Yankee Institute took issue with several of the proposals Gov. Ned Lamont presented in his budget address to the General Assembly today. The Governor told lawmakers that the state has “earned the opportunity to rethink the volatility threshold” — meaning he aims to break the fiscal guardrails, bipartisan reforms that have stabilized and improved the state’s finances since 2017.
Yankee Institute opposes the decision to undermine the volatility cap, as it enables the state to collect extra revenue from unpredictable sources (like stock market gains), and requires that the money be saved rather than immediately spent. This safeguards Connecticut’s taxpayers from unanticipated budget shortfalls or potential tax increases.
“The volatility cap exists for a reason: to protect taxpayers from the boom-and-bust cycle of government mismanagement,” said Yankee Institute President Carol Platt Liebau. “The legislature extended the guardrails unanimously in 2023, and by weakening them, the governor and legislature are breaking their promises to Connecticut’s hardworking residents and businesses, and leaving them vulnerable in the event of a downturn.”
The fiscal guardrails have reversed decades of pension underfunding, improving Connecticut’s creditworthiness and financial stability. The state has saved more than $170 million since putting the guardrails into place and can save $7 billion over the next 25 years if they are kept intact.
The guardrails have paid down nearly $8 billion in total pension debt, according to State Comptroller Sean Scanlon; they have likewise freed more than $700 million to be budgeted for vital services, including services for which additional funding is currently being demanded.
However, Yankee Institute applauds the governor’s call for ending occupational licensing fees, which will increase workforce participation; boost entrepreneurship and job creation; create opportunities for residents to achieve the American Dream; improve our state’s competitiveness; and lower consumer costs.
“We have long championed the policy of making Connecticut a more hospitable place for those who want to work by eliminating arbitrary licensing fees, and we salute the governor for his proposal to do that,” Liebau added. “Unfortunately, his other initiatives assume taxpayers have bottomless wallets. Our state already ranks among the most heavily taxed in the country, and we can’t continue to pile more financial burdens on our residents while the government just continues to spend.”
For more information about the fiscal guardrails, read Yankee Institute and Reason Foundation’s joint report, The Case for CT’s Fiscal Guardrails. Find it here.