Appropriations debate on biennial budget centers on ECS, volatility revenue and hospital tax; members split

The Appropriations Committee moved to consider House Bill 5032 (LCO 3706), the biennial budget adjustment for the 2026-27 fiscal period, and members spent substantial time on policy priorities and funding mechanics rather than going line by line.

Several members urged a foundational increase to the Education Cost Sharing (ECS) formula to provide property‑tax relief for municipalities; Representative Nuccio and others noted the base grant has not been increased since 2013. The Chair said she expects an ECS increase will be addressed through “a number of mechanisms” — including prepayments, federal dollars or the governor’s $500,000,000 set‑aside — but she cautioned that the married revenue‑and‑appropriation product, still under negotiation, will determine final funding.

Members also debated the role of volatile revenue. The Chair cited roughly $1,800,000,000 in volatility-cap revenue and argued that some of those funds are anticipated; other members warned that the volatility revenue was designed to be unpredictable and that relying on it to fund ongoing programs risks violating the fiscal guardrails. “We shouldn't count on it,” one member said; another urged a conservative approach and recommended using durable cuts to create room for a permanent ECS increase.

Lawmakers asked about several other budget items: headcount increases (a member cited an estimated net add of about 155 positions year‑to‑year while the state has roughly 2,100 vacancies), carry‑forward/non‑lapsing contract dollars, and a proposed $5,000,000 labor/workforce development line in the Commerce/DECD section. On retiree health care, the Chair discussed the OPEB trust fund (which she said currently holds about $3,100,000,000) and said any plan to use the funds would be developed by the administration and shared with state employee bargaining agents.

The hospital tax — described as a revenue-side item negotiated in the finance committee — remains unresolved in the appropriation text; members said its final form will have budgetary impacts that must be incorporated once finance completes its work.

Senator Lesser praised the committee’s human services investments, including protections for Community First Choice and increases in foster care and Meals on Wheels funding, and he noted added positions intended to address federal HR1 administrative requirements. Representative Balinski and others urged examining discretionary items such as legislative grants and ARPA-funded programs for potential savings to create durable funding for priorities such as ECS.

Procedure: After extended discussion the committee began a roll call on the budget substitute but the Chair left votes open to permit members to relay votes by telephone; the clerk reported six outstanding votes in committee. The committee scheduled a follow-up meeting at 10:00 a.m. the next day to consider raised bills and change-of-reference motions.

What happens next: The final treatment of ECS, the hospital tax and other contested items depends on how finance's revenue proposals are married with the Appropriations package and on the outstanding committee votes.