Good morning and welcome back to the Tip Sheet, a weekly newsletter from Tom Dudchik’s Capitol Report written by Mike Cerulli.

This week, the sprint to the end of the legislative session begins in earnest, with three session days on the calendar. We’ll preview two potential rifts between the legislature and Lamont. Plus, a Connecticut-based company’s stock is surging. Is a tax on the company’s most prolific product coming?

Let’s dive in…

Lamont and legislative Democrats are divided over taxes. Are they unified over Trump?

The headline in the CT Mirror said it all: Lawmakers challenge Lamont to tax rich to pay for child tax credit.

It’s a lofty challenge, one that did not garner the support of every Democrat on the Finance, Revenue, and Bonding Committee and will almost certainly meet unified opposition from the Republicans whose power to exercise a heckler’s veto as the legislative session draws to a close. Lamont himself appeared to side with opponents of a new capital gains surcharge last week when he was asked if he supports additional taxes on the wealthy.

"We don't need that,” Lamont said during a press gaggle last Wednesday before the Democrats on the Finance Committee amended their capital gains proposal to capture a 1.75% surcharge on the investment income of single filers making more than $1 million and married filers making more than $2 million.

In sticking to his steady-as-she-goes fiscal approach, the governor will once again find himself on the receiving end of criticism from his political left. Progressive advocates and legislators will no doubt press Lamont with numbers from the Office of Fiscal Analysis (OFA) which has estimated the child tax credit proposed by legislative Democrats would apply to 553,000 children while the capital gains surcharge would affect about 16,000 filers. Without accounting for exemptions, OFA estimates the proposed surcharge could bring in $284 million.

Legislators also included a $700 million diversion of cash to create something called the Supplemental Budget Reserve Fund. The official description of the fund outlines its purpose to “provide for a transfer of funds due to a decline in General Fund revenues for the current biennium of one per cent or more or due to a change in circumstances since the budget was adopted.”

In other words: Democrats want a “Trump fund” – an insurance policy of sorts to address a scenario in which Republicans deliver on their designs to cut $1.5 trillion from the federal budget.

For months, House Speaker Matt Ritter and State Senate President Martin Looney have suggested that the transfer of some so-called volatile revenue be paused and the money set aside to offset federal cuts. Thus far, Lamont has promoted more of a “wait and see” approach that would effectively give him more discretion over how to react to future federal cuts.

He doesn’t appear to be deviating from that course.

Hamden tax hikes make headlines as revaluations hit residents across the state

Hamden Mayor Lauren Garrett faced irate residents at a public meeting last week as the town confronts skyrocketing property valuations and the effects of generations of municipal borrowing.

As anyone from the area can attest, Hamden is known for its high property taxes. The mandatory revaluation conducted by the town late last year compounded that problem, delivering eye-popping increases that could, in most cases, offset any efforts to lower the town’s high mill rate.

The effects of recent revaluations are hitting residents in other communities, too. In Torrington, leaders are trying to assure residents that their own recent revaluation will not lead to higher net taxes. Nearly every community is trying to navigate a new reality in which municipal revenues are increasingly dependent on residential property taxes, rather than commercial property taxes.

It’s an issue that will loom large over the upcoming municipal election cycle, when chief executives, including Garrett, will face voters outraged by the prospect of drastically increased taxes.

Three reads to start your week

Connecticut-based Philip Morris International (PMI) saw its stock hit a record high as the company raised its profit outlook for the rest of the year. If you’re wondering why the tobacco conglomerate is doing so well, just take a peek at the pockets of any young man you see around the Capitol, at a bar, or really anywhere else. You might notice the circular outline of PMI’s most prolific product: Zyn. The tobacco-free nicotine pouches have driven spectacular growth for the firm, which is headquartered in Stamford.

Zyn is particularly popular among young men and became a minor flashpoint in the 2024 election when then-candidate Donald Trump made common cause with well-known podcasters who adore the product. Speaking at a Trump rally in late 2024, Kyle Forgeard, the leader of the social media sensation as Nelk, held up a can of Zyns and decried a 95% tax on the pouches that was put into effect in Minnesota by Gov. Tim Walz.

“Governor Tim Walz, put a 95% tax on Zyn,” Forgeard said at the rally, eliciting a chorus of boos. “We gotta get that removed, President Trump.”

Similar efforts to place a 75% excise on non-tobacco nicotine products appear to have stalled here in Connecticut despite the efforts of Democratic leaders on the legislature's Public Health Committee.

The Wall Street Journal and Reuters have the details on surging ZYN sales driving PMI's stock.

The state’s preeminent housing reporter documented an interesting trend in the Connecticut state legislature: nearly 1 in 5 lawmakers are landlords. Ginny Monk dove deep on the numbers and how ownership of rental properties might be affecting policy. Read Ginny’s reporting here.

Dan Haar weighed in on the efforts to raise taxes on Connecticut’s wealthy residents. Bottom line up front: the veteran scribe doesn’t think its a good idea. Read his argument here.

We’ll be back next week with another edition of the Tip Sheet!