Politicians in Connecticut will say all the right things about fiscal discipline, yet when faced with the temptation to spend, they find ways to bend the rules and sidestep constraints. The 2025 legislative session isn’t even halfway over, but lawmakers are pushing the limits of the state’s fiscal guardrails.
Gov. Ned Lamont has already signed two bills — one funneling taxpayer dollars for grants to left-wing nonprofits and Planned Parenthood, and another partially funding special education aid to municipalities. Both use a loophole to dodge the state’s spending cap by creating an off-the-books fund.
Additionally, two major early childhood bills would divert surplus funds that should be used to pay down pensions and other debt, into new government programs instead.
H.B. 5003 would transfer up to $200 million from Connecticut’s budget surplus over the next two fiscal years to expand early childhood care and education programs.
Meanwhile, the governor’s bill, H.B. 6867, would siphon up to $300 million of surplus funds into an endowment in fiscal year 2025. Starting in 2026, all surplus funds would be directed into the endowment — unless the Budget Reserve Fund (BRF) falls below 18% of net General Fund appropriations. In that case, some money would still go toward savings, but none would be used for extra payments to reduce pension debt.
This marks a sharp departure from fiscal policy since 2018. Traditionally, any surplus remaining after filling the BRF is applied to reducing Connecticut’s massive unfunded pension liabilities or pay off outstanding debt.
While these programs may be well-intentioned, these bills ignore fiscal constraints entirely, creating slush funds for early childhood programs and universal preschool — costly initiatives that, once started, will become permanent financial burdens on taxpayers.
It’s also a stark contrast to previous years when both Democrats and Republicans praised the fiscal guardrails — spending caps, volatility caps, and debt limits — as essential to keeping the state’s economy stable, as well as leading to tax cuts, pension paydowns, and a record rainy day fund. In 2023, the General Assembly unanimously agreed these policies were working, extending the fiscal guardrails for another five years.
What a difference a few years make. Some of the same politicians who once supported these safeguards are now trying to dismantle them, clearing the way for reckless spending and higher taxes on hardworking Connecticut residents.
Gov. Lamont has long positioned himself as a defender of Connecticut’s fiscal guardrails. In his 2023 budget address, he praised them as “one of the smartest actions the General Assembly has taken over the past decade,” crediting them with providing “predictability and stability to our budget process.”
He declared that “these fiscal controls have ended the era of wishful budgeting and the so-called permanent fiscal crisis” and touted “historic payments towards our unfunded pension liabilities — honoring our commitment to teachers and state employees and saving taxpayers billions of dollars in the future.”
But now, Gov. Lamont is changing his position. During his 2025 budget address, he acknowledged, “I want to give a shout out to you, House and Senate, Democrats and Republicans, who put us on the strongest fiscal footing in many years.”
Then came the pivot. “That said, we have earned the opportunity to rethink the volatility threshold, which are tax revenues considered too unpredictable to spend on operating expenses, that can also create big deficits in the out years. Many of you may remember those deficits all too well.”
Put simply, after years of being a champion for guardrails as being essential to Connecticut’s financial stability, Gov. Lamont is now laying the groundwork to weaken them.
Comptroller Sean Scanlon, who also once praised those same guardrails as key to the state’s financial turnaround, is now pushing for changes of his own.
In a 2023 press release, Scanlon had nothing but praise for Connecticut’s fiscal guardrails, calling them a success.
“The fiscal reforms we’ve put in place are working, and Connecticut’s fiscal health is the strongest it has been in decades,” he said at the time, celebrating a $1.3 billion transfer toward debt reduction on top of nearly $6 billion paid down over four years. He insisted “those days are over” when it came to the state kicking the can down the road on pension debt.
Now, Scanlon is changing his tune. While he claims to still support the guardrails, he wants those same fiscal guardrails to be more “adaptive”— a political euphemism for loosening the rules to allow more spending.
“The guardrails were created in 2017 to end that fiscal crisis,” Scanlon told the Hartford Business Journal this week. “In 2025, that crisis has ended.”
“If the last 10 years were about ending the crisis,” he added, “the next 10 years have to be about growing Connecticut for the first time in a long time and addressing the new crisis, which in my mind is the affordability crisis—health care, child care, housing and energy, which are all costing too much for people in the state.”
The Executive Branch isn’t alone.
House Speaker Matt Ritter (D-Hartford) was a freshman lawmaker in 2017 when the bipartisan budget deal revised the spending cap and created Connecticut’s fiscal guardrails. In a 2023 op-ed, he praised those reforms, recalling that he remembered “2017 all too well” and warning that “we must stand firm” against lawmakers who wanted to scrap the guardrails.
“Before we start spending any money this year, let us honor the remarkable bipartisan accomplishments of 2017 and reaffirm these financial practices,” Ritter wrote.
His message was clear: “We owe it to our children and grandchildren to continue the legacy of the 2017 bipartisan budget and be a shining example of what a state or country can do when we come together, compromise and do the right thing.”
Now, that commitment is being put to the test. No longer “standing firm,” Ritter told a crowd of progressive activists and union leaders at a Dec. 3 town hall meeting, “[W]e are committed to making every opportunity of what I call reasonable and legal tweaks to the guardrails.”
We’ve Seen This Film Before and Didn’t Like the Ending
The last time Connecticut had a budget surplus the money didn’t go to debt reduction — it went to spending. Between 2003 and 2008, lawmakers burned through $2.25 billion on pet projects and expanding government programs, leaving the state unprepared for the Great Recession. When the economy crashed, taxpayers got stuck with massive deficits, an $875 million tax hike, and nearly $1 billion in operating debt.
Connecticut’s history of fiscal mismanagement is exactly why these guardrails were created.
Here’s the reality of what these fiscal guardrails have achieved. $8.6 billion in pension paydowns, six straight years of budget surpluses, a record $4 billion rainy day fund, and upgraded credit ratings, reducing borrowing cost. Politicians want you to believe they can weaken these protections and nothing bad will happen. History and math say otherwise.
It’s clear that our elected officials are playing games with taxpayer dollars. If Connecticut residents don’t push back, we’re looking at a future of higher taxes, ballooning debt, and another fiscal crisis. Lawmakers need to be held accountable before they undo the only policies keeping this state financially afloat. The fiscal guardrails work. They need to stay. Period.
