Connecticut’s Fiscal Death Wish
The state may weaken or remove entirely a set of ‘guardrails’ that have kept it from budgetary ruin.
*This article was originally published by National Review. It was also co-authored by Bryce Chinault, Director of External Affairs at Yankee Institute.
In 2017, Connecticut faced a severe financial crisis: budget deficits and cuts, exorbitant borrowing, and tax increases. Recognizing the unsustainable trajectory, the general assembly enacted the “fiscal guardrails,” bipartisan reforms to limit the growth in government spending and stabilize the state’s finances.
And what a difference nearly a decade makes. In the years since, the “fiscal guardrails” have reversed decades of pension underfunding, improved Connecticut’s creditworthiness, and saved the state more than $170 million annually in reduced pension debt payments. Governor Ned Lamont praised the guardrails in his 2023 State of the State Address, saying that they have “allowed us to honestly balance four budgets in a row.” Moreover, state comptroller Sean Scanlon has noted that the guardrails have “helped get our fiscal house in order,” by paying down nearly $8 billion in total pension debt.
Looking ahead, if Connecticut continues to adhere to the fiscal guardrails, the state can save another $7 billion over the next 25 years, according to “The Case for CT’s Fiscal Guardrails” by Reason Foundation and Yankee Institute. This isn’t just fiscal discipline — it’s forward-thinking policy with long-term benefits for every resident.
The fiscal guardrails’ impact has been immediate, and, if honored, they will guide Connecticut to a financially sound future, benefitting the state’s residents at all social and economic levels. Prior to 2017, this possibly was unheard of — the mountain of debt was too great; but collaboration and sound policy have led us to a better financial footing (though much can still be improved).
But how quickly people have forgotten life before the guardrails.
Despite these gains, some lawmakers are intending to weaken or entirely remove the spending reforms to fund various programs and services, which, some argue, are “eroding at the same time the state’s coffers have swelled.” Others suggest the guardrails are a culprit in Connecticut’s high property taxes.
These critiques are misguided. Before 2017, spending in Hartford resulted in ballooning debt which took away funding for public services. Today, the guardrails have freed up more than $700 million for nonprofits, education, and health-care services by reducing the state’s mandatory debt payments. Dismantling these reforms — which the general assembly unanimously extended for another five years back in 2023 — risks returning to the same destructive cycle of overspending and underfunding.
Those clamoring for the guardrails to be removed seem to be skipping over the glaring reality that prior to the guardrails, our annual budget was increasingly burdened by debt payments. This shortsightedness is begging history to repeat itself. The recent economic improvements and massive federal spending have created a period of fiscal health, but any reasonable forecast expects bumps in the road ahead.
Furthermore, due to the recent fiscal stability and revenue surpluses, the general assembly passed a budget that included the largest income tax cut in state history; and the state has had record savings. The average Connecticut resident is already paying over half of their lifetime earnings to tax collectors, and we want to see that burden lessened. Removing the guardrails now would jeopardize this progress, especially with future economic uncertainties looming.
Connecticut’s past serves as a stark warning. Years of fiscal mismanagement led to one of the lowest credit ratings in the nation, making borrowing more expensive and burdening taxpayers with higher costs. Thanks to the guardrails, Moody’s, S&P, and Fitch have upgraded the state’s bond ratings, reflecting newfound stability and trustworthiness.
Improved credit ratings and reduced pension debt may seem abstract, but they have real consequences for Connecticut residents. Fiscal stability means fewer tax hikes, more disposable income, and a healthier economy. Connecticut already ranks 47th in the nation for tax burdens, outpacing high-tax states like New York and California. The guardrails are a critical tool for alleviating this burden and creating a more attractive environment for businesses and families.
This is particularly important as Connecticut struggles with population loss. High taxes and living costs drive residents — young professionals, retirees, and businesses alike — to relocate to more affordable states. Stories of families and businesses leaving Connecticut are commonplace, and reversing this trend requires creating a financially sustainable and welcoming state.
The fiscal guardrails have given Connecticut a second chance. They’ve proven that disciplined spending and long-term planning can deliver tangible benefits for residents, businesses, and public services alike.
To undo this progress would be a mistake. Instead, lawmakers must resist the temptation of short-term gains and focus on the bigger picture. The guardrails represent a path to lasting prosperity and a healthier financial future for Connecticut.
Andrew Fowler is a communications specialist at Yankee Institute, a Connecticut-based public-policy organization. He formerly served on the Milford Board of Education.
Bryce Chinault is the director of External Affairs at Yankee Institute. He earned his Master of Public Policy degree from George Mason University and has a decade of experience in federal- and state-level policy analysis at the George Washington University Regulatory Studies Center and the Mercatus Center at George Mason University.