Connecticut has been ranked the 15th best state in the country, improving by five spots from last year, in the latest U.S. News and World Report’s “Best State Rankings” study.
While the Constitution State’s position is noteworthy and even encouraging in some respects, it also finished in the bottom tier for fiscal stability at 48th overall. According to the report, Connecticut has an AA3-Positive government credit rating (which ranks lower than AAA, AA1, and AA2); and falls below the national average in budget balancing and liquidity.
This is significant as the General Assembly debates whether to protect or alter the state’s fiscal guardrails — a bipartisan group of spending reforms passed in 2017 and then unanimously extended in 2023.
Since their enactment, the fiscal guardrails have reversed decades of pension underfunding, improved Connecticut’s creditworthiness, and saved the state more than $170 million annually in reduced pension debt payments. If kept intact, the guardrails can save the state $7 billion over the next 25 years.
Yet Connecticut lawmakers are aiming to break the fiscal guardrails to reportedly withstand federal funding cuts from the Trump administration. In mid-April, to display funding reductions, Gov. Ned Lamont launched a reporting system to track the impact of federal policy changes on state agencies, nonprofits, and municipalities. However, nearly 45 reports have been submitted — and five had little to do with federal policy changes. Moreover, the state isn’t as dependent on federal aid as some lawmakers suggest, ranking 40th in dependence on federal money overall, including 45th for state government dependence and 17th for resident dependence.
Then there is the looming, massive $80 billion pension debt. Even though Connecticut has paid $10 billion of those obligations, each resident owes nearly $8,000 in pension debt, which ranks first compared to other states, according to the Office of Legislative Research. Paying these debts sooner will save taxpayers billions in interest costs.
Despite the mountain of debt remaining to whittle down, savings are attributable to the fiscal guardrails. They are making the state more solvent. But if state lawmakers choose to weaken these safeguards, they risk returning to the path that led to the need for reform in the first place. It is prudent, therefore, to keep the fiscal guardrails intact. Perhaps, if we do so, our rankings in the “fiscal stability” category will also improve, thus raising our overall ranking.
As for what drove Connecticut’s overall rise in state rankings, here is a breakdown:
