For the first time in 20 months, state government’s finances are officially in the black.
The Rell administration estimated earlier this month that this fiscal year’s $18.64 billion budget had finally been pushed into surplus – a razor-thin $3.4 million margin – by the deficit-mitigation act. That measure, adopted April 14, employed a combination of spending cuts, additional federal revenue and raids on special accounts and trust funds.
And according to the comptroller, who certifies the budget’s official status during the first week of each month, increased income tax receipts collected amid the April 15 filing deadline, created the rest of the current surplus.
There also have been some other recent positive economic signs besides overall income tax growth of 2.4 percent from last fiscal year, according to the comptroller’s office, including:
- Net job growth of about 6,400 jobs in the first quarter of the calendar year, led by the leisure and hospitality industry.
- And increases in home sales and new building permits, although prices continue to be depressed.
But Wyman, a Democrat from Tolland, also urged caution, noting that most of the 2009-10 deficit, which peaked on March 1 at $518.4 million, was eliminated by factors other than revenue growth.
Besides the steps taken on April 14, the deficit also was reduced by a $100 million cut to this year’s state employee pension fund contributions – a move that weakens fund savings but does not reduce the actual benefits – and an unexpected $45 million boost in federal aid tied to prescription drug benefits for low-income seniors, and about $12 million in new and other savings ordered by the governor.
“This surplus is mainly produced by federal stimulus dollars, deferral of payments to the pension fund and one-time transfers of money from accounts including the Rainy Day Fund,” Wyman said. “While this modest economic turnaround is certainly good news, it does not lessen the fiscal challenges that the state will face in the coming years.”