Proposed Budget Highlights
The governor’s proposed budget adjustments maintain fiscal discipline while making targeted, meaningful improvements to ensure Connecticut remains a place where families thrive and businesses grow. The investments are focused on education, workforce development, and cost-of-living relief.
Revenue Proposals
- Proposes using excess fiscal 2026 revenues to provide a rebate ($200 for singles or $400 for joint filers) of sales and use taxes to state residents.
- Eliminates application and renewal fees for select professions to remove a barrier to entry for in-demand professions, estimated to benefit more than 160,000 workers.
- Proposes offering a credit to match employer contributions in the first two years to encourage employers to offer Individual Coverage Health Reimbursement Arrangements through Access Health CT’s BusinessPlus platform.
- Proposes decoupling from the bonus depreciation on qualified production property provision in the One Big Beautiful Bill Act (OBBBA), consistent with current Connecticut treatment.
- Proposes decoupling from OBBBA’s expensing rules for domestic research and experimentation (R&E) for income years 2022 through 2025, inclusive. The governor proposes following OBBBA expensing rules for R&E expenses in income year 2026 and thereafter.
- Expands the research and development tax credit to allow pass-through entities to participate in this program and earn a credit equal to 6 percent of qualifying expenditures upon approval from the Department of Economic and Community Development.
- Modifies the hospital tax by reducing the tax amount by $275 million without a corresponding reduction in supplemental payments to hospitals, ensuring compliance with OBBBA Medicaid policy by reducing the inpatient tax rate from 6.0 percent to 4.1 percent.
Education
- Funds free school breakfast and eliminates reduced price lunch charges to ensure enhanced meal access for Connecticut students.
- Expands a COVID-era program providing mental and behavioral health supports in approximately 20 districts across the state.
- Establishes a statewide network of literacy coaches, inserting the coaches into 50 districts across five regions of the state serving an estimated 16,000 students in grades K-3.
- Adds funding to support an additional 36 paraeducator positions to address special education needs in the technical education and career system.
Health and Human Services
- Phases-in impact of nursing home Patient Driven Payment Model over three years and establishes a pool for nursing homes with higher Medicaid utilization, promoting more choice for Medicaid members.
- Increases Birth to Three rates under Medicaid to align with the increases under the Office of Early Childhood.
- Funds 50 new positions to address increased eligibility requirements due to federal changes.
- Proposes funding to design and develop affordable health insurance coverage options on Access Health CT’s exchange.
- Proposes transitioning Community First Choice participants to waiver programs to address uncapped program growth, higher administrative costs, and operational challenges.
Other Initiatives and Proposals
- Adds funding to maintain state rental assistance program vouchers due to rising housing costs.
- Provides funding to housing solutions for homeless youth to reduce chronic absenteeism and improve academic outcomes.
- Aggregates funding for legislatively directed funds in new stand-alone appropriations titled “Various Grants” to increase transparency and improve accountability. Aggregated funding is reduced 20 percent across-the-board, with exceptions.
- Proposes realigning functions of the Office of Health Strategy to better align programmatic activities with agencies that share similar functions and clarify responsibilities.
- Provides additional funds to maintain Unemployment Insurance staff at risk due to declining federal revenue.