by Keith M. Phaneuf, CT Mirror
June 30, 2026

Having racked up its ninth hefty budget surplus in a row, Connecticut is poised to expand a record investment in affordable childcare while taking another big chunk out of its legacy pension debt.

The $27.2 billion state budget for the fiscal year that closes Tuesday is on pace for a $412 million operating surplus — all of it earmarked by legislators and Gov. Ned Lamont for a special endowment for early childhood education.

A special savings program outside the formal budget should capture another $1.3 billion in income and business tax receipts. Most of that, roughly $1 billion to $1.1 billion, will go toward shrinking the state’s pension debt. The rest will boost Connecticut’s emergency reserve or “rainy day fund” to almost $4.5 billion — 18% of annual operating expenses, the maximum allowed by law.

“Making Connecticut more affordable means making it easier for families to live, work and raise children here,” Lamont wrote in a statement. “High-quality early childhood education gives children the strongest possible start in life while helping parents pursue careers, grow their incomes and contribute to our economy.”

Connecticut’s early childhood commissioner, Elena Trueworth, added in the statement that “This endowment represents a transformational commitment to Connecticut’s youngest children and the families who depend on high-quality early childhood education.”

Eligible families are expected to begin receiving no-cost childcare or partial assistance subsidized by the endowment starting in the 2027-28 fiscal year.

Saving for childcare was challenging this past year

The governor and his fellow Democrats in the legislature’s majority launched the Early Childhood Education Endowment with $300 million in June 2025. With a goal of adding thousands of affordable childcare program slots by 2030, officials dedicated future operating surpluses toward this effort. Separately, the special savings program outside the formal budget would remain focused on reducing pension debt.

That strategy hit a snag earlier this year.

While officials planned for another $300 million-plus operating surplus, rising Medicaid and fringe benefit costs — and smaller-than-anticipated corporation tax receipts — wiped out the entire projected fiscal cushion.

Lamont and lawmakers responded by raiding the off-budget savings program, moving hundreds of millions of dollars into the General Fund. That transfer, coupled with a last-minute surge in tax receipts, created the $412 million surplus now headed into the childcare endowment.

“We’re making a smart, long-term investment that will lower costs for families, strengthen our workforce, and ensure this support is available for generations to come,” Lamont said. “This is exactly why we have managed the state’s finances responsibly, so that when we have the opportunity to make transformational investments, we can do so without raising taxes or compromising our long-term fiscal stability.”

Officials dedicated $11 billion in surplus since 2020 to pay pension debt

Even with those adjustments to the off-budget program, the administration estimates Connecticut will still have saved $1 billion to $1.1 billion to deposit into its pension funds for state employees and municipal teachers. A final tally won’t be known until the comptroller’s office completes its formal audit of the last budget cycle in September.

Once that’s done, officials will have dedicated a total of about $11 billion from special savings to reduce pension debt since 2020.

Still, analysts project the state won’t have eliminated all unfunded pension liabilities before the 2040s.

Connecticut entered this fiscal year with more than $33 billion in unfunded pension obligations, according to analysts, and the state remains one of the most indebted per capita in the nation.

Most of that debt stems from inadequate saving by legislatures and governors for more than seven decades between 1939 and 2010, according to a 2015 report prepared for the state by the Center for Retirement Research at Boston College. By not saving properly, the state government severely restricted the potential investment earnings, forfeiting billions of dollars across seven decades.

As a result, mandatory pension contributions continue to place heavy pressure on state finances, drawing resources away from other programs and services.

Watershed debate on CT savings program expected next term

Meanwhile, Lamont’s critics say the savings program he embraces is too aggressive.

Between operating surpluses and off-budget savings programs, Connecticut has left an average of $1.8 billion unspent — roughly 8% of the General Fund — since new budget caps were enacted in 2017. By comparison, the two prior decades of state budgets produced an average annual savings of 0.1% of the General Fund.

In other words, critics say, the new system is forcing a single generation to retire a pension debt problem created by three — and that education, health care, municipal aid and other core programs are suffering as a result.

Many of Lamont’s fellow Democrats in the legislature — including state Rep. Josh Elliott of Hamden, who is challenging the governor for the party’s gubernatorial nomination — say Connecticut could retire debt at a more modest pace and invest far more in programs and direct aid to cities and towns.

The Republican gubernatorial nominee, state Sen. Ryan Fazio of Greenwich, called earlier this year for the state to reduce savings efforts in order to dramatically expand tax cuts for Connecticut’s middle class.

Legislative leaders from both parties have said they expect a debate over state government’s savings habits to dominate the next General Assembly term, which covers the 2027 and 2028 sessions.

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NEW HAVEN, Conn. — The City of New Haven is asking for a retrial after a jury awarded a Connecticut man $38 million in May for being wrongfully convicted of murder and imprisoned for 21 years.

Stefon Morant was allegedly wrongfully convicted of a double homicide in 1994. According to the New York-based law firm of Neufeld Scheck Brustin Hoffmann & Freudenberger, LLP, the jury ruled New Haven police officers and the City of New Haven were liable for his wrongful imprisonment.

The jury found that New Haven police detectives made up false evidence to frame Morant and that the city was liable for suppressing evidence favorable to criminal defendants. 

A judge has issued a temporary stay, pausing any payments until the motion is resolved.

More than six dozen Connecticut laws addressing the state’s housing growth, absentee ballot rules, availability of AI resources and more will wholly or partially take effect on July 1.

Connecticut laws are passed by the General Assembly during the legislative session each year — this year’s ran from Feb. 4 to May 6. They typically take effect on Jan. 1, July 1 or Oct. 1.

Here’s a look at some of the dozens of laws that will be implemented in July.

Zoning reform

Portions of a wide-ranging housing bill that Gov. Ned Lamont signed into law last year will go into effect on July 1.

Starting that day, towns must allow the development of mixed-use or “transit community middle housing” — a residential building containing anywhere from 2-9 units — on land zoned for mixed-use or commercial use.

Additionally, towns can no longer reject a proposed housing development with up to 16 units due to a lack of off-street parking unless there is a documented adverse impact on public health.

Gov. Ned Lamont signed the omnibus housing bill following last year’s special session, replacing a similar bill that he vetoed during the regular session. Its goal was to address the state’s dire lack of affordable housing. Other measures in it that have already taken effect include a requirement that towns create housing growth plans, an expansion of fair rent commissions and incentives for towns to take steps to allow more housing.

Connecticut AI Academy

The Board of Regents for Higher Education must establish a “Connecticut AI Academy” through Charter Oak State College by Dec. 31. The academy will offer online AI courses, promote digital literacy, prepare students for AI-related careers, offer community resources and help develop workforce training programs.

Senate Bill 5 also requires the establishment of a formal working group to study AI and make recommendations to the legislature. And it requires the state to consider planning around emerging technologies — like AI, quantum computing, or robotics — when creating an economic development strategic plan.

Absentee ballots 

No-excuse absentee ballots are now available for all elections starting July 1.

Any voter, including those who are not yet 18 but will be by the day of an election, can request an automatic application for an absentee ballot. Voters will remain on a registry to receive them for all elections unless they are removed from the official registry list.

Connecticut is joining 28 other states that already have no-excuse absentee voting.

House Bill 5001 also says a person can only wear a mask or other covering within 250 feet of a polling place if doing so is “reasonable given the weather conditions” and the person is willing to remove it at request, or if it is for medical or religious purposes.

Psychedelic-assisted therapy

Beginning July 1, any individual who is 18 years or older and meets the clinical criteria is eligible to participate in a psychedelic-assisted therapy pilot program administered by a medical school in the state, currently Yale University.

According to Senate Bill 191, this program will provide qualified patients with MDMA-assisted or psilocybin-assisted therapy as a part of a federal Food and Drug Administration research program.

MDMA, also known as Ecstasy or Molly, is a stimulant with psychedelic properties. Psilocybin is a hallucinogen that is found in some species of mushrooms. These substances are used to treat patients with PTSD, depression and substance abuse disorders.

Bus passes for residents

Public school students in grades 9-12 are eligible for free bus passes through their local and regional boards of education starting July 1.

Senate Bill 9 will provide education boards with grant funding for this program. However, they have to provide financial statements proving that the money was used for transit funding.

The Department of Veterans Affairs is launching a similar program for all veterans in the state also starting July 1.

Breast cancer screening

Starting July 1, the Commissioner of Correction can arrange breast cancer screening, diagnosis and treatment services for incarcerated women at any licensed health care institution that is closer to the correctional facility, rather than being limited to the UConn Health Center.

Senate Bill 391 also says if the commissioner can not provide a required diagnostic and screening mammogram, they can arrange for its provision at a health care institution closer than UConn Health Center.

Connecticut’s only correctional facility for women is York Correctional Institution in Niantic, which is more than 50 miles away from UConn Health Center. There are fewer than 900 women at York.

This story was originally published by the Connecticut Mirror.