State finances are on pace to finish $506.1 million in the black when the fiscal year ends June 30, Gov. Dannel P. Malloy’s administration reported Tuesday afternoon.

The new projection, which represents about 3 percent of this year’s operating budget, is up considerably from last month’s $273 million surplus estimate. The administration and nonpartisan legislative analysts released a report last week that raised expectations for income, sales and other major tax receipts.

Still, Office of Policy and Management Secretary Benjamin Barnes, Malloy’s budget chief, added one cautionary note in his monthly report to Comptroller Kevin P. Lembo. While overall income tax receipts are expected to rise, projected revenues from one source — paycheck withholding — have been reduced, a sign of a still recovering job market.

But almost 40 percent of state income tax receipts come from households that file quarterly payments, most of which are tied to capital gains, dividends and other investment-related income. Receipts in this area have grown fast enough to more than offset the reduced expectations from withholding.

Barnes noted that the stock market’s value rose by nearly 30 percent over the past year.

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

Leave a comment