The showdown between Gov. Ned Lamont and the General Assembly over the budgetary spending cap seemingly sprang up in the last two weeks around a growing crisis in special education.
But the seeds of that conflict were planted at least four years ago when officials, flush with federal COVID grants and record-setting surpluses, began dedicating hundreds of millions annually to circumvent the cap.
And now, with pandemic aid nearly exhausted and Congress weighing cuts that could take hundreds of millions more in federal aid away from Connecticut, state officials’ efforts to re-embrace the cap is coming at the worst possible time for many politicians.
“We can criticize what’s going on at the federal level, but I think Connecticut is being forced to reconcile with its bloated government,” said House Minority Leader Vincent J. Candelora, R-North Branford.
“It’s not just one category that’s touched by an austere budget” and at risk of deep cuts unless the cap dilemma is addressed, countered Sen. Cathy Osten, D-Sprague, co-chairwoman of the Appropriations Committee. “It’s every single category.”
At first glance, Connecticut isn’t in that much trouble with the cap, which keeps roughly three-quarters of the current $26 billion budget in line with household income and inflation. The remaining areas — payments on bonded debt, certain pension contributions, federal funds spent by state agencies, and programs ordered by courts or the federal government — are exempt.
Lamont warned legislators about one week ago that cost overruns and agency overspending have Connecticut on pace to close the fiscal year $61.5 million above the cap.
Legislators responded last week, in overwhelmingly bipartisan fashion, to order another $40 million in emergency spending to address a special education funding crisis in local schools. Lamont, who hinted he would veto the appropriation next week, told business leaders in January that the spending cap is “sacrosanct.”
Still, the potential overage is only one quarter of 1% of the General Fund.
The larger problem involves the next fiscal year, which begins July 1.
The $27 billion plan Lamont offered on Feb. 5 falls a razor-thin $1.8 million under the cap, despite leaving higher education and social services with hundreds of millions less and delaying any extra special education aid until 2027.
The common thread running through the spending cap woes of this year and next is $2.8 billion in emergency federal pandemic grants.
Through the American Rescue Plan Act of 2021, Congress awarded Connecticut that money with few strings. It could be used for almost any program, excluding large-scale tax reductions, and already was exempt from the cap under existing state rules.
Besides arriving one year after COVID struck the state, the timing of these ARPA dollars was perfect for another reason.
A series of other state savings programs created in 2017 to complement the spending cap was beginning to generate massive surpluses, raising concerns among some that too many tax dollars were being leached from education, health care, town aid and other core programs.
Over the past seven years, those surpluses have averaged $1.8 billion and represent 8% to 9% of the General Fund.
But even as the spending cap and other so-called “fiscal guardrails” were extracting huge sums from programs, legislators and Lamont used cap-exempt ARPA dollars to put much of that money back.
According to the governor’s budget office, an average of $703 million in ARPA funds has been allocated annually over the past four years. More than half of those funds went to ongoing efforts including higher education, early childhood development and children’s mental health, K-12 school air quality, student meals and school-based health centers, nonprofit social service providers, and services for crime victims and people experiencing homelessness.
And a second accounting maneuver helped state officials work even further around the cap.
Because Connecticut was running up record-setting surpluses, legislators and the governor chose to transfer some of those unspent dollars forward from one fiscal year to the next.
And because those “carry-forward” dollars technically were appropriated in a prior year, they didn’t count against cap limits in the subsequent year, when they were actually spent.
According to state budget records, the governor and legislature have ordered an average of $259 million in “carry-forwards” per year since 2022.
But now, Connecticut has exhausted its ARPA funds. And with more than a dozen state agencies struggling with overspending this year, options for “carry-forwards” are limited.
So, with hundreds of millions of cap-workaround dollars off the books, state officials’ choices are either to comply with the spending limit or revise it, replacing vanishing ARPA and “carry-forward” dollars with more traditional state funds.
Neither would be easy politically.
The Hartford-based Yankee Institute, a conservative public policy group, is urging officials to abide strictly by the spending cap. It believes Connecticut can save big dollars by cutting human services programs for undocumented residents and freezing wages for state employees.
Carol Platt Liebau, the group’s president, said delaying necessary spending cuts only leads to greater pain.
“Voters understand that the longer we push this choice down the road, the more we face the prospect of having tougher choices,” she said, adding that eventually translates into “massive” tax increases and service cuts.
Chris Collibee, the administration’s budget spokesman, said, “Gov. Lamont has been clear that the constitutional spending cap is an important limitation on state budgeting.”
Lamont has warned that adherence to the cap is particularly important now, given that President Donald J. Trump and the new Congress are proceeding with plans to cut Medicaid and other programs that send huge dollars to the states. Connecticut receives more than $6 billion in Medicaid alone from Washington each year. A cut of even 4% would translate into hundreds of millions in lost revenue.
“If an exigent situation presents itself that requires consideration of whether to exceed the spending cap, the governor will engage the public and the legislature,” Collibee added.
But no one in state government has felt safe doing that for almost two decades.
The spending cap was enacted in statute in 1991, and voters overwhelmingly approved a constitutional amendment one year later making the cap a necessity.
But from the late 1990s through 2007, Republican Govs. John G. Rowland and M. Jodi Rell would team with Democratic-controlled legislatures to legally exceed the cap seven times.
This requires a three-fifths vote of the legislature and the governor’s written permission.
But after the Great Recession and a sluggish recovery contributed to three major tax hikes between 2009 and 2015, tolerance for openly exceeding the cap vanished.
Gov. Dannel P. Malloy, who inherited a record-setting deficit from Rell and who approved two of the three big tax increases during that period, also sparred with the cap.
And while he never asked lawmakers to surpass the limit, he also sought to circumvent it at times.
For example, he redirected tens of millions owed to charter schools to cities and towns, which then gave the money right back to the charters. But because it had touched the accounts of “distressed” municipalities — and because aid to poor communities was cap-exempt at the time — the spending was allowed.
Malloy and legislators also revised cap exemptions in 2015 to exclude certain pension contributions.
And Lamont, even with his vocal support for the spending cap, signed ARPA allocation measures that pumped hundreds of millions of temporary cap-exempt dollars into ongoing programs.
His new budget also recommends creating a $300 million endowment, also outside of the cap, to expand child care and early childhood development initiatives.
And while minority Republicans in the legislature insist they support strict adherence to the cap, they took a different approach this week. The GOP overwhelmingly backed the extra $40 million in spending for special education and tried, unsuccessfully, to boost it to $108 million.
“That was a political statement that we made to the Democrats,” Candelora said, adding that since the majority already was pushing past the cap, Republicans figured it was time to give local schools all the funding they sought.
Several Democrats suggested it was evidence that the GOP struggles with the cap as much as does the rest of state government.
There are some policy groups that have suggested it’s time for Connecticut take a fresh look at its budget limit.
Connecticut Voices for Children and a second group composed of The Connecticut Project and researchers from Yale University’s Tobin Center for Economic Policy have offered suggestions in recent months.
Currently, the system takes the prior year’s spending and applies a growth factor: inflation or increases in household income, whichever is larger. But rather than just counting the prior year’s spending, researchers on both studies asked, why not also consider the spending that might have been?
In some years, legislators don’t spend the full amount allowed under the cap system. Under those circumstances, this allowable growth is forfeited, rather than built into the system and carried forward into future years.
In 2016, the Washington, D.C.-based Center on Budget and Policy Priorities told a legislative panel that Connecticut’s spending cap growth formula ignores a big chunk of household income in one of the richest states in the nation.
In most years, growth in allowable spending is driven by increases in household income in Connecticut.
But the existing system doesn’t consider earnings from capital gains — a huge omission. With a huge financial services sector and its proximity to Wall Street, Connecticut gains billions of tax dollars annually from investment earnings.
Analysts say the state income tax — the single-largest source of revenue in Connecticut’s budget — will generate $12.2 billion this fiscal year. And 27% or almost $3.3 billion of that comes from quarterly tax receipts, most of which involve capital gains and other investment earnings.
“Sometimes the cap can be too onerous,” House Speaker Matt Ritter, D-Hartford, told The Connecticut Mirror this week.
And though he didn’t suggest any specific reforms, the speaker said suggestions that state officials haven’t learned from the mistakes of prior decades aren’t based in fact.
Since 2017, officials have built a $212 million rainy day fund into a record-setting $4.1 billion reserve equal to 18% of annual operating expenses, one of the largest in the nation. Over the same period, another $8.6 billion in surpluses has been deposited into the pension funds.
“The fiscal success of the state in the last eight years is a credit to both the legislature and the governor,” he said. “It has involved discipline.”
To those who suggest officials can’t be trusted even to review the spending cap and other budget controls without risking Connecticut’s fiscal stability, Ritter added, some “people are scared of their political shadows.”
It’s a scheme made famous by a nearly 30-year-old episode of the sitcom Seinfeld.
Hoping to earn a quick buck, two characters load a mail truck full of soda bottles and beer cans purchased with a redeemable 5-cent deposit in New York, before traveling to Michigan, where they can be recycled for 10 cents apiece. With few thousand cans, they calculate, the trip will earn a decent profit. In the end, the plan fell apart.
But after Connecticut raised the value of its own bottle deposits to 10 cents in 2024, officials say, they were caught off guard by a flood of such fraudulent returns coming in from out of state. Redemption rates have reached 97%, and some beverage distributors have reported millions of dollars in losses as a result of having to pay out for excess returns of their products.
On Thursday, state lawmakers passed an emergency bill to crack down on illegal returns by increasing fines, requiring redemption centers to keep track of bulk drop-offs and allowing local police to go after out-of-state violators.
“I’m heartbroken,” said House Speaker Matt Ritter, D-Hartford, who supported the effort to increase deposits to 10 cents and expand the number of items eligible for redemption. “I spent a lot of political capital to get the bottle bill passed in 2021, and never in a million years did I think that New York, New Jersey and Rhode Island residents would return so many bottles.”
The legislation, Senate Bill 299, would increase fines for violating the bottle bill law from $50 to $500 on a first offense. For third and subsequent offenses, the penalty would increase from $250 to $2,000 and misdemeanor punishable by up to one year in prison.
In addition, it requires redemption centers to be licensed by the state’s Department of Energy and Environmental Protection (previously, those businesses were only required to register with DEEP). As a condition of their license, redemption centers must keep records of anyone seeking to redeem more than 1,000 bottles and cans in a single day.
Anyone not affiliated with a qualified nonprofit would be prohibited from redeeming more than 4,000 bottles a day, down from the previous limit of 5,000.
The bill also seeks to pressure some larger redemption centers into adopting automated scanning technologies, such as reverse vending machines, by temporarily lowering the handling fee that is paid on each beverage container processed by those centers.
The bill easily passed the Senate on Wednesday and the House on Thursday on its way to Gov. Ned Lamont.
While the bill drew bipartisan support, Republicans described it as a temporary fix to a growing problem.
House Minority Leader Vincent Candelora, R-North Branford, called the switch to 10-cent deposits an “unmitigated disaster” and said he believed out-of-state redemption centers were offloading much of their inventory within Connecticut.
“The sheer quantity that is being redeemed in the state of Connecticut, this isn’t two people putting cans into a post office truck,” Candelora said. “This is far more organized than that.”
The impact of those excess returns is felt mostly by the state’s wholesale beverage distributors, who initiate the redemption process by collecting an additional 10 cents on every eligible bottle and can they sell to supermarkets, liquor stores and other retailers within Connecticut. The distributors are required to pay that money back — plus a handling fee — once the containers are returned to the store or a redemption center.
According to the state’s Department of Revenue Services, nearly 12% of wholesalers reported having to pay out more redemptions than they collected in deposits in 2025. Those losses totaled $11.3 million.
Peter Gallo, the vice president of Star Distributors in West Haven, said his company’s losses alone have totaled more than $2 million since the increase on deposits went into effect two years ago. As time goes on, he said, the deficit has only grown.
“We’re hoping we can get something fixed here, because it’s a tough pill to be holding on to debt that we should get paid for,” Gallo said.
Still, officials say they have no way of tracking precisely how many of the roughly 2 billion containers that were redeemed in the state last year were illegally brought in from other states. That’s because most products lack any kind of identifiable marking indicating where they were sold.
“There’s no way to tell right now. That’s one of the core issues here,” said state Rep. John-Michael Parker, D-Madison, who co-chairs the legislature’s Environment Committee.
Parker said the issue could be solved if product labels were printed with a specific barcode or other feature that would be unique to Connecticut. Such a solution, for now, has faced technological challenges and pushback from the beverage industry, he said.
Not everyone involved in the handling, sorting and redemption of bottles is happy about the upcoming changes — or the process by which they were approved.
Francis Bartolomeo, the owner of a Fran’s Cans and Bart’s Bottles in Watertown, said he was only made aware of the legislation on Monday from a fellow redemption center owner. Since then, he said, he’s been contacting his legislators to oppose the bill and was frustrated by the lack of a public hearing.
“I know other people are as flabbergasted as I am because they don’t know where it comes out of,” Bartolomeo said “It’s a one sided affair, really.”
Bartolomeo said one of his biggest concerns with the bill is the $2,500 annual licensing fee that it would place on redemption centers. While he agreed that out-of-state redemptions are a problem, he said it should be up to the state to improve enforcement.
“We’re cleaning up the mess, and we’re going to end up being penalized,” Bartolomeo said. “Get rid of it and go back to 5 cents if it’s that big of a hindrance, but don’t penalize the redemption centers for what you imposed.”
Lynn Little of New Milford Redemption Center supports the increased penalties but believes the solution ultimately lies with better labeling by the distributors. She is also frustrated by the volume caps after the state initially gave grants to residents looking to open their own bottle redemption businesses.
“They’re taking a volume business, because any business where you make 3 cents per unit (the average handling fee) is a volume business, and limiting the volume we can take in, you’re crushing small businesses,” Little said.
Ritter said that he opposed a move back to the 5-cent deposit, which he noted was increased to encourage recycling. However, he said the current situation has become politically untenable and puts the state at risk of a lawsuit from distributors.
“We’re getting to a point where we’re going to lose the bottle bill,” Ritter said. “If we got sued in court, I think we’d lose.”
NEW BRITAIN, CT — Stanley Black & Decker on Thursday said it has decided to close its manufacturing facility in New Britain.
Debora Raymond, vice president of external communications for the manufacturer, said the decision is a result of a “structural decline in demand for single-sided tape measures.”
The New Britain facility predominantly makes these products, according to Raymond.
“These products are quickly becoming obsolete in the markets we serve,” Raymond said, via an emailed statement Thursday.
The decision is expected to impact approximately 300 employees, according to Raymond.
“We are focused on supporting impacted employees through this transition, including providing options for employment at other facilities, severance, and job placement support services for both salaried and hourly employees,” Raymond said.
As of Thursday at 4:30 p.m., no Worker Adjustment and Retraining Notification (WARN) Act notice had been filed with the state Department of Labor.
The company’s corporate headquarters remains at 1000 Stanley Dr., New Britain.
Gov. Ned Lamont released the following statement on the decision:
“Although Stanley has made the decision to discontinue operations for manufacturing outdated products, a change in workforce opportunities is difficult for employees, their families, and any community.,” Lamont said. “However, I am hopeful that these skilled workers will be repurposed with the help of Stanley Black & Decker, a company that will still proudly be headquartered here in Connecticut. My administration is working closely with local and state leaders to support affected workers and to reimagine the factory site so it can continue to create opportunity and strengthen New Britain’s economic future.”
New Britain Mayor Bobby Sanchez said he is “deeply disappointed” the company will be closing its Myrtle Street operations.
“For generations, Stanley Works has been part of the fabric of our city, providing good-paying jobs, supporting families, and helping build New Britain’s proud reputation as the ‘Hardware City,’” Sanchez said.
According to the mayor, his office’s immediate focus is on helping affected workers and their families. The mayor has been in contact with Lamont’s office, and they will be working closely to make sure employees have access to job placement services, retraining opportunities and support, Sanchez said.
“We will continue aggressively pursuing economic development opportunities and attracting businesses that are looking for a true community partner, a city ready to collaborate, innovate and grow alongside them,” Sanchez said. “New Britain has reinvented itself before, and we will do so again.”
Stanley Black & Decker, founded in 1843, operates manufacturing facilities worldwide, according to its website. It reports having 43,500 employees globally, and makes an array of products, such as power tools and equipment, hand tools, and fasteners.
Newly released police video shows former WWE executive Vince McMahon ram his luxury sports car into the rear end of another vehicle on a Connecticut highway last summer as he was being followed by a state trooper.
McMahon, now 80, was driving his 2024 Bentley Continental GT at more than 100 mph on the Merritt Parkway when he crashed in the town of Westport, according to state police.
A trooper’s dashcam video shows McMahon accelerating away, then braking too late to avoid crashing into the back of a BMW. The Bentley then swerves into a guardrail and careens back across the highway, creating a cloud of dirt and car parts.
“Why were you driving all over 100 mph?” state police Detective Maxwell Robins asked McMahon after catching up to the wrecked Bentley, which can cost over $300,000.
“I got my granddaughter’s birthday” McMahon replied, explaining he was on his way to see her. The encounter was recorded on police bodycam video.
No one was seriously injured in the July 24 crash, which happened the same day that WWE legend Hulk Hogan died of a heart attack in Florida.
Besides damage to the rear of the BMW, another vehicle driving on the opposite side of the parkway was struck by flying debris. The driver of that third car happened to be wearing a WWE shirt, according to the police video.
McMahon was cited for reckless driving and following too closely. A state judge in October allowed McMahon to enter a pretrial probation program that will result in the charges being erased from his record next October if he successfully completes the program. He was also ordered to make a $1,000 charitable contribution.
McMahon’s lawyer, Mark Sherman, said the crash was just an accident.
“Not every car accident is a crime,” Sherman said. “Vince’s primary concern during this case was for the other drivers and is appreciative that the court saw this more of an accident than a crime that needed to be prosecuted.”
State police said Robins was trying to catch up to McMahon on the parkway and clock his speed before pulling him over. They said the incident was not a pursuit, which happens when police chase someone trying to flee officers. They also said it did not appear McMahon was trying to escape — though in the video the detective suggests otherwise.
“I’m trying to catch up to you and you keep taking off,” Robins says.
“No, no no. I’m not trying to outrun you,” McMahon says.
An accident information summary provided to the media shortly after the crash did not mention that a trooper was following McMahon.
The Associated Press obtained the videos Wednesday through a public records request. They were first obtained by The Sun newspaper.
The trooper’s bodycam video also shows him asking McMahon whether he was looking at his phone when the crash happened. McMahon said he was not and adds that he hadn’t driven his car in a long time.
After Robins tells McMahon that his car is fast, McMahon replies, “Yeah, too (expletive) fast.”
The videos also show McMahon talking to the driver he rear-ended. Barbara Doran, of New York City, told the AP last summer that McMahon expressed his concern for her and was glad she was OK. She said she was heading to a ferry to Martha’s Vineyard at the time of the crash.
After McMahon was given the traffic summons, he shook hands with Robins and another trooper and they wished him well.
McMahon stepped down as WWE’s CEO in 2022 amid a company investigation into sexual misconduct allegations. He also resigned as executive chairman of the board of directors of TKO Group Holdings, the parent company of WWE, in 2024, a day after a former WWE employee filed a sexual abuse lawsuit against him. McMahon has denied the allegations. The lawsuit remains pending.
McMahon bought what was then the World Wrestling Federation in 1982 and transformed it from a regional wrestling company into a worldwide phenomenon. Besides running the company with his wife, Linda, who is now the U.S. education secretary, he also performed at WWE events as himself.
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