Even as he runs for a third term, a major piece of Gov. Ned Lamont’s legacy already is established: the Democrat and former businessman has reduced Connecticut’s debt at unmatched speed and scale.

Despite compromising lately on budget caps he’s vociferously defended for most of his seven years in office, the governor will close Connecticut’s books June 30 with another $1.1 billion he can set against the massive pension debt he inherited from past generations.

That will push total surplus deposits beyond $11 billion since 2020, almost $1.6 billion per year.

Other savings efforts in modern state history are not even close in scope.

In 2007, Gov. M. Jodi Rell and lawmakers used $10 million from a surplus to begin saving to cover billions of unfunded obligations in the healthcare program for retired state workers.

The 1999 General Assembly and Gov. John G. Rowland dedicated $55 million from surplus to avoid bonded debt and pay cash for new school construction.

“This is a historic turnaround that puts the state on strong fiscal footing,” Lamont’s budget spokesman, Chris Collibee, said of the pension debt retired since 2020.

Why does that matter?

These supplemental payments keep the budget’s pension contribution from exploding and siphoning dollars away from core services like education and healthcare — or from triggering tax hikes.

“It’s really important that we have a budget that’s built to last,” Lamont said Thursday while discussing the just-concluded General Assembly session in his Capitol office. “I wanted to make sure the promises we made are sustainable.”

In 2023 he signed the first state income tax rate cut since the mid-1990s. That, coupled with other income tax changes, are saving poor and middle-class households more than $450 million year after year.

Many legislators wanted more tax cuts in the new budget to complement $580 million extra invested in town aid and affordable childcare. But the governor insists the relief that has been approved in recent years won’t automatically vanish if the national economy slips.

Thanks to debt-reduction efforts, required pension contributions that will consume $3.5 billion or 12% of the next budget otherwise would have been almost $1 billion greater.

Promising tax cuts and expanded services is easy, the governor said. Making sure they last is hard.

“Sometimes there’s a lot of ‘Let’s promise it now, and we’ll figure out how to pay for it tomorrow,’” he said.

Lamont figured out how to attack pension debt shortly after he took office in 2019 and discovered budget caps he’d inherited would save far more than legislators had anticipated.

Thanks to those, he could wrap up one budget cycle after another with more than 8% of revenues, a yearly average of more than $1.8 billion unspent. In the 20 years prior to those new budget caps, no surplus represented more than 3.3% of the budget.

Lamont: ‘We’re not out of the woods’ on pensions yet

But if the state saves too aggressively that also pulls needed dollars from core programs and blocks lawmakers from cutting taxes on an overburdened middle class. And Lamont’s critics say the state still hasn’t found the proper balance, saying one generation shouldn’t have to pay off pension debt created by three.

“Next year, we have an opportunity: continue our progress by prioritizing the needs of working people and securing sustainable and recurring revenue sources for education and healthcare services by fixing the [budget] roadblocks and asking the wealthy to pay their fair share,” said Constanza Segovia, organizing director for Connecticut For All, a coalition of more than 60 progressive faith, labor and civic groups.

House Speaker Matt Ritter, D-Hartford, has said repeatedly that Lamont and his fellow Democrats in the legislature’s majority have compromised effectively to offer sustainable relief and clean up the fiscal mistakes of past generations.

But Ritter also has said Connecticut almost certainly must scale back savings efforts somewhat in future years or risk watching key investments in town aid and affordable childcare unravel.

The Connecticut Conference of Municipalities thanked Lamont and legislators for sending an extra $180 million for local schools in the new budget but also says communities effectively lose hundreds of millions annually because state grants haven’t kept pace with inflation for more than a decade. When reports of a likely increase in education aid began to surface in late April, CCM Executive Director Joe DeLong said, “I think $180 million should be a floor, not a ceiling.”

Many poor residents struggle to find doctors because state Medicaid payments weren’t comprehensively adjusted for nearly two decades. And while legislative leaders said last year that $300 million — a fraction of supplemental pension deposits — was needed to attack the problem, Connecticut has agreed to spend only $75 million next fiscal year above 2025 levels, and that could shrink to $50 million.

And the state’s own tax fairness studies show low- and middle-income households effectively lose a much greater share of their resources to state and municipal taxes that do high-earners.

But the governor says Connecticut can’t forget the importance of paying down its legacy of pension debt, even as it faces cuts federal aid for health care, nutrition assistance and other human services worth hundreds of millions per year.

“We’ve made a lot of progress on our pensions,” Lamont said. “We’ve gone from one of the worst-funded pensions in the country to about average. We’re not out of the woods.”

By failing to save properly for seven decades prior to 2011, governors and legislatures forfeited billions of dollars in investment earnings they needed to help cover benefits pledged to state employees and municipal teachers.

And Connecticut entered this fiscal year still owing $33.5 billion in pension debt, which still ranks among the highest burdens, per capita, in the nation.

Connecticut Mirror reporter Mark Pazniokas contributed to this story.