Connecticut state budget and finances

in Connecticut

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Connecticut budget and finances

General information

Budget calendar: Biennial

Fiscal year: 2017

State credit rating: AA- (as of 2017)

Current governor: Ned Lamont

Financial figures

Total spending (state and federal funds): $31,086,000,000 (estimated 2016)

Per capita spending: $8,692 (estimated 2016)

Total state tax collections: $15,244,947,000 (2016)

Per capita tax collections: $4,263 (2016)

State debt: $35,351,526,000 (2014)

Per capita state debt: $9,862 (2014)

State budget and finance pages • Total state expenditures • State debt • Tax policy in Connecticut

Note: In comparing dollar amounts across the states, it is important to note that the cost of living can differ from state to state and within a state. The amounts given on this page have not been adjusted to reflect these differences. For more information on "regional price disparities" and the Consumer Price Index, see the U.S. Department of Commerce, Bureau of Economic Analysis. This article, which is updated on an annual basis, was last updated in June 2017. It contains information from several sources; consequently, the currency of the information can vary from source to source.

In Connecticut, as in other states, lawmakers and public officials are elected in part to manage the state's finances. This includes generating revenues (money coming into the state from various sources) and approving expenditures (the money spent on governmental functions and servicing state debt). State budgets are complex and fluid, as they depend on anticipated revenues and planned expenditures, which may alter over the course of a fiscal year. If revenues do not keep pace with expenditures, states generally have to raise taxes, cut services, borrow money, or a combination of the three. State budget decisions are also influenced by policy decisions at the national level, such as the Affordable Care Act or energy and environmental regulations, and issues at the local level, such as crime and the quality of education.

Definitions

The following terms are used to describe a state's finances:

• Revenues come mainly from tax collections, licensing fees, federal aid, and returns on investments.
• Expenditures generally include spending on government salaries, infrastructure, education, public pensions, public assistance, corrections, Medicaid, and transportation.
• State debt refers to the money borrowed to make up for a deficit when revenues do not cover spending.
• The state credit rating is the grade given by a credit rating agency based on the general financial health of the state's government and economy.
• State funds include general and other state-based funds. A general fund is "the predominant fund for financing a state's operations." Other state funds are "restricted by law for particular governmental functions or activities."^[2]
• Federal funds are "funds received directly from the federal government."^[2]
• Total spending is calculated by adding together the totals for state and federal funds used for expenditures.

Revenues

2016 revenues

See also: State government tax collections by source

The table below breaks down state government tax collections by source in 2016 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "2016 population" and "Per capita collections" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "2016 population" and "Per capita collections" have not been abbreviated.^[3]

The table below lists 2016 tax collections by source as percentages of total collections. About 54.3 percent of Connecticut's total state tax collections came from income taxes.^[3]

Federal aid to the state budget

See also: Federal aid to state budgets

State governments receive aid from the federal government to fund a variety of joint programs, mainly in the form of grants for such things as Medicaid, education, and transportation. In 2014, federal aid to the states accounted for roughly 31 percent of all state general revenues. Federal aid varies from state to state. For example, Mississippi received approximately $7.2 billion in federal aid in 2014, accounting for about 41 percent of the state's general revenues, the highest percentage of all of the states. By contrast, North Dakota received about $1.5 billion in federal aid in 2014, or just 17 percent of the state's general revenues, the lowest percentage in the nation.^[4]

The table below notes what share of Connecticut’s general revenues came from the federal government in 2014. That year, Connecticut received approximately $6.3 billion in federal aid, 24.6 percent of the state's general revenues. Taking into consideration the state's 2014 population, this came out to about $1,768 in federal aid per capita. Figures from surrounding states are provided for additional context.^[4]

Spending

Estimated 2016 expenditures

See also: Total state expenditures

The table below breaks down estimated spending totals for fiscal year 2016 (comparable figures from surrounding states are included to provide additional context). Figures for all columns except "Population” and “Per capita spending" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the columns labeled "Population” and “Per capita spending" have not been abbreviated.^[5]

The total estimated government spending in Connecticut in fiscal year 2016 was $31.1 billion.

Spending by function

See also: State spending by function as a percent of total expenditures

State spending in Connecticut can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2015 information is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percentages, indicating the share of the total budget spent per category.^[5]

In fiscal year 2015, other spending accounted for 38.5 percent of Connecticut's total expenditures.

Spending trends

The table below details the spending trends in Connecticut in previous years. Figures are rendered as percentages, indicating the share of the total budget spent per category.^[1][6][7]

State debt

See also: Connecticut state debt

State debt refers to any debt owned by a state government. Debt may include any financial obligations a state has that have not been paid, such as bonds issued by state governments, money borrowed by a state government that has not been repaid, or post-retirement benefits promised to state employees. According to the U.S. Census Bureau, Connecticut had a debt of $35,351,526,000 in fiscal year 2015. The state debt per capita was $9,862. This ranked Connecticut eighth among the states in debt and second in per capita debt. The total state debt owned by the 50 states was $1.15 trillion with a per capita debt of $3,582.^[8]

Economic indicators

See also: Economic indicators by state

Connecticut's GDP increased by 0.6 percent in 2014. Click the image to view a larger version.

Broadly defined, a healthy economy is typically one that has a "stable and strong rate of economic growth" (gross state product, in this case) and low unemployment, among many other factors. The economic health of a state can significantly affect its healthcare costs, insurance coverage, access to care, and citizens' physical and mental health. For instance, during economic downturns, employers may reduce insurance coverage for employees, while those who are laid off may lose coverage altogether. Individuals also tend to spend less on non-urgent care or postpone visits to the doctor when times are hard. These changes in turn may affect the decisions made by policymakers as they react to shifts in the industry. Additionally, a person's socioeconomic status has profound effects on their access to care and the quality of care received.^[9][10][11]

Connecticut and its neighboring states all had an above average median annual household income between 2011 and 2013. However, Connecticut had the greatest percentage of its population that earned incomes at least 400 percent above the federal poverty level. In September 2014, Connecticut's unemployment rate was 6.4 percent, 0.5 percentage points above the nationwide rate.^{[12][13][14][15]}

Note: Gross state product (GSP) on its own is not necessarily an indicator of economic health; GSP may also be influenced by state population size. Many factors must be looked at together to assess state economic health.

Budget process

The state operates on a biennial budget cycle. The sequence of key events in the budget process is as follows:^[16]

1. Budget instructions are sent to state agencies in July.
2. State agencies submit their budget requests to the governor in September.
3. The governor submits his or her proposed budget to the state legislature in February.
4. The legislature adopts a budget in May or June. A simple majority is required to pass a budget. The fiscal year begins on July 1.

Connecticut is one of 44 states in which the governor has line item veto authority.^[16][17]

The governor is legally required to submit a balanced budget. Likewise, the legislature must adopt a balanced budget.^[16]

Agencies, offices, and committees

There is only one standing committee in the Connecticut General Assembly that deals with budget and finance matters:

1. Finance, Revenue and Bonding Committee, Connecticut General Assembly

The Connecticut Comptroller acts as the state's accountant, managing accounts payable, preparing financial reports, and monitoring the finances of state agencies. The comptroller is elected ever four years in midterm election years and is a partisan office.

The Connecticut Treasurer acts as the state's chief financial officer, overseeing state funds and investments and maintaining unclaimed property. The treasurer is elected in partisan elections and does not have a term limit.

Public Interest Research Group 2016 report

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2016. The report, entitled "Following the Money," measured how transparent and accountable state websites were with regard to state government spending. According to the report, Connecticut received a grade of A+ and a numerical score of 99, indicating that Connecticut was "Leading" in terms of transparency regarding state spending.^[18]

Noteworthy events

Background

• Gov. Dan Malloy (D) and members of the Connecticut General Assembly failed to reach a budget agreement during the 2017 legislative session, which adjourned on June 7.^[19] According to The Connecticut Mirror, House and Senate Democrats were unable to agree on a budget plan ahead of the June 30 deadline, and there was disagreement between the parties. Key issues included tax increases, funding for social programs, and labor relations with the state employees union.^[20]
  • On June 30, 2017, Malloy signed an executive order authorizing reduced amounts of government funding in the absence of a budget for fiscal year 2018. This order allowed Connecticut to avoid a shutdown of government services on July 1, the first day of the 2018 fiscal year. Funding for road repairs, state aid for school districts, and nonprofit organizations were reduced under Malloy's executive order.^[21]
  • On August 18, 2017, Malloy revised his executive order to change the amounts of the Education Cost Sharing payments that go to school districts. Under his revisions, the 30 lowest-performing school districts saw no change to their cost-sharing payments, 54 districts received reduced payments, and 85 districts received no state payment. The order went into effect in October because no budget was approved.^[22][23]

• Malloy pushed for lawmakers to call a special session before June 30 and pass a 90-day temporary budget. Speaker of the House Joe Aresimowicz (D) declined the idea, saying that he and the House Democratic Caucus wanted to first see an outline of a two-year budget before agreeing to a temporary budget.^[20] Leaders in the Connecticut State Senate, including President Pro Tempore Martin Looney (D), were supportive of a 90-day temporary budget.^[24]

• The budget was not passed due to disagreements between Malloy and the General Assembly, disagreements among members of the Democratic caucus, and disagreements between Democratic and Republican legislators.^[25] According to The Hartford Courant, House Democrats were divided between a faction trying to prevent cuts to social services and a faction trying to prevent tax increases.^[26] When talking about the divisions within the Democratic caucus, State Rep. Vincent Candelora (R) said, "I think everybody in this building realizes a budget cannot pass without Republican support."^[27]

• As of July 6, 2017, Connecticut faced a $5.1 billion budget deficit during the 2018 and 2019 fiscal years. The spending provisions in Malloy's executive order resulted in a $2.1 billion spending reduction during the 2018 fiscal year.^[19] On July 31, the General Assembly passed a labor concessions deal negotiated with state employees unions that was designed to save $1.57 billion in fiscal years 2018 and 2019. With the concessions deal approved, the budget deficit decreased from $5.1 billion to $3.5 billion.^[28]

Timeline of key events

• On October 31, Gov. Malloy signed most of the budget that passed on October 26. He vetoed a portion of it dealing with the state's hospital tax, also called a provider fee. The tax was increased from six percent to eight percent in the budget, although the hospitals would have received millions in Medicaid funding from the federal government due to the tax increase. According to Malloy, the wording of the hospital tax contained issues and would have cost the state $1 billion. Malloy said, "I strongly urge my colleagues in the General Assembly to convene as soon as possible to pass a legal alternative to the illegal hospital tax and troublesome supplemental payment and rate language presented in the bill."^[29]
  • With Malloy's signature, Connecticut ended a 123-day period without a budget. This was the longest period of the time the state had ever went without a budget. The second-longest period was in 1991 when legislators debated whether to create a state income tax.^[29]
  • On November 15, the Connecticut House voted 123-12 to approve a bill that proponents said fixed flaws in the state budget signed on October 31, including a provision dealing with the state's hospital tax. The Connecticut Senate voted 34-0 on November 14 to pass the bill. Gov. Malloy said he would sign the bill into law. Opponents of the budget fix said that it would require towns to assume $8.5 million in costs from a renters’ rebate program and that the costs would not be equitably distributed based on a community's income level.^[30][31]

• On October 26 at around 2:00 AM ET, the Connecticut State Senate passed a budget deal by a 33-3 vote.^[32] Later that day, the Connecticut House passed the budget by a 126-23 vote. Both margins were sufficient to override a gubernatorial veto.^[33] After the budget passed, Kelly Donnelly, Gov. Malloy's communications director, said that the budget contained an error related to the tax on hospitals that would cost the state $1 billion. Legislative leaders in the state House said that the chamber would reconvene the following week if an issue in the budget needed to be addressed.^[34]

• Here are some of the details of the budget that was agreed to on October 26:^[32]
  • Revenue: The budget deal made no changes to Connecticut’s sales or income taxes. It increased the cigarette tax, put a $10 surcharge on motor vehicle registrations, and required a $0.25 fee for Uber and Lyft rides. It also required teachers to contribute one percentage point more toward their pensions and increased the hospital provider fee from six percent to eight percent (although the tax the hospitals pay was reimbursed by the federal government in Medicaid funding).
  • Spending: The budget included up to $40 million to help the city of Hartford avoid bankruptcy. It also restored most of the education and municipal funding that was reduced by the executive order Gov. Malloy used to fund government programs during the stalemate. For the 2018 fiscal year, 136 of 169 municipalities had their education funding decreased by five percent. For the 2019 fiscal year, 88 municipalities had the same amount or less education funding than they did in 2017, while 81 had an increase in funding compared to 2017. The budget included $65 million in cuts per year for the University of Connecticut and it scaled back several tax credits, including the property tax credit and the earned income tax credit. Moreover, it put caps on spending and borrowing by the state and required the state legislature to vote on all state employee union contracts.

• On October 23, Republican and Democratic leaders announced that they had agreed to the specifics of a budget deal. Senate Republican Minority Leader Leonard Fasano said the deal included some of his party’s priorities such as a cap on spending and borrowing and the establishment of an independent panel to recommend changes to the state’s pension program. The deal also increased the taxes on cigarettes and decreased taxes for Social Security and pension recipients.^[35]

• On October 18, Republican and Democratic legislative leaders announced that they had reached an agreement on the major provisions of a $40 billion two-year budget plan. The deal was negotiated without input from Gov. Malloy.^[36]

• On October 13, Standard & Poor's notified Connecticut that it was changing its outlook for the state's general obligation bonds from stable to negative.^[37] On October 16, Moody's Investor Service announced that it was considering credit downgrades for 26 Connecticut municipalities and three regional school districts, all of which saw funding reductions as a result of the budget stalemate. Twenty-five other municipalities and three other regional school districts were assigned negative outlooks.^[38][39]

• On October 3, the Connecticut House chose not to vote on a veto override of the Republican budget plan that passed on September 16.^[40]

• On October 1, education payments to cities and towns were reduced or eliminated under an executive order signed by Gov. Malloy. The funding cuts went into effect because a budget had not been agreed to.^[41][42] On October 11, the Connecticut Education Association—the state’s largest teachers’ union—filed a lawsuit claiming that education cuts would prevent schools from providing an adequate education for students. Connecticut’s school funding had previously been challenged in the courts for being too low.^[43][44]

• On September 28, Gov. Malloy vetoed the Republican budget plan that passed on September 16. Senate Republican Minority Leader Fasano called for the General Assembly to override the veto. A veto override requires 101 votes in the state House and 24 votes in the state Senate.^[45]

• On September 16, the Connecticut General Assembly approved a budget plan drawn up by Republican legislators. The budget included $40.7 billion in spending over the FY2018-2019 biennium. Gov. Malloy said he would veto the budget because of its spending reductions for higher education and other state programs. The budget also included changes to relations with state employees labor unions.^[46]
  • The budget passed due to defections from Democrats in both chambers who joined with the Republican minority. Their defections came after Malloy and Democratic legislators had apparently reached an agreement on September 14. Their budget plan included new taxes on cell phone bills, vacation homes, hospitals, cigarettes, smokeless tobacco and hotel rooms.^[47] The Democratic legislators who voted for the Republican plan said the reason they defected was because of tax increases in the Democratic plan.
  • The Connecticut House passed the budget on September 16 at around 3:00 AM EST by a 77-73 vote. Democratic Reps. Pat Boyd, Lonnie Reed, Daniel S. Rovero, John Hampton, and Kim Rose defected from their party.^[48]
  • The Connecticut Senate passed the budget on September 15 by a 21-18 vote. Democratic Sens. Paul Doyle, Gayle Slossberg, and Joan Hartley defected from their party. Their defections were unexpected and were not announced prior to a floor speech by Doyle where he said he would vote for the Republican plan.^[49]
    
    

Labor relations

• On July 31, the Connecticut General Assembly passed a labor concessions deal that was negotiated with state employees unions. The concessions deal was designed to save $1.57 billion in the 2018 and 2019 fiscal years. The Connecticut State Senate passed the deal on July 31. The chamber vote split 18-18 with all Democrats in favor and all Republicans opposed. Lieutenant Gov. Nancy Wyman (D) cast a tie-breaking vote to pass the deal.^[50] The Connecticut House passed the deal on July 24 by a 78-72 vote, with all Republicans and Democrat John Hampton opposed.^[51]

• The concessions package was announced in June 2017 by Gov. Malloy and state employee union leaders. It amended the existing labor agreement by extending its end date from 2022 to 2027 and achieving $1.57 billion in savings in the 2018 and 2019 fiscal years. The provisions in the agreement that increased savings included a three-year wage freeze for some state employees and increased contributions for health and pension benefits.^[20] On July 18, unions announced that rank-and-file members approved the concessions package by a margin of 83 percent to 17 percent. Concessions packages can be approved by the General Assembly, although it is not required for them to take effect. If a concessions deal is not approved by the General Assembly, it goes into effect the following year.^[52][53][54]

• According to The Hartford Courant, Republican legislators proposed a plan with $2 billion in savings for the state in the 2018 and 2019 fiscal years.^[52] Republican leaders expressed interest in changes to collective bargaining and other ways that state employees were compensated. House Republican minority leader Themis Klarides said that the state should end collective bargaining and instead allow the General Assembly to craft wages and benefits for state employees.^[55] Senate Republican minority leader Leonard Fasano said that the state would save money by changing aspects of collective bargaining, eliminating two state holidays, and prohibiting meal and clothing allowances.^[56]

• Compensation levels for members of state employee labor unions in Connecticut, including wages, pensions, and health benefits, were reached through collective bargaining. As of January 2017, about two-thirds of government workers in Connecticut, including teachers, professors, and prison guards, belonged to a labor union.^[57]

Budget and finance ballot measures

Voting on state and local government budgets, spending, and finance
Policy
Budget policy
Ballot measures
By state
By year
Not on ballot
Local City budgets County budgets Spending limits School budgets

See also: Spending and finance on the ballot and List of Connecticut ballot measures

Ballotpedia has tracked the following ballot measures relating to state and local budget and financial matters in Connecticut.

1. Connecticut Limit on State Expenditures, Question 2 (1992)

Budget and finance legislation

The following is a list of recent budget and finance bills that have been introduced in or passed by the Connecticut state legislature. To learn more about each of these bills, click the bill title. This information is provided by BillTrack50 and LegiScan.

Note: Due to the nature of the sorting process used to generate this list, some results may not be relevant to the topic. If no bills are displayed below, no legislation pertaining to this topic has been introduced in the legislature recently.

Recent news

The link below is to the most recent stories in a Google news search for the terms Connecticut budget. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

Contact information

Office of Policy and Management; Budget and Financial Management Division
450 Capitol Ave.
Hartford, CT 06106
Telephone: 860-418-6272
Fax: 860-418-6490

See also

• Historical Connecticut budget and finance information
• Tax policy in Connecticut
• Connecticut government sector lobbying
• Connecticut public pensions
• Governor of Connecticut
• Connecticut State Senate
• Connecticut House of Representatives
• Connecticut State Legislature

Footnotes

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