HARTFORD – The state House and Senate passed Gov. Ned Lamont’s $28.6 billion fiscal year 2027 budget adjustment bill over the weekend. The spending plan developed in collaboration with legislative leaders boosts the state’s education system, increases investments in housing and transportation and supports town and city budgets.
“This budget delivers a strong, responsible path forward, one that makes Connecticut more affordable while keeping our state on solid fiscal footing,” Gov. Lamont said. “Throughout this legislative session, we have listened closely to residents, businesses, and municipal leaders, and this proposal reflects their priorities.
“It makes historic investments in early childhood education, strengthens our K-12 education system, and provides meaningful support to our cities and towns. It advances critical progress in housing and transportation while responsibly reducing more than $1 billion in unfunded pension liabilities. This is a budget that provides immediate relief for families and positions our state for long-term growth, and I urge the legislature to support it.”
State Senate President Pro Tempore Martin Looney praised how the newly passed budget addresses child care and healthcare assistance.
“For years, towns and cities across Connecticut have absorbed the growing cost of public education with insufficient state support, and that burden has landed squarely on local property taxpayers, Looney said. “Senate Bill 1 addresses that imbalance directly, directing substantial new resources to local boards of education and ensuring that every district receives an increase regardless of enrollment. Paired with $100 million in direct aid to municipalities, this budget gives Connecticut’s cities and towns the tools they need to serve their residents without reaching deeper into taxpayers’ pockets.”
One of the more controversial provisions of the FY 2027 state budget on the revenue side is the use of volatility cap revenue.
- Volatility cap: This budget continues the trend of prudent fiscal management while utilizing extraordinary revenue to make investments in key areas. Due to the state’s continued fiscal stewardship, volatile revenues subject to the volatility cap have exceeded $2 billion in FY 2026. At the same time, the state faces higher than expected Medicaid costs, and municipal and school budgets are negatively impacted by inflation, rising healthcare costs, and federal cutbacks. Governor Lamont today issued a declarationpermitting the investment of $813.7 million of these volatile revenues to promote affordability and growth in the state while still making a sizable contribution to our pension system.
Notable new investments include:
- K-12 education: The budget provides an additional $193 million in supplemental education grants for towns and cities, including $162.2 million in direct aid to municipalities, $8.7 million for charter schools, $8.3 million for magnets schools, and $800,000 for vocational agriculture programs – representing an increase for all Connecticut public school students – and approximately $10 million in temporary educational aid.
The budget includes Governor Lamont’s priority investments in children’s education, including $12 million for universal free school breakfast to ensure all 500,000 Connecticut students have access to a healthy meal to start the school day; $5 million to expand impactful mental and behavioral health supports in schools; $2 million to fund 75 teacher apprentices per year; and $2 million for a new literacy coaches program.
- Municipal aid: The budget provides more than $100 million in one-time financial assistance for towns and cities. This investment will help local communities lower property taxes.
- Early childhood education: The budget invests approximately $300 million in the Early Childhood Education Endowment. As championed by Lamont, the endowment is the largest expansion of early childhood education programs in Connecticut history, enabling tens of thousands of additional children to enroll in these opportunities.
- Higher education: The budget provides $30 million in General Obligation bonding for the Connecticut Higher Education Supplemental Loan Authority (CHESLA) to launch a new alternative to the Grad Plus Subsidized Loan Program, which was eliminated upon passage of President Trump’s One Big Beautiful Bill.
- Unfunded liabilities: Under this budget, the state is expected to make additional pension payments of more than $1 billion in both FY 2026 and FY 2027. These payments are projected to generate roughly $100 million in annual savings in each of the next 25 years.
- Federal Cuts Response Fund: This budget bolsters the recently created Federal Cuts Response Fund by $50 million to ensure Connecticut remains well-positioned to address federal policy and funding challenges.
- Child welfare accountability and transparency: The budget provides an additional $3.34 million for the Department of Children and Families to establish several new programs and services, which include grant-funded programs for certain caregivers to help cover child-care costs, postsecondary education assistance, paid social worker internship and mentorship programs, and mandatory employee training programs. In addition, a new Urgent Crisis Center in Stamford will be established, and personal emergency communication devices will be made available for certain employees.
- Health and human service providers: This budget provides $892,000 for the Department of Public Health to pilot free flu vaccines to uninsured and under-insured adult residents, which will reduce hospitalizations and healthcare costs.
It redistributes activities formerly performed by the Office of Health Strategy among the state agencies best equipped to handle them, clarifying responsibilities and fostering greater alignment between federal and state efforts – including for healthcare-related IT. The Department of Public Health is taking over and streamlining the Certificate of Need (CON) program to improve care quality, access, and affordability. The Office of Policy and
Housing: The budget provides an increase in operating support of $500,000 for the Department of Housing to operationalize the various housing efforts set in motion through the passage of Public Act 25-49.
Revenue adjustments include:
- Lowers the cost of health insurance: The budget creates a new tax credit for small businesses to encourage employers to offer Individual Coverage Health Reimbursement Arrangements (ICHRA) through Access Health CT’s BusinessPlus platform. This new incentive will expand healthcare coverage options while allowing small employers to better attract and retain workers.
- Cannabis tax modifications: This budget converts the current tax on cannabis from a THC tax to a 10.75% excise tax, simplifying the current tax structure for cannabis.
- PeoplesBank Arena Tax Credits for UConn Athletics: This budget provides tax credits that will ensure UConn’s basketball and hockey teams play games in Hartford for the next 20 years.
