Connecticut tax receipts on the rise in 2012-13
There are some new positive signs in state government’s finances.
As officials prepare to close the books next week on the last fiscal year, preliminary estimates show that receipts from all major taxes were on the rise in 2012-13.
Though the last budget technically ended June 30, receipts from several taxes continue to accrue through Sept. 1.
But unofficial totals show receipts not only from the three largest taxes — income, sales and corporation — but also smaller levies on utilities, insurance companies, estates and fuel also were raking in more than they had in 2011-12, at the same respective rates. That’s according to cash receipts recorded by the Department of Revenue Services as well as the last estimates from the nonpartisan Office of Fiscal Analysis.
And though tax refunds, an expense to the state, also were up in 2012-13, officials said the trend clearly is a positive one, especially given that Gov. Dannel P. Malloy and the legislature also have built up $230 million in the state’s emergency budget reserve.
“Governor Malloy took prudent and necessary steps, such as midyear budget cuts, to ensure that last year’s budget was balanced,” Malloy budget chief Benjamin Barnes said.
He noted that more than $380 million in midyear deficit-reduction measures were taken and that without them, the reserve wouldn’t have been possible.
“While we’re pleased with the improvement over 2012, the economy still has a long way to go and we’ll keep working hard to support the businesses and individuals that are growing Connecticut’s economy.”
Comptroller Kevin P. Lembo, the state’s chief fiscal watchdog, said, “Even when things are pointing only marginally in a good direction. There’s a lot to be hopeful about in the out-years based on what we are seeing now, especially considering we are climbing out of a very severe economic downturn.”
Lembo said legislators not only need to continue to closely monitor overall state spending, but they must remain conservative in their expectations for revenue from the most volatile components of the tax system.
More than one-third of the state’s income tax receipts are tied to households that report earnings quarterly — and the majority of that reflects capital gains and other investment income that can grow, or shrink, in annual double-digit leaps as the economy fluctuates.
But Rep. Vincent Candelora, R-North Branford, a veteran member of the tax-writing Finance, Revenue and Bonding Committee, said the state’s fiscal future still faces great uncertainty.
“It is something positive to point to, but we need to continue to look at the whole picture,” he said. “It is not a time for high fives and pats on the back. To me (rising tax receipts) are more of a deep sigh of relief. … We need to put Connecticut on solid footing and we’re not there.”
Candelora said he remains concerned about the $712 million deficit projected for the first state operating budget after the next gubernatorial election, a margin of about 4 percent.
The North Branford lawmaker added that he also is worried about how future efforts to shrink the federal budget deficit may harm Connecticut’s finances, particularly if federal aid for health care should decline in the next five years.
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