Connecticut

Connecticut

Budget Links

FY2026-2027 (proposed)
FY2024-2025 (enacted)
FY2023 budget adjustments (enacted)
FY2022-2023 (enacted)
FY2020-2021 (enacted)

Proposed Budget - Fiscal Years 2026 - 2027

On February 5, Connecticut Governor Ned Lamont released his budget proposal for the fiscal 2026-2027 biennium. The budget recommends $26.97 billion in total spending in fiscal 2026, a 3.8 percent increase over appropriated fiscal 2025, and $28.2 billion in fiscal 2027, a 4.6 percent increase over the recommended level for fiscal 2026. General fund spending comprises $23.8 billion in fiscal 2026, an increase of 4.5 percent over appropriated fiscal 2025, and $24.97 billion in fiscal 2027, an increase of 4.8 percent over fiscal 2026. Total general fund revenues at the current rate are projected at $23.9 billion in fiscal 2026, an increase of 2.4 percent over fiscal 2025, while net projected revenue after proposed revenue changes is $24.1 billion, an increase of 3.3 percent. For fiscal 2027, total general fund revenues at the current rate are projected at $24.6 billion, an increase of 2.8 percent over fiscal 2026, and net projected revenue after proposed revenue changes is $25.3 billion, an increase of 4.8 percent. The budget assumes a budget reserve fund level of $5.5 billion at the end of fiscal 2027. The budget also proposes a revision to the volatility cap, one of the fiscal guardrails extended by the legislature at least through 2028. The cap, which applies to revenue from estimated and final payments under the personal income tax and from the pass-through entity tax, is currently set at 76.4 percent for fiscal 2026 and 77.5 percent for fiscal 2027. The governor proposes increasing the threshold by $288.9 million in fiscal 2026, allowing approximately 80.0 percent of this revenue to flow to the general fund. The threshold would grow in line with the growth in personal income for fiscal 2027 and beyond.

Proposed Budget Highlights 

The governor’s proposed budget for the fiscal 2026-2027 biennium continues the promise of opportunity for all and builds upon the progress of previous budgets to advance the goals of opportunity and affordability for Connecticut residents. The budget prioritizes investments in children and families, financial support for programs serving the most vulnerable residents, and providing individual and business tax relief.

Tax Relief 

• Corporate Taxes: Accelerates the elimination of the capital base tax (originally scheduled to be eliminated January 1, 2028), modifies the research and development credit exchange program by increasing the reimbursement percentage to 90 percent for the biotech sector, reforms the unitary tax and net operating losses, extends the corporate surcharge for three additional income years, and reduces the top film production tax credit rate from 30 percent to 25 percent of qualifying expenditures.
• Property Taxes: Expands property tax relief by increasing the income tax credit for property taxes paid to municipalities, benefiting more than 800,000 taxpayers, and increasing income limits for phaseout of the credit.
• Children and Families
• Creates a Universal Pre-school Endowment, allowing for a sustainable expansion of pre-school access with approximately 12,000 new spaces and 7,500 extended day pre-school spaces by 2032. The endowment will also subsidize the cost of offering school-day, school-year pre-school spaces for families meeting income requirements.
  
  • The endowment will be funded by $300 million of the unappropriated surplus for fiscal 2025 with future amounts also coming from general fund surplus if available.
• Increases provider rates in the Care 4 Kids program. 
• Increases rates in fiscal 2027 for rates in the Early Start CT program, which will launch in July 2025 and combine three existing programs – Child Day Care Contracts, School Readiness Grants, and State HeadStart Supplemental Grants.
• Provides funds to increase rates in the Birth to Three program.

K-12 Education

• Increases the Education Cost Sharing grant in fiscal 2026. All districts phasing into full funding of their formula entitlement will receive their full grant two years sooner than the original 10-year phase-in timeline.
• Increases funding in fiscal 2027 to subsidize high-cost placements for students with the greatest special education needs and establishes a High-Quality Special Education Incentive grant to support districts’ abilities to provide high-quality special education programming.
• Provides funds to help address chronic student absence and disengagement, eliminate reduced price lunch and breakfast fees for students statewide, provide universal free school breakfast, and support a high dosage tutoring grant.

Health and Wellness

• Proposes limiting price increases for generic and off-patent drugs to the annual rate of inflation.
• Proposes the state begin evaluating the feasibility of a drug importation program and provides funds for drafting a feasibility study and program application.
• Recommends updating the hospital provider tax to generate additional provider tax revenue in fiscal 2027 and increase hospital supplemental payments.
• Directs the Comptroller to explore measures to reduce hospital costs under the state employee and non-Medicare retiree health plans. If the savings target is achieved, the state will increase hospital supplemental payments under Medicaid.
• Provides funds to support increased rates for providers under Medicaid. 
• Removes coverage of weight loss medications in the Medicaid program when prescribed for obesity only. 
• Increases private provider funding to providers who are contracted to serve the state’s most vulnerable populations.
• Utilizes Opioid Settlement Funding from to continue behavioral health programs previously funded by the federal American Rescue Plan Act (ARPA), including mobile crisis services for children and adults, wrap-around services for persons in supportive housing, and cold weather response.

Transportation

• Increases funding for public transportation bus service and proposes a bus fare increase; fares have remained flat since 2016.
• Continues support for expanded bus services to support workforce transportation.
• Provides additional funding for rail transportation services and increases rail fares.
• Other Initiatives and Proposals
• Eliminates license fees for certain occupations to remove barriers for individuals entering in-demand professions. 
• Funds two positions to coordinate the state’s strategy regarding artificial intelligence (AI).
• Supports new Rental Assistance Program vouchers while also supporting eviction prevention efforts.
• Provides funds to the Department of Correction to annualize fiscal 2025 deficiencies including in personal services, other expenses, and inmate medical services.
• Increases funding in fiscal 2027 to support expanded resources to respond to and support victims of sexual violence and child abuse.
• Includes additional transfers of general fund revenue to the Municipal Revenue Sharing Fund each year.

Proposed Budget Information
Fiscal Years 2026 - 2027 Budget Proposal  

Slide Presentation 

Budget Address 

Economic Report