In budget speech, a governor caught between a desire for social justice and fiscal restraint

Gov. Ned Lamont

Gov. Ned Lamont described his proposed budget as a reflection of Connecticut’s shared values, an assessment certain to provoke dissent among progressives demanding tax equity and non-profits seeking higher reimbursements for a range of services delivered by front-line workers.

In a 25-minute address recorded at his desk Friday for broadcast at midday Wednesday, a precaution during a pandemic that has ruled out large gatherings such as a joint session of the General Assembly, Lamont spoke of a desire for boldness, especially on racial health disparities laid bare by COVID-19.

“Our budget is much more than a list of expenditures and revenues,” Lamont said. “Rather, it is a reflection of our shared values, as we are collectively deciding not only what we are funding but why we are funding it. It is a document that defines who we are as a state and a society.” 

But the first-term Democrat, a businessman, has made fiscal restraint and economic growth his overarching priorities, ones that can be at odds with a desire to address disparities. The tension between those goals was evident throughout his speech.

“The pandemic reminds us that this is no time to limit our ambitions,” Lamont said, noting the “fragility of working families and small businesses” crucial to civic life and well-being. ”We owe them more than just our gratitude.”

In the next breath, the governor all but acknowledged those ambitions indeed would be constrained by the annual costs imposed by Connecticut’s debt and unfunded pension liability, one of the nation’s highest.

“But let’s face it,” Lamont said, “the Connecticut budget is still burdened with high fixed costs accumulated over the decades, and these costs plus a COVID economy result in deficit projections in each of the next two years.”

He acknowledged near the top of his speech that balancing his $46 billion, two-year budget would require a reliance on non-recurring revenue, a likely mix of federal pandemic stimulus aid and a partial draw down from the state’s $3.5 billion rainy day fund.

If he runs and is re-elected in 2022, his first task in 2023 could be confronting the consequence of that reliance. His speech made no mention of that future challenge.

Lamont suggested that new or higher broad-based taxes could hamper a boom in home sales attributed in large measure to New Yorkers exploiting the work-from-home opportunities created by the pandemic.

“I’ve always said we don’t need more taxes, we need more taxpayers, and they are already paying dividends, as you can see by our balanced budget,” Lamont said.

To encourage the boom, Lamont said, he is proposing legislation improving broadband access.

As governors tend to do in framing their budgets, Lamont emphasized what his plan would provide, not what needs would go unmet. He outlined five broad priorities, the first being the defeat of COVID-19. 

“Because if we don’t, nothing else matters,” he said.

Managing the COVID pandemic has been the source of Lamont’s comeback in political polling. His advocacy for highway tolls for all motor vehicles in 2019, a reversal of a campaign promise to seek tolls only for trucks, quickly pushed him to the bottom ranks of gubernatorial approval ratings.

With tolls off the table, Lamont is proposing a new revenue source for transportation projects: a mileage fee on heavy trucks that he says would raise $90 million annually. Connecticut also expects revenue from its participation in a regional Transportation & Climate Initiative, which would require large gasoline and diesel fuel suppliers to purchase “allowances” for the pollution caused by the combustion of those fuels.

“With these two alternatives, we can maintain our project schedule to keep or bring our roads and bridges up to a state of good repair and speed up your commute,” he said.

Even with a major increase in federal transportation infrastructure spending promised by President Joe Biden, the state needs new revenue to meet its needs, including the state match for federal transportation projects.

Without specifics, he suggested a push toward green jobs and environmental justice by “reducing our dependence on out-of-date energy solutions, such as coal and antiquated trash-to-energy plants, which are spewing pollution particulates into the air. This airborne pollution hits our urban communities the hardest.” 

Lamont made relatively little of two of the higher-profile initiatives in his budget: the legalization of recreational marijuana and the expansion of gambling by allowing sports betting and other forms of online gambling. 

If the governor intends a hard sell to the lawmakers on these two controversial issues, his speech offered no preview.

The governor cast the legalization of pot as a means to avoid surrendering the cannabis market to neighboring Massachusetts, where sales are legal, or to the underground market in Connecticut. He mentioned no specific revenue expectations but noted that municipalities would share.

“These additional revenues will go to distressed communities, which have been hardest hit by the war on drugs,” he said. “Half the tax revenues should be allocated to PILOT payments, in addition to a 3% local excise tax option. And importantly, my proposed legislation authorizes the automated erasure of criminal records for those with marijuana-related drug possession convictions and charges.”

PILOT is the acronym for the payments in lieu of taxes the state sends cities and towns as a partial reimbursement for tax-exempt properties.

His pitch for expanded gambling was similarly brief.

“Our neighboring states are moving forward with sports betting and i-gaming, and Connecticut should not leave these opportunities for other states to benefit from our inaction,” he said. “My administration has been in active negotiations with our tribal partners to bring the state’s gaming economy into the digital age.”

In return for paying the state 25% of gross profits from slots, the tribal owners of the state’s two casinos, Foxwoods Resort and Mohegan Sun, have exclusive rights to casino games, necessitating negotiations over sports betting and online gambling. 

He also spoke broadly about continued efforts to modernize state government with new technology and working to control health costs facing the state and consumers.

“We don’t have the luxury of doing one thing at a time. There’s too much at stake,” he said. “While my administration will continue to be laser-focused on managing the COVID-19 crisis, we must focus on the light at the end of the tunnel. Every action we take in response to COVID-19 is in the interest of the economy and public health and safety. We must do so knowing exactly how it positions us on our shared path to continued fiscal health and broad-based economic opportunity for all of our citizens.” 

“And, lastly,” he said, “if our budget is a representation of our core values, we must make significant progress towards racial justice and equity; not as a single budget item, rather as a pervasive reach into all our programs and priorities.”

That may be true, but line items can be readily measured, while imbuing justice and equity across the budget cannot.