Connecticut’s current budget

Governor Ned Lamont released his FY 2026-2027 budget proposal in February 2025 and gave the state of the state address in January 2025. The FY 2026-2027 budget was enacted in June 2025.

Connecticut enacted its FY 2024-2025 biennial budget in June 2023. The budget reported general fund spending of $22.1 billion in FY 2024, essentially flat from FY 2023, and $22.8 billion in FY 2025, an increase of 3 percent over FY 2024. Connecticut also approved a significant individual income tax cut in calendar year 2023. That tax reduction followed numerous tax cuts in 2022.

Under the American Rescue Plan, Connecticut received $2.8 billion in direct state fiscal aid and $1.4 billion in local government aid from the federal government. As of January 2025, Connecticut had fully allocated its state ARP. States must spend the funds by Dec. 31, 2026.

According to the National Association of State Budget Officers (NASBO), Connecticut’s total expenditures in fiscal year FY 2025 were $42.6 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2025 were $2.9 trillion, ranging from $5.4 billion in Wyoming to $413.8 billion in California.

According to NASBO, Connecticut’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2025: $23.4 billion/$45.3 billion
• FY 2024: $22.8 billion/$42.8 billion
• FY 2023: $22.2 billion/$42.6 billion
• FY 2022: $20.7 billion/$40.7 billion
• FY 2021: $19.4 billion/$37.6 billion
• FY 2020: $19.2 billion/$34.1 billion
• FY 2019: $19.2 billion/$34.4 billion

For more on Connecticut’s budget, see

• the Connecticut General Assembly,
  
• the Connecticut Office of Legislative Research,
  
• the Connecticut Office of Fiscal Analysis,
  
• the Connecticut Department of Revenue Services,
  
• the Connecticut Commission on Fiscal Stability and Economic Growth (ongoing), and
  
• the Connecticut State Tax Panel.

Connecticut’s budget institutions, rules, and constraints

Connecticut uses a biennial budget. The legislature must pass a balanced budget, but it can carry a deficit into the following year. State spending growth is limited further by the average growth in personal income. The rule is binding and thus requires a legislative supermajority or vote of the people to override it. However, the state does not have any supermajority requirements for raising revenue or passing a budget. On top of these rules, the state limits its authorized debt.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Overview of Connecticut’s state and local expenditure and revenue sources

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Connecticut’s combined state and local direct general expenditures were $44.0 billion in FY 2022 (the most recent year census data were available), or $12,202 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $12,083.

Connecticut’s largest spending areas per capita were elementary and secondary education ($3,107) and public welfare ($1,111). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Connecticut’s combined state and local general revenues were $53.0 billion in FY 2022, or $14,676 per capita. National per capita general revenues were $13,619. Connecticut uses all major state and local taxes. After federal transfers, Connecticut’s largest sources of per capita revenue were property taxes ($3,364) and individual income taxes ($2,733).

Connecticut’s economic trends

Connecticut’s per capita income (per the Bureau of Economic Analysis) was $93,235 in 2024, ranking second among the states. It was above both the national average of $72,425 and the New England regional average of $82,021. The state’s median household income (five-year estimate) was $95,781 in 2024, ranking eighth among the states and above the national average of $80,734. Connecticut’s poverty rate was 10 percent in 2024 (five-year estimate), below the national rate of 12.5 percent.

Although Connecticut’s averages tell a story about the entire state, Connecticut is composed of diverse localities. For example, the city of Hartford’s median household income was $46,411, and its poverty rate was 26.3 percent; the city of North Haven’s median household income was $132,689, and its poverty rate was 4.1 percent.

Connecticut’s unemployment rate was below the national rate for much of the 2000s, but it has been slightly above the national average for most of the past decade.

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Connecticut, the average unemployment rate in 2024 was 3.3 percent for white residents, 4.5 percent for Black residents, and 4.6 percent for Hispanic or Latino residents.

The major industries that contributed the most to Connecticut’s gross domestic product (GDP) in 2024 were finance, professional services, manufacturing, social services (i.e. health and education), and government. Connecticut’s finance industry is noticeably larger than the national average and its regional average. However, according to Connecticut’s Office of Fiscal Analysis, the state’s finance industry has not fully recovered from the Great Recession, though New York’s similarly large finance industry has.

Looking at more specific industries, among those that accounted for at least 1 percent of Connecticut’s GDP in 2023, insurance carriers produced far more for the state than for the nation, contributing 6.9 percent to Connecticut’s GDP and 2.6 percent to the nation’s. Other industries that overperformed in Connecticut relative to national averages in 2023 were transportation equipment manufacturing, securities and commodity contracts, broadcasting and telecommunications, and education.

Connecticut’s politics

Governor Ned Lamont, a Democrat, was elected in 2022 with 56 percent of the vote. The next gubernatorial election is in 2026.

Democrats control both the House of Representatives (98 Democrats to 53 Republicans) and Senate (24 Democrats to 12 Republicans). Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in Connecticut. The entire legislature is up for election in 2026 because both representatives and senators serve two-year terms.

Connecticut’s demographics

As of July 2024, Connecticut’s population was 3,675,069. That was up 2.7 percent from 2010. The state’s population growth rate was slower than than the nation’s 9.9 percent growth over the same period. The Urban Institute estimates the state’s population will increase 8 percent between 2010 and 2030, less than the nation’s estimated growth rate of 16 percent.

Additional resources

• The State and Local Finance Initiative’s Backgrounders explain the tax and spending issues highlighted in these briefs.
  
• The State Economic Monitor presents updated data and customized visualizations of state economic indicators.
  
• State and Local Finance Data: Exploring the Census of Governments allow users to sort, customize, and download the Census of Governments State and Local Finance series data featured in these summaries.
  
• The State Tax and Economic Review series provides quarterly reports on state tax collections and underlying economic trends in all 50 states.
  
• The Urban Institute’s State Tax Data Subscriptions provide access to up-to-date revenue data in all 50 states.