House GOP Proposes $54.4B State Budget Plan

House Republicans proposed a $54.4 billion, two-year budget plan May 1 that largely avoids tax hikes, targets lower electric rates, and maintains the state’s fiscal guardrails.

The proposal is $1.3 billion less than the plan approved last week by the legislature’s tax and spending committees and approximately $770 million less than Gov. Ned Lamont proposed proposed earlier this year.

That plan adopted by the Appropriations and Finance, Revenue, and Bonding committees also weakened the fiscal guardrails by exceeding the constitutional spending cap and adjusting the volatility cap to capture $1 billion in additional revenue.

The House Republicans’ proposal increases state spending 3.8% in fiscal 2026 and 1.8% the following year.

“Our plan is rooted in reality—the reality that Connecticut families are already stretched thin by the high cost of living that’s driven by the cost of government,” House Republican Leader Vincent Candelora (R-North Branford) said in a statement.

“House Republicans are offering a sustainable, disciplined approach that funds what’s necessary while protecting the fiscal guardrails that help to stabilize our finances and pay down long-term debt.”

Taxes, Spending

The House GOP plan extends the “temporary” corporate tax surcharge—now 20 years old—while proposing $320 in annual tax relief based on Connecticut successfully challenging New York over income taxes involving residents working for out-of-state employers.

Republicans also proposed generating savings through state agency spending cuts, limiting hiring, freezing state employee wages for two years, and requiring public colleges and universities to use reserve funds.

The budget proposal increases spending for schools, social services, and childcare, and features $137.5 million in increased Medicare spending.

House Republicans proposed state agency spending cuts, limiting hiring, and freezing state employee wages for two years.

Appropriations Committee ranking member Rep. Tammy Nuccio (R-Tolland) said House Republicans were “shrinking government costs, while funding areas that matter most—from special education, veterans’ services, Medicaid rates and most importantly we are the only caucus who are directly addressing energy costs.”

“This budget is a step toward what residents deserve—affordability, accountability, and flexibility in the face of federal funding uncertainty,” added Finance Committee ranking member Rep. Joe Polletta (R-Watertown).

Rob Blanchard, the governor’s communications director, said that while some GOP proposals overlapped the administration’s, “at first glance, there appears to be vague cuts, such as agency operating expenses with no details and unrealistic staffing savings.”

House Speaker Matt Ritter (D-Hartford) said the plan is “not the most serious document I’ve ever seen, so we’ll probably have to write this one off.”

Budget Surplus

House Republicans released the budget proposal a day after state officials announced that Connecticut is headed for a near-record $2.3 billion budget surplus this fiscal year.

That’s the state’s second-largest budget surplus on record, driven largely by a surge in income and business tax revenues.

The consensus revenue report from the legislature’s nonpartisan Office of Fiscal Analysis and the administration’s Office of Policy and Management also projects Connecticut will save about $1.3 billion in each of the next two fiscal years.

Lamont warned that “Connecticut’s current fiscal year outlook remains positive, but there are troubling signs for fiscal years 2026 and 2027.”

“The economic policies coming out of Washington are directly impacting our state’s economic future, as evidenced by leading indicators such as consumer confidence, which is already causing a downward revision in sales tax revenue,” he said.

With a $2.3B surplus, Connecticut can navigate current uncertainty without tax hikes or weakening the fiscal guardrails. As budget chief Jeff Beckham says, “Our fiscal house was rebuilt to weather an economic downturn. Now is not the time to tear it down." https://t.co/B47LWUYTt7

— Chris DiPentima (@ChrisDipentima) May 1, 2025

Lamont’s budget chief, Jeff Beckham, used the release of the revenue report to offer a staunch defense of the state’s fiscal guardrails—instrumental to Connecticut’s improved fiscal fortunes and economic climate.

“Our fiscal house has been rebuilt to weather an economic downturn,” he said.

“Now is not the time to tear it down; we must protect what we have long fought to achieve and provide a balanced state budget for the next two years.

“When we passed the largest income tax cut in state history, we did so with the intent that it be sustainable.

“The budget we will be working on over the next few weeks must ensure that state spending is sustainable and will not lead to future tax increases or service cuts.”

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For more information, contact CBIA’s CBIA’s Chris Davis (860.244.1931) or Jenna Grasso (860.244.1169).