As the 2026 legislative session begins, activity at the Capitol has moved quickly, with the Governor’s budget adjustments released on opening day and a significant number of bills already introduced that affect municipalities, regional planning, and local budgets. While the short session is technically focused on budget adjustments, the volume and scope of legislation introduced so far suggests another active year for issues that directly affect towns and regions.
Governor’s Budget Adjustments
The Governor’s proposed adjustments to the FY2027 budget add approximately $85 million to the second year of the biennium, bringing total spending to roughly $28.7 billion, representing a 5.7 percent increase over the FY2026 enacted budget. Several elements of the proposal are particularly relevant to municipalities and regional organizations. Municipal aid remains a significant component of the Governor’s FY 2027 proposal. The budget increases Town Aid Road funding by $20 million, from $60 million to $80 million, which is a roughly 33% rise in each municipality’s allocation. It also increases Municipal Grants-in-Aid from $91 million to $150 million, with targeted funding directed to specific municipalities. In total, nearly $1.1 billion in bond-funded municipal grants is anticipated to become available in FY 2027, including funding for local roads, capital improvements, school construction, and a new District Repair and Improvement Program. Energy affordability continues to be a major focus in Hartford and across the state. The Governor’s proposal includes an energy tax credit for residents and would move the Public Utilities Regulatory Authority to become an independent agency. Changes in utility policy and electric rates remain one of the most closely watched issues by municipalities, businesses, and residents alike, and additional legislative proposals in this area are expected. The proposal also includes changes intended to accelerate redevelopment and economic activity. The state’s Transfer Act would be sunset and replaced with a release-based cleanup program designed to streamline environmental remediation and make redevelopment of underutilized or contaminated properties faster and more predictable. This change could have meaningful implications for brownfield redevelopment and economic development across the region. A number of healthcare-related proposals are also included in the budget adjustments. These include eliminating licensing fees for certain healthcare professionals, maintaining Medicaid rate increases to support providers, piloting expanded vaccination programs, and studying a proposed “Connecticut Option” health plan.
Legislation Raised to Date
In addition to the Governor’s budget proposal, legislators have introduced a number of bills that directly affect municipalities and regional priorities. Several themes are already emerging. Municipal fiscal stability continues to be a major topic of discussion. Multiple bills propose requiring the state to reimburse municipalities for revenue losses associated with veterans’ property tax exemptions. Other proposals address PILOT calculations and reimbursement formulas, reflecting ongoing concern about the impact of state property and tax exemptions on local grand lists. These issues have long been priorities for municipalities and remain central to regional advocacy efforts. Education funding is again one of the most active areas of legislation. Several bills propose rebasing or increasing the Education Cost Sharing formula in order to reduce pressure on local property taxes. Other proposals focus on increasing overall school funding or addressing educational equity. Of particular importance to municipalities, legislation has been introduced that would fully reimburse school districts for excess special education costs-an issue that continues to be one of the fastest-growing drivers of local budgets. Municipal operating costs are also receiving attention. Bills have been introduced to provide funding to offset the costs associated with administering early voting, which has created new and ongoing expenses for towns related to staffing, facilities, and administration. Energy policy and affordability remain central legislative themes. In addition to the Governor’s proposals, legislation has been introduced addressing electric rate structures and public benefits charges. Given the impact of energy costs on municipal buildings, schools, and local economies, these proposals will be closely watched as the session progresses. Transportation and infrastructure funding continue to be part of the broader conversation. While some current proposals focus on specific bus and rail services, micro transit and transit and transportation funding decisions often shape broader statewide policy and funding structures that affect the Capitol Region, including ongoing investments in rail, bus, and roadway infrastructure. Land use and preservation issues are also under discussion, including proposals to increase funding for farmland preservation. These issues intersect with housing, economic development, and regional planning, all of which remain important to the Capitol Region’s long-term growth and sustainability. Finally, legislation has been introduced to expand high-speed broadband access in underserved areas. Broadband is increasingly viewed as essential infrastructure, supporting economic development, workforce participation, and access to education and services.
Looking Ahead
Although the session is still in its early weeks, several clear themes are emerging: continued focus on municipal fiscal pressures, education and special education funding, energy affordability, infrastructure investment, and economic competitiveness. Many of these issues align closely with CRCOG’s legislative agenda and will present opportunities for coordinated regional advocacy in the weeks ahead. CRCOG staff will continue monitoring legislation, engaging with state agencies and legislators, and providing updates as the session progresses and budget negotiations intensify later in the spring.