The Connecticut General Assembly’s 2025 session ended June 4, with Gov. Ned Lamont and lawmakers approving a $55.8 billion biennial budget. The governor hailed it as a “balanced, sensible budget” with significant investments in education and Medicaid. But the budget weakened the volatility cap — one of the 2017 fiscal guardrails designed to protect taxpayers from budget shortfalls and tax hikes — and Gov. Lamont declared a “fiscal emergency” to exceed the constitutional spending cap for the first time in nearly 20 years.
Even so, given that special interests began the session determined to largely destroy the guardrails, it’s no small achievement that the damage was limited. Your voice made an impact.
In a progressive state where labor unions hold significant influence, together, we secured key victories: Gov. Lamont is poised to veto a bill paying striking workers unemployment benefits, overreaching social media regulations and new taxes were defeated, and environmental mandates were significantly diluted.
Below is Yankee Institute’s breakdown of the session’s outcomes.
The Good
Subsidizing Strikes — Presumptively Vetoed
A bill to allow striking workers to collect unemployment benefits resurfaced in 2025 after Gov. Lamont vetoed it last year. Yankee Institute’s Labor Fellow Frank Ricci testified that this policy would “exacerbate Connecticut’s affordability crisis and incentivize labor unrest,” burdening businesses with higher unemployment insurance costs and raising prices for consumers. Yankee Institute kept the pressure on through op/eds in national and local media outlets; Take Action emails; TV and radio interviews; and commercials on Channel 3. The bill passed the General Assembly, but Gov. Lamont has signaled his intent to veto it again.
Burdensome Labor Regulations — Blocked
Several union-backed bills failed, including one mandating municipal pension systems, which would have imposed unfunded mandates on taxpayers. Another bill, limiting productivity quotas at warehouse distribution centers, was defeated, preventing stifled business growth and potential job losses. A proposal requiring companies to set heat standards also died, sparing small businesses from costly administrative burdens. As Ricci noted, “For a lean operation, [such regulations] could mean hiring extra help or training staff just to keep up — costs that hit hard.”
Linking Union and Nonprofit Funding — Defeated
S.B. 1547, which would have tied nonprofit funding to state employee wage increases, was rejected. In a CT Mirror op-ed, Ricci warned this could turn nonprofits into advocates for higher taxes and spending, misaligning their focus from service delivery. This victory preserves fiscal discipline and nonprofit integrity.
Overreaching Social Media Bill — Defeated
A proposed social media regulation bill, aimed at protecting children online, risked constitutional challenges similar to laws in Ohio, Arkansas, and Utah. Yankee Institute’s Meghan Portfolio argued in RealClearPolicy that such bills prioritize political posturing over practical solutions, threatening free speech and inviting litigation. The bill’s failure avoided a legal quagmire.
“Green” Amendment — Defeated
The Green Amendment, which would have enshrined a constitutional right to a “safe and stable climate,” was defeated. While appealing in theory, it risked costly lawsuits and intrusive regulations. Yankee Institute President Carol Platt Liebau wrote in the Hartford Courant that it would “make our state even more unaffordable, increase the cost of living, block economic development, and reduce the quality of life.” Its defeat protects taxpayers and businesses.
Capital Gains Surcharge — Defeated
A proposed 1.75% surcharge on capital gains for high earners was abandoned. Critics, including Yankee Institute, highlighted that Connecticut’s top 1% already pay over 40% of state income taxes. Defeating this tax prevented further burden on key taxpayers. Watch Yankee Institute’s video on the bill.
“Green Monster” — Tamed
Environmentalists pushed an omnibus bill dubbed the “Green Monster” by Yankee Institute’s Meghan Portfolio, which would have mandated aggressive greenhouse gas reductions, net-zero goals, and a transition to renewable energy sources like wind and solar. Our research and public scrutiny led to a significantly watered-down version in 2025, reducing its economic impact.
The Bad
Fiscal Guardrails Weakened — But Not Destroyed
The volatility cap was diluted, and the spending cap was bypassed via a “fiscal emergency” declaration. This was not a complete surprise, as Gov. Lamont and lawmakers telegraphed their intent to undermine several of the fiscal guardrails to appease their supporters and create a new universal pre-K program.
Prior to the 2025 session, Yankee Institute and Reason Foundation published the policy paper, The Case for CT’s Fiscal Guardrails, providing lawmakers with intellectual ammunition. The research showed that the guardrails reversed decades of pension underfunding, improving Connecticut’s creditworthiness and financial stability. The state has also 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.
While lawmakers tampered with the guardrails to fund a universal pre-K program, our pressure ensured they weren’t ignored entirely, preventing greater fiscal recklessness.
Housing Bill Erodes Local Control
H.B. 5002, a housing omnibus bill, centralizes zoning control in Hartford, stripping local governments of autonomy. Yankee Institute and CT169Strong warned that it disregards community needs and undermines Connecticut’s tradition of local governance. As YI President Carol Liebau stated, “If towns want to eliminate parking minimums or implement housing measures, it should be their choice.” Despite our efforts, it seems likely the bill will be passed and signed into law — but YI will continue to push for local control throughout our state.
Unclear Costs of Illegal Immigration
Yankee Institute cited a Federation for American Immigration Reform study estimating illegal immigration cost Connecticut $1.3 billion in 2023. While state leaders disputed this figure, they failed to provide their own estimate. Liebau wrote in The Federalist that this lack of transparency disrespects taxpayers, who deserve clarity on how their money is spent.
The Road Forward
Expanding Educational Opportunities
Yankee Institute continues to promote our “Opportunity” Tax Credit Scholarship (TCS) program to enable low-income children to attend schools that best fit their needs. With 26 TCS programs nationwide, evidence shows academic benefits and high parent satisfaction without diverting public school funds. Our Opportunity Scholarship legislation received a legislative vote for the first time this year — and now struggling low-income families can see which legislators truly stand with them in their efforts to help their children escape failing public schools.
Protecting Fiscal Responsibility
With the fiscal guardrails weakened, further erosion is a risk. Liebau warned, “Tampering with the guardrails means they’re just guard-‘suggestions.’ Every time they’re loosened, it becomes easier to weaken them again.” Yankee Institute will fight to preserve these protections and prevent a return to the 2017 fiscal crisis.
Addressing Energy Rates and Environmental Policy
Skyrocketing energy rates, driven by the Public Benefits Charge, made Connecticut’s electric costs second only to Hawaii. A new law allows borrowing $260 million annually to offset these costs, but it’s a short-term fix. Yankee Institute will monitor environmentalist efforts to revive the Green Amendment or other costly mandates, championing affordable, sustainable energy policies.
Anticipating Labor Union Pushback
With the strike pay bill likely to be vetoed, unions may try again in 2026. Meanwhile, negotiations between Gov. Lamont and SEBAC, representing 45,000 state workers, could impact taxpayers, especially as state employees have seen 33% wage increases over six years — far outpacing the private sector’s 23% national average. Yankee Institute will remain vigilant to protect taxpayer interests.
