Senate Republicans Pushed a Plan to End Surplus Pension Funding They Long Defended
Senate Republicans spent the legislative session promoting a $1.5 billion tax relief plan, but never released a full budget showing how they would pay for it
The plan would consume the budget surpluses that Connecticut has used for years to pay down pension debt and build its reserves, ending the savings model that improved the state’s fiscal outlook
State analysts projected the plan would cost more than the budget caps generate in future years, which Democrats said would push state finances toward deficit
Senate Republicans spent Connecticut’s legislative session promoting a $1.5 billion tax relief plan, but never released a full state budget showing how they would pay for it before lawmakers adjourned May 6.
The caucus that proposed the largest tax cuts in the legislature was the only one that declined to produce a complete budget. Senate Democrats, House Democrats, and House Republicans each released detailed plans during the session. Senate Minority Leader Stephen Harding, R-Brookfield, had told the CT Mirror in early April that a detailed Republican budget was coming, but weeks later said his caucus had decided against it.
Senate President Pro Tem Martin M. Looney, D-New Haven, and Majority Leader Bob Duff, D-Norwalk, challenged the Republican caucus to back up its numbers.
“With the clock ticking down on this legislative session, there is still nothing on paper,” Looney and Duff wrote in a joint statement. “The public, the media, and legislators have no bill number, no fiscal analysis, and no public hearing. Just more campaign talking points and empty promises.”
The leaders added: “Connecticut families deserve better from their elected representatives than a press release dressed up as legislation.”
The money to pay for the Senate Republicans’ back-of-the-napkin plan to cut taxes would come from the budget surpluses that Connecticut has banked for years under the fiscal caps Senate Republicans have championed since their bipartisan adoption in 2017. Those caps capture a share of volatile income and business tax receipts and force surpluses at the close of each fiscal year — the surpluses that allowed Connecticut to build a record Rainy Day Fund and steer more than $10 billion in additional payments into its long-underfunded pension systems. That sustained pension funding has cut the state’s required annual pension contributions by an estimated $854 million going forward.
State analysts projected that the revenue stream would not be large enough to cover the cuts. The income- and business-tax cap was expected to capture about $1.2 billion in the 2026-27 fiscal year and $855 million the year after, short of the $1.5 billion the tax cuts would cost annually. By the analysts’ projections, the plan would eliminate nearly all of the state’s surplus funds in future years, ending the funding source for both the reserve and the pension paydown. Looney and Duff said it could push state finances toward a deficit.
Gov. Ned Lamont’s spokesman Rob Blanchard said the proposal would repeat past mistakes by leaning on unpredictable revenue streams to pay for permanent costs — the pattern that produced the deficits and tax hikes that dominated state finances between 2009 and 2017. Connecticut has not closed its books in deficit since 2017, when it finished about $22.7 million short, and has ended every year since with at least $569 million left over.
The surpluses at issue would make a substantial impact on the state’s finances for years to come. The fiscal year 2026 budget was projected to send $1.15 billion into the pension funds, and the adopted fiscal year 2027 budget projected another $1.53 billion — deposits estimated to lock in more than $200 million in combined annual savings over 25 years. Those were among the surplus dollars that state analysts said the Republican plan would consume.
By Kevin Coughlin