Finance, Revenue and Bonding committee adopts revenue estimates, reallocates $813.7M in volatile revenue to municipalities and trusts

The Finance, Revenue and Bonding Committee voted to adopt consensus revenue estimates after a staff overview and brief questioning, moving to apply a temporary $813,700,000 adjustment to the volatility threshold to support municipalities, schools and early childhood funding.

Representative Santiago, chairing the meeting, opened by stressing the meeting’s narrow purpose: “We are not here voting on the budget. We are here to accept the revenue estimates.” She told the committee that volatile revenues were stronger than expected — “about $300,000,000 over projections” — and that the package before members uses that surplus to address municipal pain and support hospitals through changes to the hospital tax system.

Why it matters: adoption of the revenue estimates establishes the administration’s revenue baseline for the coming fiscal work and authorizes moving surplus and volatility-related amounts into targeted uses rather than leaving them in the budget reserve fund. Santiago summarized the planned allocations: $162,000,000 for ECS municipal grants; an additional $100,000,000 routed via the Mashantucket Pequot Mohegan Fund formula for municipalities; $18,000,000 for charter and magnet schools; and $300,000,000 to seed an early childhood education trust fund.

Committee members pressed staff on two main points. Representative Puletta asked why corporate tax receipts have fallen; Mike Murphy of the Office of Fiscal Analysis said the drop is a nationwide trend driven in part by federal policy changes and explained that some adjustments in the revenue plan are intended to temporarily reverse those effects. On the FY27 federal funds line, Murphy and Santiago said the roughly $130,000,000 increase reported for FY27 reflects a timing/truing-up shift of federal expenditures between fiscal years — a one-time move rather than a sustained new revenue stream. “That increased number of federal funds in ’27 is not a reflection of a trend line of increased federal grants,” Santiago said.

Representative Piscopo asked about a jump in “transfers to other funds” (from about $90 million in the original estimate to roughly $306 million in the revised OFA worksheet). Murphy said most of that increase flows from using the $813.7 million volatility adjustment in FY26, with portions carrying into FY27 as higher transfers; members noted that, because the budget reserve fund is full, those dollars would not be deposited there and instead could be applied to pension obligations or direct debt reduction.

After discussion, Senator Fonferro moved to adopt the revenue estimates; Representative Rader seconded. The administrator conducted a roll-call vote. Most members answered in the affirmative; at least two members — Representative Rutigliano and Representative Veach — recorded no votes. Chair Santiago said votes would be held open until the call of the House and the committee recessed.

What remains: The adoption sets the revenue baseline for upcoming budget negotiations; members underscored that some items — notably the timing-driven federal funds in FY27 — are one-time adjustments and should not be treated as recurring revenue when crafting the full budget later this year.