicles can now handle more services online, such as driver’s license renewals.
And at our Department of Consumer Protection, we successfully moved 245 operational licenses online, representing about 80 percent of all state license renewals.
Additionally, our continued focus on driving efficiencies and savings across 25 state agencies and departments has resulted in the successful consolidation of HR, personnel, and technology platforms so our state government can work together as one, rather than 25 different fiefdoms.
One of the many lessons learned over the last year was one taught to both the public and private sectors – large-scale office space may be a thing of the past. While we’re already moving in this direction, we have sped up the process of reducing the real estate footprint of the state government, shedding extra capacity no longer needed with a technology-enabled workforce, and returning those properties to the municipal tax rolls. This past year, we successfully sold a large state-owned office building in Hartford and moved out of two others, which will also be sold and returned to the city’s tax base.
This helps our municipalities and the state by reducing the state’s real estate footprint, returning these buildings to the tax base of the town and cities which host them, and eliminates the costs of operating them. Similarly, the state has excess capacity in prisons and nursing homes which will result in further downsizing.
Economic Growth and an Economy That Work For All
We will also continue to find similar savings by working together with our neighboring states. We went out to bid, for example, for offshore wind power at the same time last year, and that competition resulted in Connecticut securing a long-term power agreement, which was one of the lowest in the country.
And now our neighboring states are offering recreational marijuana on a legal and regulated basis. Massachusetts dispensaries are advertising extensively here in Connecticut. And, rather than surrender this market to out-of-staters, or worse, to the unregulated underground market, our budget provides for the legalization of recreational marijuana.
These additional revenues will go to distressed communities, which have been hardest hit by the war on drugs. Half the tax revenues should be allocated to PILOT payments, in addition to a three percent local excise tax option. And importantly, my proposed legislation authorizes the automated erasure of criminal records for those with marijuana-related drug possession, convictions, and charges.
Our neighboring states are moving forward with sports betting and i-gaming, and Connecticut should not leave these opportunities for other states to benefit from our inaction. My administration has been in active negotiations with our tribal partners to bring the state’s gaming economy into the digital age. And I am submitting legislation which reflects what I believe to be the best bet in ending this stalemate of inaction in a way which is in the best interest for the entire state.
Over the last year, we’ve experienced a real estate boom in Connecticut. With tens of thousands of new residents discovering what they’ve always known, that Connecticut is a beautiful state with beaches, mountains, and parks all within a short drive from one another, great schools which were more likely to be open and open safely, not to mention expanding job opportunities. In Hartford County alone, this past December saw a 50 percent increase in sold single-family homes compared to the previous December, in a similar trend all across the state and one we must continue to support and encourage. I’ve always said, we don’t need more taxes, we need more taxpayers, and they are already paying dividends as you can see by our balanced budget.
We don’t have the luxury of doing one thing at a time. There’s too much at stake. While my administration will continue to be laser focus on managing the COVID-19 crisis, we must focus on the light at the end of the tunnel. Every action we take in response to COVID-19 is in the interest of the economy and public health and safety. We must do so knowing exactly how it positions us on our shared path to continued fiscal health and broad-based economic opportunity for all of our citizens.
And lastly, if our budget is a representation of our core values, we must make significant progress towards racial justice and equity; not as a single budget item, rather as a pervasive reach into all our programs and priorities.
At President Biden’s inauguration, Amanda Gorman, the nation’s first youth poet laureate, eloquently addressed the nation about racial justice. Her inaugural poem, “The Hill We Climb,” was a powerful recognition of the pain of our nation’s past and the promise of its future. Everything she said moved me, especially this passage:
“We’ve learned that quiet isn’t always peace, and the norms and notions of what is just isn’t always justice.”
We’re the land of steady habits, but that habit must include the never-ending struggle for a more just society.
Throughout my budget, you will find significant focus on investments in education, housing, workforce development, healthcare, criminal justice reform – each intended to help us climb the hill that Amanda Gorman has challenged us to take.
Our charge is bigger than beating back COVID-19. My challenge to you today is exactly what it was two years ago, and we are going to do this together. A budget that’s on time, in time, for our mayors, superintendents, and the 500,000 students who don’t want to waste their shot and make the most of a fresh start – all joining us in Connecticut’s comeback.
Now, let’s get to work.