The Great Recession in 2007 devastated Connecticut’s economy, depleting the rainy-day fund by 2011. Since then, using fiscal limits colloquially known as “guardrails” that were put in place in 2017, the state has rebuilt its reserves, saving $292 million annually on average and redirecting $8.6 billion into pension funds in just seven years.
While rebuilding reserves was prudent, we must not only question whether funneling $12.6 billion to Wall Street money managers while our communities face growing crises reflects sound priorities, but also whether such austerity budgets are sustainable without shifting the costs onto municipalities, who will be forced to raise local taxes to make up the difference.
We originally intended the guardrails to save $6 billion, but they have surpassed expectations, saving over $12 billion. Of this, $4.1 billion has filled our rainy-day fund to its statutory maximum of 18%, while an additional $8.5 billion has been used to pay down pension debt. These results are impressive, but they also raise an important question: Should we adjust the guardrails slightly to address critical needs or allow local property taxes to skyrocket?
Without state intervention, post-ARPA expenses for special education and K-12 schools will overwhelm municipal budgets. The fiscal guardrails have quickly turned into fiscal roadblocks that are hampering the economic and social progress of our state. For fiscally responsible policymakers, the choice is clear.
In the wake of systemic underfunding and the fiscal cliff created by the end of federal pandemic-related funds through ARPA, the needs of our non-profits, our K-12 schools, and higher education are urgent. The appropriations committee has received more than $3 billion in requests, and they have only a small fraction of that —perhaps 10% of those requests— to spend without adjusting these roadblocks.
Experts from both sides of the aisle agree that spending this money is necessary to protect and educate our children and to avoid a disastrous collapse of our urban school systems. Under P.A. 23-101, the Connecticut General Assembly tasked the bipartisan Comprehensive Needs of Children Task Force with analyzing federal COVID relief programs and recommending which should receive permanent state funding. The Task Force reviewed the 2024 State Recovery Plan, identifying $1.3 billion —nearly half of the $2.8 billion in temporary federal aid— as critical for continuation. These programs support mandates and long-standing needs aligned with the Whole Child framework, ensuring children are healthy, safe, and prepared to succeed in school and beyond.
Municipalities are legally obligated to fund many of these mandates. If the state doesn’t step in, towns will face no choice but to fund them, and for many municipalities, it will be difficult to come up with the funding without imposing property tax increases.
Consider Bridgeport: its education budget is already $38 million in deficit. Without action, the state’s largest city could face a financial collapse, necessitating a costly bailout far exceeding the expense of a guardrail adjustment. Similar scenarios loom in cities like New Haven.
Moreover, Connecticut’s income inequality, among the highest in the nation, has worsened. Homelessness among children has increased 75% since 2021, and education achievement gaps for Black and Hispanic students now exceed pre-pandemic levels. Meanwhile, our regressive tax system places the heaviest burden on those with the least. Channeling billions of tax dollars to affluent Wall Street firms while underfunding communities is both a fiscal and moral failure.
Adjusting the roadblocks is about balancing prudence with compassion. Redirecting a fraction of the $12 billion in savings to meet pressing needs will cost taxpayers nothing extra and prevent devastating local property tax hikes if our schools do not receive state aid.
The time to act is now. Connecticut’s fiscal health allows us to address urgent needs without jeopardizing long-term stability. Failing to adjust the roadblocks will only shift the burden onto struggling municipalities and vulnerable families. Responsible leadership demands we make the right choice
Brendan Cunningham is a Professor at Eastern Connecticut State University and ECSU professor and Treasurer of the Connecticut State University-AAUP. Christopher Trombly is Interim Dean of the School of Education at Southern Connecticut State University. Wynn Gadkar-Wilcox is a Professor at Western Connecticut State University, Vice President of the WCSU-AAUP and Chair of CSU-AAUP legislative committee.