CT leaders promise to protect against Trump cuts. But could it mean a tax increase?

Connecticut is facing major federal cuts, although some won't happen until 2027. Gov. Ned Lamont said the state will protect vital programs – but he couldn't rule out a future tax hike.

John Craven

Jul 7, 2025, 9:11 PM

Updated 7 hr ago

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President Donald Trump’s “One Big Beautiful Bill” could blow a big hole in Connecticut’s state budget.
On Monday, Gov. Ned Lamont insisted that his administration can weather the storm – but he couldn’t rule out new taxes in the future to cover the losses.
“BIG BEAUTIFUL BILL”
As military jets flew overhead, Trump signed the massive budget mega-bill on the Fourth of July.
“This is the most single most popular bill ever signed,” he said. “It includes the largest tax cut in American history. The largest spending cut – $1.7 trillion.”
But those cuts come at a cost.
Connecticut stands to lose hundreds of millions of dollars in HUSKY Medicaid and SNAP food payments, although state leaders are still assessing the full impact.
One in four Connecticut residents relies on HUSKY for health insurance.
“These are real people,” said Timothy Powers, with Charter Oak Health Center in Hartford. “Children, seniors, individuals living with disabilities and hardworking families.”
And it's not just HUSKY Health.
Another 140,000 people are enrolled in Access Health CT, the state's Obamacare exchange. But half of all enrollees could drop out due to higher premiums, more paperwork and a shorter enrollment period, according to the health research organization KFF.
“WE’VE GOT YOUR BACK”
Despite the looming reductions, the Lamont administration pledged to protect vulnerable families.
“Our message to the people to Connecticut is, we’ve your back,” said Democratic state comptroller Sean Scanlon. “We’re not going to let you fall through the cracks.”
Some cuts happen right away, including lower provider tax reimbursements for hospitals and a one-year freeze on Medicaid funding to Planned Parenthood. That could cost the agency $12 million in Connecticut and Rhode Island – a quarter of its funding.
“Planned Parenthood health centers are a literal lifeline,” said Gretchen Raffa, with Planned Parenthood of Southern New England. “Defunding them puts millions of patients at risk of late or missed cancer diagnoses, untreated infections.”
Medicaid funds were already prohibited from being used for abortions. On Monday, Planned Parenthood sued the Trump administration over the cuts.
“We need to look at all strategies we can,” said PPSNE president and CEO Amanda Skinner. “So not just going to the states and asking the states to step in and support Planned Parenthood of Southern New England, but also how we can do it through the courts.”
CAN CT COVER THE LOSSES?
Connecticut has more time to adjust to other federal cuts.
Most Medicaid and SNAP changes – including new work requirements – don’t kick-in until 2027 and 2028. The Connecticut Department of Social Services is studying how other states implemented work requirements.
“It’s really indescribable what we’re about to face,” said DSS commissioner Andrea Barton Reeves. “But what I do know is that here, in Connecticut, we are really prepared to work with this.”
State lawmakers already approved $80 million in higher reimbursements for Federally Qualified Health Centers like Charter Oak, but Lamont said Connecticut may have to dip into the state's $4 billion Rainy Day Fund.
He insisted that new taxes are not on the table – at least for now.
“I don’t think there’s any need for revenue now, but we'll see what happens over the next few years,” he told reporters. “Can I make up for that entire shortfall? I don’t think so. Let’s see what other alternatives there are, but it’s a real devil’s bargain they’ve given us.”
GOP: TAX CUTS WILL HELP FAMILIES
Republicans blasted Democrats for attacking a bill that includes more than $1 trillion in tax relief and spending cuts.
“A smaller, more affordable government threatens the big-government model Connecticut Democrats hold up as the only way forward,” said House GOP leader Vin Candelora (R-North Branford). “Connecticut Democrats are quick to attack congressional Republicans for a federal budget that delivers real tax relief, but their own idea of fiscal responsibility is built on gimmicks.”
Nearly all households will see some tax relief, but the wealthy will benefit disproportionately. A Tax Policy Center analysis shows nearly 60% of the cuts would benefit the top 20% of U.S. households – those making more than $217,000 a year.
Here in Connecticut, homeowners are the biggest winners. The State and Local Tax (SALT) deduction jumps from $10,000 to $40,000 until at least 2029. SALT allows people in high-tax regions like New England to reduce their federally taxable income.
“In many cases, people are now going to be able to deduct 100% of their property taxes,” said Connecticut Republican Party chair Ben Proto.
Parents will also get a modest $200 in extra child tax credits, while seniors will see a $6,000 tax break. The new budget also temporarily eliminates federal taxes on some tips and overtime – a campaign promise of Trump’s.
“When you actually look at the bill itself, the benefits to Connecticut probably far outweigh some of the downside to it,” Proto said.
The budget could also boost Connecticut’s sizable defense industry. It includes an extra $150 billion for new Navy ships and a missile defense shield.
But despite the steep spending cuts, the Republican budget adds $3.3 trillion to the national debt over the next decade, according to the Congressional Budget Office.
State lawmakers expect to return to Hartford in two months for a special session to make possible budget adjustments.