Connecticut

Connecticut

Budget Links

FY2027 budget adjustments (enacted)
FY2027 budget adjustments (proposed)
FY2026-2027 (enacted)
FY2024-2025 (enacted)
FY2023 budget adjustments (enacted)
FY2022-2023 (enacted)

Enacted Budget Adjustments – Fiscal Years 2026-2027

In 2025, Connecticut enacted a biennial budget for fiscal 2026-2027. Connecticut Governor Ned Lamont signed the state’s fiscal 2027 budget adjustments on May 26, 2026. Total net appropriations in the adjusted budget are $28.1 billion, a decrease of 1.7 percent from the original fiscal 2027 budget and an increase of 3.5 percent compared to the fiscal 2026 budget. General fund net appropriations total $24.9 billion in adjusted fiscal 2027, a decrease of 1.9 percent from the original fiscal 2027 budget and an increase of 3.5 percent compared to fiscal 2026. The April consensus revenue forecast for fiscal 2027 is $26.1 billion, an increase of 7.4 percent over fiscal 2026 estimated general fund revenues. 

New investments enacted in the fiscal 2027 adjustments include supplemental education grants for towns and cities (including direct aid to municipalities, charter schools, magnet schools, and vocational agriculture programs), funds for universal free school breakfast, allocations to expand mental and behavioral health supports in schools, and funds for a new literacy coaches program. Addressing local governments, the budget provides one-time financial assistance for towns and cities to help communities lower property taxes. The budget provides additional funds for child welfare accountability and transparency and establishes a new urgent crisis center in Stamford. Supporting veterans, the budget includes an investment to provide free bus passes to veterans along with funds to support veteran housing. The budget also provides funding to make permanent its first-in-the-nation interagency, holistic efforts on inmate medical care while maintaining funding to support significant rate increases for human services providers. Several revenue adjustments were enacted in the budget including ones that create a new tax credit for small businesses to encourage employers to offer health reimbursement arrangements and expand health care coverage options; expand eligible items during the Sales Tax-Free Week and increase the sales price exempt from the cap; eliminate taxes on school supplies; provide a Caregiver Tax Credit; allow pass-through entities to participate in the research and development tax credit program and earn a credit equal to six percent of qualifying expenditures upon state approval; and convert the current tax on cannabis from a THC tax to a 10.75 percent excise tax.

Enacted Budget Information
Fiscal Year 2026-2027 Enacted Budget Adjustments 

Office of Fiscal Analysis Fiscal Note

Governor's Press Release

Revenue Estimate

Proposed Supplemental Budget - Fiscal Year 2027

During the 2025 legislative session, Connecticut enacted a biennial budget for fiscal 2026 and fiscal 2027. On February 4, Connecticut Governor Ned Lamont released budget adjustments for fiscal 2027. The budget proposes $28.7 billion in total spending in fiscal 2027, an increase of 0.3 percent over enacted fiscal 2027 (and an increase of 4.4 percent over fiscal 2026). General fund spending comprises $25.5 billion in fiscal 2027, an increase of 0.4 percent over enacted fiscal 2027 (and an increase of 4.5 percent over fiscal 2026). For the proposed fiscal 2027 budget adjustments, total general fund revenues under current law are projected at $26.04 billion, an increase of 6.2 percent over projected fiscal 2026 and total general fund revenues after accounting for proposed policy changes are projected at $25.8 billion, an increase of 5.3 percent over fiscal 2026. The budget assumes a budget reserve level of $5.8 billion at the end of fiscal 2027. 

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. 

Proposed Budget Information
Fiscal Years 2026 - 2027 Proposed Budget Adjustments 

Budget Presentation 

State of the State Address 

Economic Report