State government’s finances are back in the black — albeit by a razor thin margin — according to new estimates released Friday by Gov. Dannel P. Malloy’s administration.
The $23.3 million surplus the governor’s budget office projected in its monthly report to Comptroller Kevin P. Lembo is equal to less than one-seventh of 1 percent of this fiscal year’s General Fund.
Malloy and legislators still face major deficits projected for each of the next two fiscal years. The last forecast from nonpartisan analysts, combined with updated revenue estimates issued last week, means state finances — unless adjusted — are on pace to run $1.42 billion in deficit in 2017-18, and $1.6 billion in the red in 2018-19.
Both of those shortfalls represent about 8 percent of annual operating costs.
Last month Malloy had reported a small deficit in the current state budget of $41.6 million.
Most of that was wiped out earlier this month when Attorney General George Jepsen announced the settlement of a multi-state lawsuit against Moody’s Investors Service over the credit agency’s ratings mistakes leading up to the 2008 Wall Street collapse. Connecticut’s share of that settlement was a one-time payment of $31.5 million.
But fiscal analysts also reported last week that expectations for General Fund tax receipts had been upgraded by about $25 million. Despite erosion of income and sales tax receipts, surging corporation tax revenues left Connecticut with a net gain.
The Office of Policy and Management, the governor’s chief budget and policy planning agency, also reported Friday that projected spending for the current budget has been reduced by about $8.2 million, primarily because of savings in fringe benefits accounts.
“It is a good sign that the budget continues to stabilize, and our main focus can turn to the 2018-19 budget years,” said House Speaker Joe Aresimowicz, D-Berlin. “As we monitor both revenues and expenditures over the coming months, we must still remain diligent on ensuring that the budget reflects the priorities of the people of Connecticut.”
“This is good news for Connecticut, but we still have much work to do to meet the state’s ongoing budget challenges,” said Rep. Toni E. Walker, D-New Haven, House Chair of the legislature’s Appropriations Committee. “We have worked hard with the governor and the state’s agencies to hold down expenditures, and this report shows we are making progress. We must continue, however, to look for more efficiencies in government while protecting the people of Connecticut who depend on vital services.”
Malloy has not had the opportunity to report many surpluses since his second term began in January 2015. The first two fiscal years since his re-election closed $113.2 million and $170.4 million in deficit, respectively.