Posted on June 12, 2023
Today, Governor Lamont signed the $51 billion bipartisan state budget into law. The package for FY 2024-25 is headlined by a state income tax cut for the middle- and low-income earners and families, the first in over three decades.
The fully balanced budget features more than $150 million for local education, establishes a phase-out on pension and annuity taxes, invests in public safety, and follows fiscal guardrails established with the 2017 bipartisan budget agreement. Each of these key initiatives were proposed and supported by House Republicans dating back to 2022, when they proposed the income tax cut included in the final compromise.
Income tax cuts included in the budget reduce the bottom two marginal tax rates – from 3% to 2% and from 5% to 4.5% – with full benefit going to single filers earning under $105k and joint filers earning under $210k.
EDUCATION FUNDING
The budget also fully funds Education Cost Sharing (ECS) for Montville and Waterford which directly infuses our local schools with the tools to strengthen our children’s education. In receiving these ECS funds, municipalities can better allocate the monies saved by the funding injection without raising costs for taxpayers. The budget also fully funds the Excess Cost grants for special education reimbursements to towns.
SUPPORTING SENIORS
Connecticut seniors are supported in the budget agreement, which eliminates the benefits cliff on their pension and annuity income or individual retirement accounts. The plan phases out the income tax exemption on those earnings post-retirement gradually by raising the income threshold from $100k to $150k for joint filers and $75k to $100k for single, separate, and head of household filers.
PUBLIC SAFETY
Importantly, there is funding to create a “Narcan Leave Behind” program to allow first responders to leave naloxone kits with the family, friends, or bystanders at the scene of a non-fatal overdose, and makes Narcan tax exempt in all forms. It also includes funding to improve safety and training for local firefighters, an additional $5 million in firefighter cancer relief funding, and help to remove PFAS, which contains dangerous carcinogens, from standard use in fire service operations.
GOOD GOVERNMENT
Additionally, the budget will shrink the size of state government by requiring state agencies to follow real-world hiring principles. In doing so, the state will save taxpayers $200 million.
Omitted from the final document were other strong Republican initiatives like a first-ever child tax deduction of $2,000 per child. Though, improvements to an opt-in pass-through entity tax credit to benefit small businesses was approved.
The bipartisan state budget was enabled by honoring the spending, volatility, and bonding caps enacted by Republicans in the 2017 budget agreement that were re-certified early in the 2023 legislative session.