House Democrats are making early childhood care and education a top priority this session, pushing through a bill (H.B. 5003) that could cost Connecticut taxpayers hundreds of millions of dollars.
The legislation’s proponents claim the measure would improve affordability for working families, while critics warn it comes with a massive price tag and long-term fiscal risks the state can’t afford to ignore. Despite the disagreements, the bill was voted out of the Committee on Children on March 6.
H.B. 5003 would expand eligibility for the Care 4 Kids childcare subsidy program, provide salary increases and health care plans for early childhood workers, authorize bonding for facility improvements, and establish a range of new administrative requirements and reporting systems.
According to the legislature’s Office of Fiscal Analysis (OFA) report, the bill would cost the state at least $600 million over fiscal years 2026 and 2027. That includes $150 million each year to expand Care 4 Kids eligibility — from the current 60 percent of the state median income to 85 percent — and to phase in benefits for families earning up to 100 percent of the median.
Another $60 million per year is earmarked for the Office of Early Childhood (OEC) to build and operate a new presumptive eligibility system that would allow families to begin receiving childcare subsidies before their full eligibility is verified. OEC is also expected to face additional, yet undefined, IT contractor costs to make the necessary system upgrades.
Moreover, the bill includes $154,000 annually for a Durational Project Manager at OEC to oversee a new grant program for childcare facility construction and renovations.
The bill also authorizes $20 million annually in General Obligation bonds from FY 2026 through FY 2030. OFA estimates the total debt repayment will exceed $143 million, adding another long-term burden to taxpayers.
Beginning in 2026, the state will also use the Early Childhood Care and Education Fund to launch two new health care subsidy programs. One provides financial assistance to childcare workers who open Health Savings Accounts, while the other helps providers offset the cost of offering health insurance to employees and their families. The cost of these programs remains unspecified.
In addition to those direct costs, the bill would divert up to $100 million of the state’s unappropriated General Fund surplus at the end of both fiscal years 2025 and 2026 into a new Early Childhood Care and Education Fund. The money would be used to support expanded subsidies, workforce pay, administrative initiatives, and other program goals — funding that would otherwise go toward the state’s Budget Reserve Fund or paying down $79 billion in long-term debt.
OFA expects this bill will have an ongoing fiscal impact “into the future subject to inflation.”
In her testimony, Rep. Kate Farrar (D-West Hartford), one of the bill’s co-sponsors, described it as a response to both family needs and workforce shortages. “Too many families and businesses are struggling in Connecticut to find affordable and accessible childcare,” she wrote, noting that center-based care costs an average of $18,000 per year and that Connecticut ranks among the most expensive states in the country for childcare.
Rep. Farrar tied the childcare issue to the state’s labor shortage, pointing out that “Connecticut’s labor force has shrunk by 19,000 since before the pandemic at the same time that there are over 74,000 open jobs.” She warned that “unless we fix childcare, businesses are going to go where they can find people to do the work.”
Calling the bill “a top House legislative priority,” she claimed it would “deliver faster funding to families, attract and retain childcare educators, and create new and update current childcare facilities.” She also suggested the bill’s steep costs would pay off in the long run, stating, “The best way to reduce budget deficits is to invest in quality early childhood development.”
But critics argue those assumptions are far from guaranteed — and say the state can’t afford to gamble on yet another expensive expansion of government services without firm cost controls or sustainable funding in place.
The Office of Policy and Management (OPM), which oversees the state budget on behalf of the governor, submitted written testimony criticizing the bill.
“While the Governor supports and has proposed a significant investment in early childhood care and education, there are several critical differences between his proposal and this bill,” OPM Secretary Jeffrey Beckham wrote. He noted that the governor’s preferred approach would cap annual spending from the fund at 10 percent to ensure investments are sustainable given that “the amount of surplus will vary significantly from year to year.”
Beckham warned the bill “commits the state to ongoing funding to support systemic increases in birth to five provider rates, further subsidizing wages in this sector and creating a new subsidy of health insurance benefits,” without guarantees that the funding will be available in future years.
He added that if the legislature pursues such program expansions, “then a General Fund appropriation is a more appropriate way to fund the program requirements, given the nature and scope of the expenditures.” He also raised concerns about the $100 million in bond authorizations, cautioning that “the state cannot afford to continue increasing its already nationally high long-term liabilities.”
Beckham was not alone. The Connecticut Business and Industry Association (CBIA) also submitted testimony expressing concerns about how the bill is funded. CBIA noted that while businesses support expanding access to childcare to help address workforce shortages, the proposal to intercept millions in surplus funds could reduce dollars available for pension debt payments.
“The business community believes that the savings from reduced future pension contributions (estimated at $8.5 million annually) is nearly equivalent to the annual funding that would be allocated to the proposed child care fund ($10 million),” wrote Jenna Grasso, a public policy associate with CBIA. “Therefore, we recommend allowing the pension funding to remain intact and, instead, appropriating the annual pension savings directly to support child care initiatives.”
The bill’s fiscal impact comes at a time of growing economic uncertainty nationwide.
A recent forecast from Goldman Sachs warns that the probability of a U.S. recession within the next 12 months is 45 percent, citing the potential impact of trade policies and declining consumer confidence. The firm said it expects GDP growth to slow to 1 percent in 2025 and unemployment to rise to 4.5 percent. “Economic fundamentals are not as strong as in prior years,” the report noted, adding that “higher tariffs are likely to boost consumer crisis.”
Other provisions in the bill include exempting childcare provider employees from paying the family fee required under Care 4 Kids, implementing a prospective payment system based on enrollment rather than attendance, and requiring all providers to submit annual tuition data to the OCE. It also directs OCE to conduct or commission studies on childcare workforce demographics, liability insurance, and background check processing.
While the bill aims to improve access to childcare and support the early education workforce, its scope and cost should send up red flags — especially at a time when economic forecasts are turning cautious.
More than just an expensive proposal, the bill shows the legislature hasn’t learned from past mistakes and is slipping back into the same fiscal habits that once pushed Connecticut to the brink in 2017.
For years, lawmakers relied on gimmicks to fill budget gaps — like sweeping money from dedicated funds, using one-time revenues to pay for ongoing expenses, and pushing pension payments down the road. They approved budgets based on unrealistic revenue projections and moved spending off the books to avoid the state’s spending cap. These short-term moves created long-term problems — chronic deficits, out of control pension liabilities, and a loss of public trust.
It wasn’t until 2017 Connecticut started to change course with real fiscal guardrails: a strong spending cap, caps on bonding, a volatility cap to stabilize revenue, and stricter pension funding rules. Those reforms helped the state build up its ‘Rainy Day Fund’ and allowed it to make additional payments to reduce pension debt. Now, H.B. 5003 — and proposals like it — threaten to undo that progress. Redirecting surplus dollars into special-purpose funds outside the cap may look like innovation, but it’s just a new version of the same old game. If lawmakers continue down this path, they risk taking Connecticut right back to the dark days.
