A new report from the Connecticut Project Action Fund Wednesday suggests lawmakers look at relaxing some of the state’s fiscal guardrails.

Vice President of Advocacy and External Affairs Melvin Medina said the purpose of the report isn’t to make recommendations, but also notes it makes the case that the guardrails are now limiting the state’s ability to pay for certain needs.

“This is about improving, strengthening the fiscal rules, but striking a better balance,” Medina said.

The report comes four weeks ahead of the start of the next legislative session, when lawmakers will begin working on a new two-year budget.

The fiscal guardrails will likely be a focal point of that debate.

Other groups have also tried to get ahead of that debate by pushing to uphold those constraints and many lawmakers have voiced concerns about making changes.

“It’s the sole reason we have been able to prevent tax increases, it’s the sole reason we’ve put $4 billion in reserve,” Sen. Stephen Harding said.

The state has four guardrails:

• A spending cap that limits growth based on inflation
• A volatility cap that restricts spending of income taxes from Wall Street investors
• A revenue cap that keeps lawmakers from spending 100% of expected revenues
• A bond cap that limits borrowing

The Connecticut Project report suggests lawmakers could revisit the spending and volatility caps.

The report notes the volatility cap, in particular, has resulted in significant excess cash.

Revenues that are subject to the cap have exceeded it every year since 2018, often by more than $1 billion, but those funds can go toward the rainy day fund or debt.

Various groups have pointed to those funds in hopes of getting extra money for programming.

Medina said that’s something lawmakers could do, but also noted the state will need extra money for existing services.

Medicaid is on pace for a deficit exceeding $200 million, while lawmakers will consider increased funding for local school aid and other needs.

“That budget cliff is looming, and so our belief is you probably start where the gaps are,” Medina said.

Supporters of the guardrails say it’s those constraints that free up money in the long run. The Yankee Institute has been airing ads urging people to tell their lawmakers not to support changes.

“If we get rid of the guardrails, then we go back to the bad old days where every budget cycle, we had emergency tax increases, budgets that didn’t balance,” Yankee Institute President Carol Platt Liebau said.

Some Democrats have voiced support for revisiting the volatility cap, but that doesn’t mean the votes will be there to make a change.

Sen. Cathy Osten (D-Sprague), who co-chairs the legislature’s Appropriation’s Committee, said the state has increased spending for various needs. She also said paying down debt will help the state do more of that over time.

“I think that’s important to recognize that by doing what we’re doing, we’re opening up more funding opportunities,” Osten said.