Fiscal Guardrails Drive Stability, Growth, and Opportunity

The following opinion piece first appeared in Hearst Connecticut Media‘s newspapers.

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The 2017 bipartisan fiscal reforms triggered a remarkable transformation for Connecticut, reversing a decade-plus, corrosive cycle of budget deficits followed by tax hikes followed by more deficits.

I vividly recall the pain I felt leading my family’s manufacturing company during that time—constantly debating whether to limit capital investments, lay off employees that were like family, and explore expansion to the Southeast or Midwest to escape the crippling uncertainty that defined Connecticut at that time.

Business leaders from across the state shared similar experiences during that period—experiences none of us care to repeat. And because of those hard-fought, bipartisan fiscal reforms, there’s no reason Connecticut businesses and residents need to go through a decade like that ever again.

With six straight years of budget surpluses, there’s plenty of reasons for optimism about continued economic growth given Connecticut’s newly restored predictability and stability.

Major Impact

The impact—over just a short period of time—of the fiscal guardrails is significant. For instance:

• From 2020-2023, an additional $7.7 billion was paid into the state employee retirement system, with funding ratios now at a two-decade high
• Those pension payments will save taxpayers a projected $18.4 billion over the next 20 years
• Created the conditions that allowed for the historic 2023 income tax cuts
• Led to the state’s first credit rating upgrades in 20 years, significantly lowering borrowing costs
• Paved the way for six years of consistent spending increases for key social programs
• Freed up $738 million in spending in the fiscal 2025 state budget
• Without the guardrails, state spending likely increases by $10 billion-plus between 2021-2025

The fiscal reforms are working—providing a long-term, sustainable foundation for building an opportunity economy.

Our economic fortunes are intertwined not only with maintaining and protecting the fiscal guardrails, but also with addressing the state’s labor shortage crisis—there is no long-term, sustained economic growth without job growth.

Economic Threats

More than one-third of employers told CBIA’s 2024 Survey of Connecticut Businesses that the labor shortage represented the greatest threat to economic growth.

We have 74,000 job openings in the state—1.3 positions for every unemployed person. The number of openings is five percent higher than before the pandemic, while our labor force—those working and those actively looking for work—has declined by 19,000 (1%) over the same period.

Connecticut’s high cost of living is one of the primary factors driving the labor shortage.

“We have a long way to go, and the rest of the country is watching.”

Gov. Ned Lamont

This legislative session, we are urging lawmakers to prioritize policy solutions that will lower those costs—particularly energy, housing, childcare, and healthcare costs—so that we can retain and attract more residents and grow our workforce.

In essence, every legislative proposal must be evaluated through this lens: ‘How will this bill make Connecticut more affordable?’”

There’s still much work left to fully strengthen and stabilize our fiscal position: Connecticut’s $22,957 per capita debt burden is the second highest of any state.

As Gov. Ned Lamont said at the beginning of the 2025 legislative session, “we’ve gone from being the third worst-funded pension in the country to the sixth-worst. We have a long way to go, and the rest of the country is watching.”

Spending Growth

Advocates for weakening the fiscal guardrails—who argue that they constrain spending—should consider that since 1997, state government spending has soared 143%, far outpacing growth in household income (110%), inflation (87%), and population (11%).

Connecticut is among the top three states in terms of per capita state government spending—almost two times the national average. For many years our budget was almost the same size as North Carolina’s, yet we have a third of that state’s population.

Fixed cost obligations—dominated by state employee pension and retiree healthcare requirements—consume the greatest share of the state budget, shortchanging essential services and programs.

Any weakening of the guardrails—however well-intentioned—will lead to irreversible fissures that will undermine Connecticut’s nascent foundation for growth and prosperity and again saddle future generations with the mistakes of the past.

Instead of raising taxes and weakening the fiscal guardrails, we urge policymakers to look at the 2021 CREATES Report, which identified over 200 opportunities to reform state government operations generating up to $900 million in annual savings. There’s a bill currently before the legislature that offers a promising start to implementing these long-overdue reforms.

As the Governor himself said, this legislative session is about getting better results—not just finding more revenue and spending.

Lawmakers must prioritize affordability and economic growth. That’s how we’ll attract and retain the workforce of today, promote business investment, and foster opportunity for all residents.

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Chris DiPentima is the president and CEO of CBIA, Connecticut’s largest business organization.