Connecticut finances stay modestly in the black
The outlook for the state’s finances remains “generally positive” one-third of the way into the new fiscal year, Comptroller Kevin P. Lembo reported Friday.
In his latest monthly budget forecast, Connecticut’s chief fiscal watchdog projected a modest, $11.2 million surplus for the fiscal year that ends next June 30. That represents just 1/15th of 1 percent of this year’s general fund, which covers the bulk of operating costs in the state budget.
Still, that would be a welcome change for Gov. Dannel P. Malloy, who struggled with red ink during much of his first two fiscal years in office.
The 2011-12 year ended about $144 million in deficit. The governor and legislature covered that gap by delaying repayment of a loan used to balance the books in 2009.
The 2012-13 year ended nearly $400 million in the black, but first it took more than $360 million in mid-year program cuts to wipe out a deficit back in December.
“If the current trends continue through the fiscal year, the state will likely meet its budget targets,” Lembo said. “The outlook is generally positive, both in revenue performance and in spending control.”
The comptroller did cite projected cost overruns in the current budget involving insurance claim settlements and magnet school costs. The state’s share of video slot revenues from the two Indian casinos in southeastern Connecticut also is running below forecasts.
But Lembo noted that these shortfalls have been offset, to date, by savings in accounts for debt service and child welfare programs.
The state also is watching some crucial developments that could change the budget outlook — for better or for worse — later in the fiscal year.
Fiscal analysts, who will revise projections for tax and other revenues in November, January and April, are keeping a close watch on the federal budget debate and its potential impact on the stock market. Nearly 40 percent of state income tax receipts come from quarterly payments rather than from paycheck withholding, and the bulk of those quarterly payments involve capital gains, dividends or other investment income.
Lembo also noted that other economic indicators, such as an updated unemployment rate, were delayed because of the federal government shutdown during the first half of October.
The last report from the state Department of Labor, which relies on federal statistics, was released in September. That report showed unemployment here stood at 8.1 percent in August, well above the national average of 7.3 percent.
Connecticut was one of 17 states that saw its job numbers decline in August, when it lost 6,000 positions.
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