Connecticut’s state budget decides how the state raises and spends tens of billions of dollars a year, so it shapes schools, municipal aid, health care and taxes. Here is how the budget is organized, what happened in the 2026 session, and where to read the numbers for yourself. For how a bill moves through the legislature in general, read how the General Assembly works.
A two-year budget, adjusted in the middle
Connecticut’s fiscal year starts July 1. The state budgets in two-year cycles: in odd-numbered years the legislature passes a biennial budget, and in even-numbered years it may adjust the second year. The current biennial budget for fiscal years 2026 and 2027 is Public Act 25-168. In 2026, the legislature passed an adjustment to FY2027, which Governor Lamont signed on May 26, 2026, as Public Act 26-68.
What the FY2027 adjustment did
According to the governor’s May 26, 2026 announcement, the adjustment includes:
- $193 million in supplemental education grants,
- about $100 million or more in one-time aid for municipalities,
- about $300 million deposited into the Early Childhood Education Endowment.
The same announcement says the state exceeded the volatility cap by more than $2 billion in FY2026 and invested $813.7 million under an extraordinary-circumstances declaration. The announcement breaks that down as $183 million for schools, $100 million for municipalities, $50 million for the Federal Response Fund and $80 million for Medicaid.
Why the extra revenue went where it did
When revenue from volatile sources exceeds a set threshold, state law generally directs the excess toward the Budget Reserve Fund and other purposes rather than ongoing spending. In an extraordinary-circumstances declaration, the governor and legislature can direct some of that money elsewhere. Our explainer on the spending cap, volatility cap and rainy day fund covers those guardrails in detail, including the vote thresholds required.
How the budget is built
Agencies submit requests to the Office of Policy and Management in the fall before the session. The governor presents a proposal in February. The Appropriations Committee works on spending, and the Finance, Revenue and Bonding Committee works on taxes, fees and borrowing. Leaders and the governor’s office negotiate a final package, which both chambers vote on and the governor signs. The nonpartisan Office of Fiscal Analysis publishes fiscal notes and budget summaries throughout.
Where to follow the numbers
- The governor’s press releases summarize the signed budget.
- The General Assembly’s Office of Fiscal Analysis publishes budget summaries and bill fiscal notes.
- Our tax rate guide covers the main tax rates and 2026 changes.
How to read budget headlines
Budget stories often use terms that sound similar but mean different things. A budget adjustment changes the second year of a two-year budget. A supplemental grant is extra money beyond the base formula. One-time aid does not repeat unless the legislature votes it again. When a headline gives a dollar figure, check whether it is a single year or two years, and whether it is new spending, a transfer or a deposit into a reserve. The linked sources below give the full detail behind the summary on this page.
Numbers in this article come from the governor’s announcement and are as of October 25, 2026. If you find an error, use our corrections page.
Sources
- Governor Lamont signs FY 2027 state budget, May 26, 2026
- Connecticut fiscal guardrails, OLR Report 2025-R-0142
Frequently asked questions
What is Public Act 26-68?
It is the law making adjustments to the second year (FY2027) of Connecticut’s two-year budget, signed by Governor Lamont on May 26, 2026.
When does Connecticut’s fiscal year start?
July 1. The state budgets in two-year cycles, and in even-numbered years the legislature may adjust the second year.
What is the volatility cap?
It limits how much volatile revenue, such as income tax receipts from capital gains and other less predictable sources, can be spent. Amounts over it go to the Budget Reserve Fund and other purposes. See our explainer on the spending cap, volatility cap and rainy day fund.