By pouring more than $10 billion in budget surpluses into its cash-starved pension system since 2020, Connecticut has stemmed the skyrocketing costs that threatened public service programs in the 2010s, Gov. Ned Lamont announced Wednesday. Lamont, who was joined by Treasurer Erick Russell and Co mptroller Sean Scanlon during a late morning press conference in the State Office Building, also challenged the General Assembly to remain faithful to the budget caps that have generated these surpluses, warning that the global economic future remains uncertain. Analysts project Connecticut must contribute at least $3.62 billion next fiscal year to its pension systems for state workers and municipal teachers. That’s only $14 million less than the minimum contribution it must make this fiscal year — essentially the same amount. But Lamont, Russell and Scanlon say next year’s required payment would much greater — by about $857 million — had Connecticut not poured $10 billion extra in budget surpluses into its pensions over the past six years. When calculating the minimum contribution Connecticut must budget for, analysts consider likely earnings for decades to come through the investment of pension assets. If the pension funds hold an extra $857 million, then likely investment income over the next 25 to 30 years will be significantly greater. And if that’s the case, the state’s minimum contribution doesn’t have to grow as much year to year, making it easier to balance the budget and avoid tax hikes. “The perception of the state is incredibly important,” the governor said, adding that Connecticut’s fiscal prosperity in the 2020s, which followed a decade marred by numerous deficits and some huge tax hikes, has been noticed. “It means we’re a place where businesses want to be and where individuals want to be,” the governor said. It also has led Wall Street credit rating agencies to repeatedly upgrade its evaluations of Connecticut in recent years, helping to lower borrowing costs for school construction, transportation work and other capital projects. Thanks also to the robust 10.1% return that pension investments generated in 2025, “Connecticut continues to make undeniable progress in strengthening its pension funds and restoring long-term fiscal stability,” Russell said. Lamont often touts these pension contributions savings as a huge boon to other programs in the state budget, such as education, human services and municipal aid. “You can put that [$857 million savings] to social services, take care of people,” the governor said Wednesday. And certainly, these programs would be at risk of steep cuts if Connecticut had to find an extra $857 million next fiscal year to cover its minimum mandatory pension contribution. But that also doesn’t mean all, or even most, of this extra $857 million will be invested in schools, Medicaid, programs for vulnerable populations or grants to cities and towns. Connecticut has a spending cap designed to keep most budget growth in line with household income and inflation. According to the legislature’s nonpartisan Office of Fiscal Analysis, the preliminary $28.6 billion budget lawmakers and Lamont approved last June for the fiscal year that begins next July 1 has room for only $70 million more in appropriations before it hits the cap. In other words, Connecticut will dodge a big increase in mandatory pension spending that could gut core programs but also will keep most of that savings, not invest it in other services. And this has been the case since Connecticut imposed a more aggressive budget cap and other fiscal controls in 2017. Many of Lamont’s fellow Democrats in the General Assembly have argued for several years that these caps are focusing too heavily on shrinking pension debt while siphoning huge dollars from municipalities, schools, health care and social services. While state budget surpluses have averaged an unprecedented $1.8 billion since 2017, annual spending in most non-pension areas hasn’t kept pace with inflation for more than a decade, leaving some to charge most vital programs are slipping. Critics also note that Connecticut amassed its huge pension debt, which still exceeds $33 billion, over more than seven decades prior to 2011. And since it took at least three generations to create the problem, one generation can’t pay it off responsibly, not without doing great harm to other programs. The Lamont administration currently projects the state’s unfunded pension liabilities will be eliminated by the mid-2040s. Given the huge debt still unresolved, and growing fears of a looming global economic recession, both Lamont and Scanlon said it’s important Connecticut remains focused on paying down its unfunded liabilities. “It is important that we continue to find the balance between maintaining Connecticut’s fiscal health and responding to residents’ needs,” said Scanlon, who served in the General Assembly when the 2017 budget controls were enacted. “I am proud of the progress we’ve made and look forward to continuing to work with this administration.” ...read more read less