Democrats, including Governor Ned Lamont, are justifiably proud of the budget they crafted in the upcoming 2022 state legislative session. The state of Connecticut, which for years has suffered from budget deficits and resorted to accounting tricks to make the tally, cut taxes this year, invest in needed projects and pay down long-term debt, all at the same time.
With every state government position up for election this year, it’s important that officials present their best vision to state voters. More importantly, it’s vital to Connecticut’s future that we get our books in order.
State Republicans, mostly out of power for the past decade except for a two-year power-sharing deal in the Senate after the 2016 election, were less enthusiastic. Abnormally large sums of money pouring into state coffers mean more should be spent on tax cuts, leaders said. This is not unexpected, and there is some justification for this belief. The budgetary situation has no recent precedent.
The current budget surplus is close to $4 billion. The rainy day fund is as big as it is allowed by law, and while long-term pension and health care debt remains a concern, the state has done more to pay those bills to the government. in recent years than he had done. in decades.
It would be misleading, however, to think that our problems have been solved. While Lamont made budget setting his top priority when he took office in 2019, it would be premature to say that his goal was achieved. Too much of the current situation depends on one-off events or what might be temporary realities.
COVID relief, or course, is a major factor. The federal government has sent huge sums of money to state and local governments over the past two years to cover pandemic losses, and while this help has been welcome, it has also skewed our view of what government funding looks like. These revenue streams won’t last much longer and we clearly can’t make any future plans based on them.
That relief money also came with restrictions — Washington didn’t want to write a big check to the states and have it all go directly to tax cuts, but instead it’s meant to be used to fund needed pandemic-related projects. . That has limited Connecticut’s options, but the governor and legislative leaders believe they have found the best way forward and are cutting car taxes, offering a child tax credit and lowering fees for seniors.
As always, public funds are heavily dependent on the stock market. Even with steps taken to limit volatility, a healthy Wall Street means good times for Connecticut’s budget, which was especially the case during Lamont’s tenure. Again, as always, this is subject to change, and the good times could go south if the economy falters.
That’s why, with the COVID relief conundrum, some of the tax cut proposals aren’t long-term, but mostly offer immediate relief. We don’t know what the budget situation will look like in a year or two.
It would surely please some voters and interest groups to lower taxes in the longer term. But it seems to be the most responsible route.
