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Surplus Grows To $400 Million

by Hugh McQuaid | Sep 3, 2013 2:25pm
(5) Comments | Commenting has expired

CTNJ File Photo

Comptroller Kevin Lembo

The state’s budget surplus for the fiscal year that ended on June 30 has grown to around $400 million because of low spending growth and an increase in revenue, Comptroller Kevin Lembo reported Tuesday.

In a monthly letter to Gov. Dannel P. Malloy, Lembo said Connecticut will end the fiscal year with a $398.79 million surplus. He said $220.8 of last year’s surplus will be dedicated to spending in this fiscal year and $178 million will be used to shore up the state’s “Rainy Day Fund.”

The deposit will bring the fund’s balance to $271.5 million, which Lembo called a good first step in restoring the Rainy Day Fund. However, he said the fund has a long way to go before it’s an adequate buffer against economic turmoil.

“The ultimate goal for funding the Rainy Day Fund should be approximately $3 billion — or 15 percent of the current General Fund — in order to fully protect taxpayers against future economic downturns,” he said.

Lembo cautioned against drawing too many conclusions from the surplus. He said it is a good sign but one that could be caused in part by one-time revenues.

“The growth was largely driven by strong stock market performance and an increase in the federal capital gains tax rate that pushed future year gains into Fiscal Year 2013. The payroll component of the income tax, which accounts for 60 percent of the total income tax receipts, was down slightly from last year,” he said.

State spending in the last fiscal year increased by about 1.3 percent over the prior year. For “historical context,” Lembo compared that growth to the increases in state spending that occurred in the four years preceding the recession, when spending grew by 7.3 percent annually.

Despite the current surplus, Lembo said he had concerns about the current fiscal year when spending on Medicaid could exceed what the state has budgeted. The budget reduces Medicaid expenditures by $169 million over the biennium in anticipation of savings.

“The Fiscal Year 2014 is predicated on significant savings being realized in the Medicaid program. Current spending patterns do not reflect the budgeted level of savings,” he said.

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(5) Comments

posted by: Noteworthy | September 3, 2013  9:19pm

The spending should b frozen at last year’s level; and all the surplus used to shore up the fund. As soon as it reaches the $3 billion mark, it should be returned to taxpayers. this practice of spending billion or more each year is BS.

posted by: Art Vandelay | September 4, 2013  6:26am

I agree with Noteworthy.  I also do not believe any numbers coming from the Malloy Administration.  Connecticut needs to lower taxes and stop spending money like a drunken sailor in order to stay competitive with other states.

posted by: Noteworthy | September 4, 2013  9:27am

My comment should have read: The idea of INCREASING spending by a billion or more each year is BS. The idea of using surplus tax dollars to pay for next year’s budget is just really stupid. This is the kind of thinking that leads to $200K pensions, 5% pay raises for people at UCONN making $300 - $500K.

posted by: DirtyJobsGUy | September 4, 2013  10:07am

So once again the gain is in capital gains (one time burst due to raise in Federal taxes) and a couple of rich folks dying and thus a boost in the estate tax.  Payroll taxes are down (kinda important don’t ya think).

Much more important is the warning that CT has underbudgeted for Medicaid expenses (hmm wasn’t there a fiddle on that this time?)

So all the fundamentals are piss poor, but we did lower our spending increase a bit.

posted by: JamesBronsdon | September 4, 2013  10:38am

Interesting poster Comptroller Lembo stands in front of. Googled it and found a website. All well intentioned, sure, but would be interested in hearing from the Comptroller how many governmental staff and tax dollars are connected with this effort. (Perhaps it’s all volunteer; I don’t know.) I suspect there are many other similar initiatives already out there.