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2014 Surplus Revised Upward Due To Federal Funds

by Christine Stuart | Jul 22, 2014 3:00pm
(10) Comments | Commenting has expired
Posted to: State Budget, Taxes, State Capitol

CTNJ file photo

Ben Barnes, Malloy’s budget director

Earlier this month, State Comptroller Kevin Lembo predicted the state would end the year with a $33.2 million surplus. But thanks to additional federal money, Democratic Gov. Dannel P. Malloy has revised revenues upward by $63 million over last month’s forecast.

That brings the new estimated 2014 surplus to $121.3 million, according to Malloy’s budget office.

In its monthly letter to Lembo, Ben Barnes, Malloy’s budget director, said most of the additional revenue came from a $42.1 million increase in federal Medicaid awards. About $37.2 million came from personal income tax revenue, while all other revenue was revised downward by $16.3 million.

If the surplus number holds into September — when the state closes the books — then the $121.3 million will be deposited in the Rainy Day Fund, bringing the balance in that fund up to $392 million.

“While there is still much work to do, we are making progress in our effort to make state government more sustainable for the long term,” Malloy said in a press release. “Depositing this surplus into the Rainy Day Fund, combined with our efforts to limit spending, are just a few of the ways that we are taking responsible steps to restore the fiscal health of our state.”

But Republican lawmakers were quick to criticize the decisions the state made in order to accomplish what they believe is a fake surplus.

“This is a paper surplus, the only place it should be deposited is the trash can,” Sen. John McKinney, who is running for governor, said. “We need an honest budget with a real plan for tax relief, not more gimmicks.”

Sen. Len Fasano, R-North Haven, said the surplus reported Tuesday by the Malloy administration comes at the cost of “shifting expenses off the books, borrowing to fund everyday government expenses, and diverting over $189 million away from the Special Transportation Fund.”

“It is not a true surplus,” Fasano said.

What Malloy is touting as a surplus is “celebrating — a failed economic plan coupled with the creation of an illusion of excess funds,” said Fasano.

“The truth is Connecticut faces a deficit of almost $3 billion over the next two years,” Fasano said. “Bonding and moving funds around only digs us into a deeper hole, grows our debt and underfunds areas that need our support.”

Fasano and McKinney are referring to several decisions made over the past few years to refinance debt and push the repayment date past the November election. The legislature and Malloy also erased the 2012 budget deficit by postponing the early payment of about $222 million in debt.

“While we aren’t yet where we want to be, this shows that Connecticut’s on the right path,” Barnes said in a press release. “Prudent fiscal policy under Governor Malloy — with average annual budget growth lower than those of his last two predecessors — means we are building reserves that are an important contingency against any future economic downturn.”

Earlier this year, Malloy and his budget office wanted to give what they predicted would be a $500 million surplus back to the taxpayers through a $55 tax refund. However, plans for that were scrapped in late April when budget analysts predicted the surplus would be much smaller.

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(10) Comments

posted by: rpk31 | July 22, 2014  3:24pm

So this means we can get our refund checks again, right? I’ll just pencil in my $11 refund into my budget now, I know Dan’s good for it.

posted by: art vandelay | July 22, 2014  5:45pm

art vandelay

In essence what Barnes states is Obama has to bail out Malloy with federal funds to make him look good come November!  Democrats must prove to the general electorate that Malloy’s economic policies worked.  Malloy deserves a second term failed economic policies or not.

posted by: QuestionMark | July 22, 2014  6:58pm

Ben Barnes is very careless with the truth in covering up the true fiscal demise of Connecticut in an effort to try to make Malloy electable.

posted by: RogueReporterCT | July 22, 2014  8:32pm

RogueReporterCT

In a recent Housatonic University poll, “LUMPS IN MY OATMEAL” beat out Dan Malloy by a substantial margin.

posted by: dano860 | July 22, 2014  9:08pm

Hey, HST, I know who else is rolling those FATTIES!

posted by: DrHunterSThompson | July 23, 2014  7:00am

DrHunterSThompson

Ben digs fatties.

HST

posted by: Commuter | July 23, 2014  7:07am

Four years, four balanced budgets, four surpluses.

Four more years, four more balanced budgets, four more surpluses.

Four more years. Four more years.

posted by: Chien DeBerger | July 23, 2014  7:42am

@dano860

+1 LOL!
Semper Fi!

posted by: One and Done | July 23, 2014  11:39am

Malloy campaigned in 2010 on implementing GAAP. Fast forward to today and the accounting gimmicks being used here would land people in the private sector in prison.

posted by: QuestionMark | July 23, 2014  12:30pm

Commuter is doing a clever “reverse psychology number,” since Malloy already has the state in a reverse fiscal direction.