After starting the week with great budget news, the state wrapped things Friday with a modest slip.

The projected deficit for the current fiscal year worsened slightly from $223 million to $240 million, Gov. Dannel P. Malloy’s budget office reported.

That news came just four days after state fiscal analysts reported General Fund revenues were running $586 million ahead of earlier projections.

But because that growth was driven almost entirely by surging income tax receipts tied to capital gains and dividends — and because the budget requites most of that unanticipated growth to be deposited into the emergency reserve — it is not immediately available to close the deficit.

Connecticut’s reserve, commonly known as the Rainy Day Fund, rose from $212 million — an amount equal to just 1.1 percent of annual operating costs — to almost $890 million or 4.6 percent.

Anticipated federal grants have declined slightly, and the state also will spend more this fiscal year than originally planned on its Medicaid Savings Program.

Malloy vetoed a bill this week to reverse eligibility restrictions in the program that would have reduced or eliminated health benefits for an estimated 113,000 seniors and disabled patients.

The governor argued the legislature’s plan was not fiscally sound, double-counting savings in pension contributions and stripping funds from next fiscal year’s budget to cover expenses now.

But even before legislators had voted to reverse the cuts, Malloy had agreed not to implement the eligibility restrictions until after the fiscal year ends on June 30.

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.

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