Lamont Examines Spending Against New Revenue Items

A surge in income tax receipts has shrunk the state deficit, good news for Governor-elect Ned Lamont as he looks ahead to crafting a two-year budget proposal to the incoming General Assembly. Still, some hard choices must be made about spending priorities buttressed by potentially new revenue sources from legalized sports betting, expanded gaming options, tolls and taxing commercial marijuana.

CT Mirror state budget guru Keith Phaneuf shares details:

Gov. Dannel P. Malloy outlined a compromise path Thursday that would allow Gov.-elect Ned Lamont to modestly tap Connecticut’s reserves to avoid tax hikes–and still leave a sizable fiscal cushion to guard against the next recession.

Other deficit-mitigation options Malloy cited in his transition budget include: canceling tax cuts; shifting teacher pension costs onto municipalities; maintaining a new hospital taxing arrangement that leverages big federal aid; trimming employee ranks through attrition; reducing municipal aid “without harming our poorest communities;” and cutting health care programs.

“These options would be difficult, and would involve real sacrifice by various constituencies,” Office of Policy and Management Secretary Ben Barnes, Malloy’s budget director, wrote to Lamont. “The Malloy administration did not repeatedly put hard choices like these on the table without significant forethought, knowing that many in the legislature may have preferred to take a different approach including more revenue. But if the General Assembly is willing to work with you on a combination of such ideas, closing the (fiscal year) 2020 shortfall without a tax rate increase is achievable.”

Malloy also suggested Lamont could consider tolls, legalizing and taxing recreational marijuana use, and imposing a fee on recently legalized sports betting, but did not specifically endorse or criticize these alternatives.

Full story here.