Budget Debate: ‘Prioritize Affordability, Economic Growth’

CBIA president and CEO Chris DiPentima this week called for lawmakers to prioritize affordability and economic growth as they shape the state’s next two-year budget.

Testifying before the legislature’s Finance, Revenue, and Bonding Committee, DiPentima also reinforced the organization’s support for Connecticut’s fiscal guardrails, critical for the state’s long-term growth prospects.

“Connecticut has made great progress in recent years, thanks to the fiscal guardrails established in the bipartisan 2017 budget,” he said.

“These reforms brought stability after a lost decade of budget deficits, tax hikes, and spending cuts.

“I vividly recall the pain I felt leading my family’s manufacturing company during that time—constantly debating decisions to limit capital investments, reduce staff that are like family, and exploring expanding to the Southeast or Midwest to escape the uncertainty that defined Connecticut.”

DiPentima appeared before the committee to share the business community’s reaction to Gov. Ned Lamont’s proposed $55.2 billion, two-year tax and spending plan.

Funding Concerns

The Governor’s proposed budget—the largest in state history—increases state spending by 3.8% to almost $27 billion in fiscal 2026 and by another 4.6% the following year.

DiPentima said employers support many of Lamont’s initiatives, including expanding childcare, increasing bioscience research and tax credit reimbursements, accelerating the elimination of the capital base tax, and eliminating licensing fees for high-demand trades.

“However, we have significant concerns with many of the proposed mechanisms for funding these initiatives—particularly when there are more effective, viable, and sustainable solutions available,” he said.

“While we welcome the Governor’s recommendation to extend the fiscal guardrails through mid-2038, there are real consequences to weakening the state’s volatility cap, which he proposed as a way to fund the initial $300 million investment in the early childhood education endowment.”

Lamont also proposed eliminating the $2.5 million cap on unitary combined tax liability, extending the corporate tax surcharge, cutting net operating loss carryforwards, reducing the film production tax credit rate, and restructuring the hospital provider tax

DiPentima said those proposals amounted to a $348 million tax hike on Connecticut businesses.

“This would be the largest tax increase on businesses in over a decade and will further strain Connecticut’s competitiveness,” he said.

Taxpayer Savings

DiPentima called for lawmakers to support legislation implementing the recommendations of a 2021 report commissioned by the legislature that recommended almost $1 billion in taxpayer savings.

“Instead of raising taxes and weakening the fiscal guardrails, we urge you 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,” he said.

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

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

CBIA’s Chris DiPentima

“We urge you to prioritize affordability and economic growth so businesses can continue investing in Connecticut’s future.”

DiPentima added that “any weakening of the guardrails—however well-intentioned—leads to irreversible fissures that will undermine a newly laid foundation for growth and prosperity and again saddle future generations with the mistakes of the past.”

And he noted that tax hikes were “the last thing job creators, already operating in one of the most expensive states in the country to run a business, need.”

‘Leverage Momentum’

DiPentima emphasized that the 2017 bipartisan budget reforms “are positioning Connecticut to best address our biggest challenges, providing much-needed stability, certainty, and predictability.”

“For instance, the guardrails freed up $738 million in spending for fiscal 2025 and without them, state spending would likely have increased by more than $10 billion between 2021 and 2025— just to meet the fixed cost burdens that continue to cloud our long-term economic outlook,” he said.

“Those 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, while Connecticut’s $22,957 per capita debt burden is the second highest of any state.

“The fiscal guardrails play an essential role in reducing that burden.”

He noted that Connecticut state government spends $6,173 per capita annually—almost twice the national average and among the top three states.

“Our budget is almost the same size as North Carolina’s, yet we have a third of that state’s population,” he said.

“Connecticut is at a critical point in the state’s post-pandemic growth. The two-year budget you adopt this session represents a real opportunity to properly leverage the state’s momentum and expand our workforce, grow our economy, and improve our quality of life.

“We are urging lawmakers to prioritize policy solutions that will lower Connecticut’s high cost living—particularly energy, housing, childcare, and healthcare costs—so that we can retain and attract more residents and grow our workforce.

“Every legislative proposal must be evaluated through this lens: ‘How will this bill make Connecticut more affordable?’”

---

For more information, contact CBIA’s Chris Davis (860.244.1931).