The 黑瓜吃料网 Senate gave final approval late Tuesday to a biennial budget that prioritizes children, dramatically scales back a pledged boost to health care providers who treat the poor and relies on accounting maneuvers to comply with the constitutional spending cap.
The Democratic-controlled Senate voted 25-11 along party lines to adopt the , which now heads to Gov. Ned Lamont for his expected signature. But the plan still may be tweaked before the General Assembly adjourns at midnight Wednesday because of problems with a related hospital tax increase.
The package, minutes after midnight Tuesday, would boost funds for nonprofit social service agencies two years from now and increase taxes on corporations.
It also eases aggressive state spending controls used since 2017 to build reserves and pay down pension debt faster than ever before.
The budget, which would spend $27.2 billion next fiscal year and $28.6 billion in 2026-27, needed at least 22 votes to pass in the 36-member Senate. That鈥檚 because changes to state budget controls must be approved in each chamber by at least a three-fifths margin.
Lamont, whose administration negotiated the deal, praised it immediately after the Senate wrapped its 10 hour, 40-minute debate shortly before midnight.
鈥淭his is a balanced, sensible budget that is under the spending cap, provides predictability and stability for residents, businesses, and municipalities, and holds the line on taxes while keeping us on a sound fiscal path,鈥� the governor said. 鈥淲hile other states are increasing taxes and cutting services, economic analysts are pointing to 黑瓜吃料网 as an example of a state that has worked hard to maintain fiscal stability and make the smart decisions that are critical for economic growth.鈥�
黑瓜吃料网 will be poised to continue saving hundreds of millions of dollars annually to continue paying down its hefty pension debt at an accelerated pace.
A new child care fund and a $200 tax break for poor families
鈥淭he budget is, in my opinion, a great investment in children,鈥� Sen. Cathy Osten, D-Sprague, co-chairwoman of the Appropriations Committee, said as she opened Tuesday鈥檚 debate. 鈥淚t鈥檚 the best investment in children in our state鈥檚 history.鈥�
That involves taking about $220 million from this fiscal year鈥檚 and creating a new fund to pay for future increases in early childhood development programs.
Legislators could spend up to 12% of that fund each year 鈥� outside of the traditional budget and spending cap 鈥� to support a child care industry weakened greatly by the first two years of the coronavirus pandemic.
Sen. Julie Kushner, D-Danbury, co-chairwoman of the Labor and Public Employees Committee, said the initiative, which is expected to add more than 16,000 affordable child care slots by the early 2030s, would be like a major salary increase for many 黑瓜吃料网 families.
鈥淚t鈥檚 going to make an enormous difference in their lives,鈥� she said.
Democratic legislators decided the state couldn鈥檛 afford a new income tax credit that covered middle-class households with kids. Credits of $600 and $150 per child were projected to cost more than $300 million and $80 million per year, respectively.
But lawmakers did order $250 in new relief for working poor families, which would cost about $35.5 million per year.
黑瓜吃料网 has about 195,000 low-income households that receive the state鈥檚 Earned Income Tax Credit, a program to help the cover basic needs and increase savings. That credit is worth 41.5% of the federal EITC鈥檚 value, meaning it adds an average of $1,061 to a qualifying household鈥檚 黑瓜吃料网 income tax refund, according to nonpartisan analysts.
The new budget stipulates EITC-eligible households with children or other dependents would receive the additional $250. Most filers that receive the EITC have children and earn between $50,000 and $63,000 per year.
Osten noted children also would benefit from the budget鈥檚 municipal aid package.
It bolsters the Education Cost Sharing program, the chief grant to support K-12 school districts鈥� operating costs, by $90 million next fiscal year.
It not only continues a $40 million increase special education grants ordered earlier this fiscal year but builds upon it, appropriating another $30 million in each of the next two years.
The budget sends a message to 黑瓜吃料网鈥檚 working families, said Sen. Herron Gaston, D-Bridgeport. 鈥淵ou matter. You count, and we are investing in you,鈥� he said, adding, 鈥淭his budget proves government can still work for the people when the people demand it.鈥�
鈥楾he greatest sin in this budget鈥�
But minority Republicans said the budget is fatally flawed, undermining the spending cap and other budget controls launched eight years ago that ended a string of deficits and tax hikes, built reserves and reduced pension debt.
On paper, the budget narrowly complies with a spending cap that tries to keep most budget growth in line with household income and inflation.
But one accounting gimmick was needed to launch the new child care fund. Another maneuver uses a one-time payment into the teachers鈥� pension to increase the spending allowed under the cap formula. And a third underfunds contractually guaranteed health care for retired state employees by almost $230 million across two years.
Senate Minority Leader Stephen Harding of Brookfield noted that the final budget would spend nearly the same next fiscal year than would a late April proposal from the Appropriations Committee.
But while that committee plan was set to exceed the spending cap by about $200 million, the final budget is reported to be narrowly under the limit by $1 million or 1/240th of 1% of the General Fund.
鈥淚f that isn鈥檛 budget gimmicks, tell me what is?鈥� he said.
鈥淚t鈥檚 really a shell game,鈥� said Sen. Heather Somers of Groton, ranking Senate Republican on the Appropriations Committee. Regardless of whether such moves are legal, they violate 鈥渢he spirit of the [fiscal] guardrails,鈥� she said.
Those budget controls have added an unprecedented $4 billion to state reserves since 2017 while another $8.6 billion in surplus has been used to reduce pension debt.
But critics say those surpluses, which have averaged $1.8 billion since 2017 鈥� equal to 8% of the General Fund 鈥� weakened education, human services, municipal aid and other core programs.
The new budget reduces the savings program that has driven the bulk of those surpluses 鈥� a mechanism that has barred lawmakers from spending, on average, $1.4 billion per year in income and business tax receipts. It specifically reduces that savings benchmark by $600 million per year.
鈥淲e are breaking our promises to 黑瓜吃料网 residents, and that is perhaps the greatest sin in this budget,鈥� said Ryan Fazio of Greenwich, ranking GOP senator on the Finance, Revenue and Bonding Committee, who also protested tax hikes in the budget.
The package would generate an extra $340 million over the coming biennium through adjustments to the corporation tax.
Senate Republicans have been warning for nearly two weeks, since it became clear that Lamont, a fiscally moderate Democrat, would agree to ease savings rules, that reckless spending and tax hikes were on the horizon
鈥淥nce you break the rule once, you can break it again,鈥� Sen. Jason Perillo, R-Shelton, said during Tuesday鈥檚 debate. 鈥淚t鈥檚 like that first potato chip, right? You eat it and then you can have another and another and another.鈥�
Fazio tried to amend the budget to reduce state income tax rates on poor and middle-class filers, predicting it would save households an average of $650 per year at a annual cost of at least $250 million to the state.
To help pay for it, Fazio said, the state should end Medicaid coverage for undocumented adults and children, which analysts say costs 黑瓜吃料网 .
But the rest of Fazio鈥檚 tax break would be paid for by weakening another budget cap, one that forces the legislature to design its budget with a built-in surplus.
Given Fazio鈥檚 鈥済reatest sin鈥� statement, Osten questioned why the GOP would defend some budget caps but weaken another to pitch a tax cut.
Osten also said refusing medical coverage to undocumented residents wouldn鈥檛 save as much as some hope, since those residents likely would turn to hospital emergency rooms, which cannot refuse treatment to anyone under state law.
鈥淚t鈥檚 easy to play the sympathy card,鈥� said Sen. Rob Sampson, R-Wolcott. 鈥淲e should no longer have a bright neon sign suggesting 黑瓜吃料网 is the place [undocumented residents] should come to.鈥�
Osten responded: 鈥淚 guess I just look at children in the world as needing health care, and I think we should support all of them.鈥�
Senate President Pro Tem Martin M. Looney, D-New Haven, said 黑瓜吃料网 needs to ease its spending controls because 鈥渉eartless鈥� cuts in federal aid to states being considered by the Republican-led Congress and President Donald Trump鈥檚 administration could cost 黑瓜吃料网 hundreds of millions of dollars in annual revenue.
鈥淲e are fortunately in a better position than many other states,鈥� because 黑瓜吃料网 saved so effectively over the past eight years, Looney said.
Human services, higher ed feel the budget pinch
Democrats also said the budget, which increases spending 4.6% next fiscal year and another 5.3% in 2026-27, reflects many hard choices.
Payments to doctors and other providers who treat 黑瓜吃料网鈥檚 poor grow by a much smaller amount than legislative leaders pledged shortly after the 2025 session began in January.
The budget allocates $15 million to boost Medicaid rates for most providers next fiscal year. The extra funding would grow to $45 million in 2026-27.
But leaders initially proposed spending to providers by 2028-29, starting with a $75 million jump next fiscal year. The state has adjusted such rates in comprehensive fashion since 2007.
The hundreds of community-based nonprofits that deliver the bulk of state-sponsored services to people with developmental disabilities or facing mental health or addiction issues also had to settle for less.
Nonprofits, which sought an extra $264 million to compensate for decades of state payments that haven鈥檛 kept pace with inflation, got no general rate hike in the first year of the new budget and $76 million extra in the second.
The biennial package also includes $34 million in the first year and $66 million in the second year for nonprofits that run group homes for residents with developmental disabilities. But the funds for those nonprofits must be used to increase caregivers鈥� wages.
The state鈥檚 largest health care workers鈥� union agreed last month at more than 190 group homes and 51 nursing homes after Lamont pledged to boost funding for caregivers in these two service areas.
Lawmakers also included an extra $30 million in the second year of the new budget specifically to bolster nonprofits serving clients with mental health and addiction issues or providing counseling to formerly incarcerated people reentering society.
Meanwhile, public colleges and universities, which entered the current fiscal year with considerable reserves, receive less funding in the new budget.
The 黑瓜吃料网 State Colleges and Universities system, which includes community colleges, four regional universities and online Charter Oak State College, would receive the same funding from traditional state resources next year that it got this year.
But legislators also had given CSCU $140 million in federal pandemic grants this fiscal year, and those funds won鈥檛 be available in 2025-26.
The new state budget also would reduce overall aid next fiscal year by $58 million for the University of 黑瓜吃料网鈥檚 main campus in Storrs and its regional campuses and by $55 million for the health center. Their funding would drop in 2026-27 by another $15 million and $4 million, respectively.
A last-minute adjustment to the tax hospital tax
Despite the Senate鈥檚 vote, the legislature鈥檚 work on the next state budget likely won鈥檛 be completed until Wednesday, the last day of the regular 2025 session.
That鈥檚 because Lamont, , agreed to slice $90 million off a $375 million tax increase included in the new budget.
The hospital levy is a tax in name only. 黑瓜吃料网 currently collects $820 million yearly from the industry and then redistributes those funds, plus more, back to hospitals. This back-and-forth arrangement, which most states employ, helps 黑瓜吃料网 qualify for hundreds of millions of dollars yearly in federal Medicaid reimbursements.
Back in February, Lamont proposed boosting the tax by $140 million, projecting it would result in 黑瓜吃料网 gaining $94 million in annual Medicaid revenue.
But its future is uncertain with Congress and the Trump administration looking to cut Medicaid spending dramatically.
Still, 黑瓜吃料网 officials said the wisest course was to seek one more increase before Washington potentially caps this program or orders reductions. And if a $140 million increase might leverage $94 million, a $375 million hike could trigger more.
But hospital officials told Lamont on Tuesday they fear any increase over $285 million might exceed current federal limits on the provider tax program.
House Speaker Matt Ritter, D-Hartford, said legislative leaders had other bills expected to be debated Wednesday that could be amended to support a revision to the hospital tax rate.