Cathy Osten

Investing in Education, Towns, and Nonprofits – with No Tax Hikes

Senate gives final, bipartisan approval to two-year state budget

HARTFORD – State Senator Cathy Osten (D-Sprague) today joined her colleagues in the state Senate to pass a bipartisan, two-year Democratic state budget that invests in education, cities and towns, and nonprofit social service providers while not raising taxes, remaining well under the state spending cap, and putting an extra $1 billion toward paying off Connecticut’s unfunded pension debt.

The Senate voted 31-4 to pass House Bill 6689, the state biennial budget for July 1, 2021 through June 30, 2023. The budget, which had previously been approved by the House of Representatives, now heads to Governor Ned Lamont, who is expected to sign it into law.

With a billion-dollar year-end budget surplus, its Rainy Day Fund at historic highs, our state bond rating at its highest level in two decades, and state income tax and federal revenues swelling, Connecticut is well-positioned this year to make major investments in education, town aid, social services, health care, justice-related initiatives and workforce development programs, all the while remaining under our statutory spending cap.

“This budget is really a moral document that addresses many of the issues that were brought before me and the Appropriations Committee over the course of dozens of hours of public hearings,” said Sen. Osten, who has Senate Chair of the Appropriations Committee co-wrote the state budget. “This budget protects our private providers, who work with some of Connecticut’s most vulnerable residents, young and old. It funds our investments in education from pre-K all the way through college. It provides state funding for our cities and towns, which helps local taxpayers. It makes investments in workforce development and in our cities. And it does this all without violating our state spending cap and while making large payments toward our pension debt. Connecticut is in a pretty good financial position due to some fiscal policies we have enacted over the past several years, and our ability to save money and spend money elsewhere and pay down our debt in this budget is a direct result of that.”

The approved budget will bring another $8.48 million in state aid over the next two years to Sen. Osten’s Senate District towns of Columbia, Franklin, Hebron, Lebanon, Ledyard, Lisbon, Marlborough, Montville and Norwich for a total of $198.495 million in state aid – representing year-over-year state grant increases of 3.75% in FY 22 and 5.17% in FY 23 compared to the current 2021 fiscal year funding.

The two-year General Fund budget totals $42.46 billion: $20.8 billion in FY 22, and $21.66 billion in FY 23. The budget including all nine special funds (i.e. the Special Transportation, Banking, Insurance, Workers’ Compensation and other funds) totals $46.36 billion, which is a year-over-year 2.6% spending increase in FY 22 and a 3.9% spending increase in FY 23.

Despite all of the state investments in a wide variety of necessary and popular public programs, the budget remains $22.2 million under the state-mandated sending cap in FY 22 and $35.7 million under the spending cap in FY 23, even while making an extra billion-dollar payment toward Connecticut’s unfunded pension debt, which has built up over the past 70 years.

The state budget relies on $2.28 billion in federal American Rescue Plan Act funding over the biennium: $1.271 billion in FY 22, and $1.01 billion in FY 23; Connecticut received a total of $2.6 billion in ARPA funds, leaving about $400 million unallocated.

Among the many investments this state budget makes are:

Fiscal Responsibility

• This budget recognizes the structural and systemic inequities experienced by our major cities – many of which have over 50 percent of their property as non-taxable – and keeps our promises to municipalities by fully funding the Payment-in-Lieu-of-Taxes (PILOT) formula that was championed by Senate President Martin Looney and passed earlier this session. This budget will provide over $525 million in additional funds to Connecticut cities and towns over the next two years through a combination increased PILOT and Education Cost Sharing (ECS) grants.

• Because of Democratic fiscal policies, in 2020 Connecticut finished its fiscal year with a surplus and reached the 15% threshold in our Rainy Day Fund, allowing us for the first time in 75 years to make a bulk payment of $63 million toward our unfunded pension liability.  This fiscal prudence will also result in a budget volatility cap transfer of more than $1 billion at the end FY 21 to pay down our unfunded pension liability.

• The budget increases the state Earned Income Tax Credit for working poor people from the current 23% of the federal income tax to 30.5%. That tax credit change will provide an additional $40 million in income – $158 million overall – to nearly 195,000 Connecticut households.

Education

• Education Cost Sharing Grant – This budget keeps our promises related to local education funding and maintains the current roll-out of the ECS formula providing cities and towns with additional $130 million over the next two years, while holding harmless towns that would have otherwise lost funds. It also provides additional funding to school systems with higher numbers of low-income students and English Language Learner students.
• Vocational-Agricultural Education – Provides funding to increase the state per-pupil grant for Vocational Agriculture schools by $1,000.

• Charter Schools – Provides funding to increase the per-pupil charter school grant from $11,250 to $11,525.  The budget also provides funding for grade growth within some charter schools in the state. This will provide parity between traditional public schools and public charter schools.

• Debt-Free Community College – Provides $14 million in FY 22 and $15 million in FY 23 to fully implement debt-free community college. This makes community college free and accessible to all students in Connecticut and leverages federal dollars brought in by additional student enrollment to help ensure the long-term success of our community college system. 

Nonprofits & Nursing Homes

• Direct Support for Nonprofits – Provides $50 million in support from the FY 21 surplus to the non-profit providers of health and human services that contract with state agencies. In addition, it provides an additional $30 million in FY 22 and FY 23 to these agencies. With additional $30 million in FY 22 and FY 23 in federal funds.

• Increased Rates for Home Health, Nonprofits and Waiver Services Providers

• Increased the ratio of people providing direct care and social work services to residents in nursing homes

• Statutory Increases for Nursing Homes, Intermediate Care Facilities & Boarding Home

Justice & Equity

• Community Reinvestment – Provides $14 million from the FY 21 surplus for community investment to fund a variety of initiatives focused on reducing violence and providing support for Connecticut’s cities.
• Cost-free communications for incarcerated persons

• Inmate Medical Services – Provides additional support to allow for an increase in staffing.

• Supports Survivors of Domestic Violence – Provides funding for staff positions to implement new domestic violence laws and for a grant program to provide legal representation to applicants for restraining orders.

• Support for the Tourism Fund & Statewide Marketing Campaign- The Tourism Fund, which supports statewide marketing campaigns as well as various arts and cultural programs, is funded solely by an occupancy tax on hotel stays, a revenue source that has decreased dramatically due to the impacts of the pandemic.  This provides funds of $15 million in immediate support for statewide marketing efforts in FY 21.