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Last week, the Connecticut General Assembly’s Appropriations Committee endorsed a $51 billion budget for the next two fiscal years, and the Finance Committee endorsed a $300 million state tax-cutting plan that includes income tax rate reductions.
Their proposals come two months after Gov. Ned Lamont presented his state budget proposal and his version of a state income tax cut.
Lawmakers and the Lamont administration will try to negotiate a final biennial budget plan before the regular 2023 General Assembly session closes June 7.
[RELATED: Connecticut’s budget process, explained]
How do the governor’s proposals compare to those from the state legislature? Here’s what to know.
How does Lamont’s state budget proposal compare to the Appropriations Committee’s proposal?
In a bipartisan vote of 40-12, the Democrat-controlled Appropriations Committee endorsed a $51 billion budget for the next two fiscal years that would soften the big funding cut Gov. Ned Lamont proposed for public colleges and universities while dedicating significant new funding for federally qualified health clinics.
But lawmakers had to forgo dreams of offering much more than Lamont did for local school districts, child care services, nursing homes and the private nonprofit agencies that deliver most state-sponsored social services.
At first glance, the committee’s plan seems very similar to Lamont’s. It would appropriate $25.1 billion in the fiscal year that begins July 1, just $37 million more than what the governor recommended on Feb. 8 and about 3.7% above current spending.
But spending under the committee plan would grow another 3.2% in 2024-25, surpassing Lamont’s proposal for the second year of the biennium by $374 million.
More important, it would carry $260 million of this current year’s $3.3 billion projected surplus forward into the next biennium and use about three-quarters of that funding to support programs in 2023-24. And because those surplus dollars technically were appropriated this fiscal year, they wouldn’t count against the spending cap in the coming biennium.
The state’s public colleges and universities potentially escape a deep cut under the committee plan, but Connecticut’s flagship university still would take a hit in the next budget cycle.
Lamont recommended $887 million for the University of Connecticut, its satellite campuses and its Farmington-based health center over the coming biennium. That’s down from the nearly $1.1 billion in assistance they received across this fiscal year and last. The system needs roughly $1.2 billion to fund current services in the coming biennium.
Additionally, Lamont proposed $923 million for the community colleges and regional state universities, down from $1.04 billion received across this fiscal year and last.
Much of the $260 million shaved off this year’s surplus under the committee plan would go to public colleges and universities. UConn, which stands to lose more than $300 million over the biennium under the Lamont plan, would be down about $200 million under the committee proposal. The legislators’ proposal would also close much of the gap for community colleges and regional universities.
Nonprofit social services and nursing homes
Nonprofit social service agencies said earlier this year that the state payments they receive annually are down more than $480 million once adjusted for inflation and that the pandemic and inflation also have forced many to shrink programs and cut staff.
Lamont recommended no increase for the agencies, while the committee offered $20 million extra next fiscal year — a 1% increase — that would continue in 2024-25.
Meanwhile, the state is transitioning into a new methodology to support nursing homes that serve thousands of residents on Medicaid.
Because of that, both Lamont and the committee would cancel nearly $64 million in inflationary rate adjustments otherwise due to facilities over the next two fiscal years.
The committee budget does not recommend a $2 million expenditure proposed by Lamont for the next fiscal year to support individuals coming to Connecticut to access contraceptives and abortion services from states that restrict access to these services.
How does Lamont’s income tax cut proposal compare to the Finance Committee’s proposal?
The legislature’s Finance Committee endorsed a $300 million state tax-cutting plan Wednesday that includes the first income tax rate reductions since the mid-1990s.
But the package, which will be a key part of final budget negotiations between legislative leaders and Gov. Ned Lamont, is not as far-reaching as the Democratic governor had hoped.
The committee plan limits rate relief to singles making less than $200,000 per year and to couples under $400,000. It also scrapped a proposal from Lamont to provide tax relief to business owners.
The centerpiece of the plan involves reducing the two lowest marginal rates in Connecticut’s income tax system. The 3% rate, applied to the first $10,000 earned by singles and $20,000 earned by couples, would drop to 2%.
The 5% rate charged to the next $40,000 earned by singles and $80,000 earned by couples would drop to 4.75%.
But individuals earning more than $200,000 per year and couples topping $400,000 wouldn’t receive the benefit of these rate cuts.
Lamont had proposed a more broad-based cut that would have reduced the two lowest rates to 2% and 4.5%, respectively. Singles making as much as $540,000 per year and couples making slightly more than $1 million would also benefit marginally from the Lamont proposal.
[RELATED: Gov. Ned Lamont pitched an income tax cut in CT. Here’s an overview of his proposal]