Free Daily Headlines :

  • COVID-19
  • Vaccine Info
  • Money
  • Politics
  • Education
  • Health
  • Justice
  • More
    • Environment
    • Economic Development
    • Gaming
    • Investigations
    • Social Services
    • TRANSPORTATION
  • Opinion
    • CT Viewpoints
    • CT Artpoints
DONATE
Reflecting Connecticut’s Reality.
    COVID-19
    Vaccine Info
    Money
    Politics
    Education
    Health
    Justice
    More
    Environment
    Economic Development
    Gaming
    Investigations
    Social Services
    TRANSPORTATION
    Opinion
    CT Viewpoints
    CT Artpoints

LET�S GET SOCIAL

Show your love for great stories and out standing journalism

Connecticut’s coffers have swelled — not shrunk — during COVID

  • Money
  • by Keith M. Phaneuf
  • July 29, 2020
  • View as "Clean Read" "Exit Clean Read"

Kyle Constable :: CTMirror.org

Connecticut State Capitol

State government’s coffers have swelled by hundreds of millions of dollars since the coronavirus struck in mid-March, despite warnings of a nearly $1 billion deficit just three months ago.

Connecticut’s rainy day fund, which stood at $2.5 billion when the pandemic struck, now approaches $2.8 billion, according to an ongoing review of thousands of state tax returns filed after July 15.

And while the legislature’s Office of Fiscal Analysis still expects Connecticut to exhaust most reserves over the next 11 months, they now project the state will maintain a modest, $250 million cushion one year from now. 

That’s a far cry from two months ago, when Gov. Ned Lamont warned Connecticut might be broke by mid-2021 and potentially saddled with $500 million in operating debt. The governor hoped to avoid this debt by seeking concessions from labor unions, who declined, noting they provided givebacks in 2009, 2011 and 2017.

How has state government gotten richer since the pandemic began?

“That’s a fair question,” said Rep. Jason Rojas, D-East Hartford, co-chairman of the Finance, Revenue and Bonding Committee. “I think it’s a matter of us having a conversation” with Lamont’s budget office.

Administration officials and the legislature’s nonpartisan analysts both warned during a joint forecast three months ago that fiscal projections were little more than a shot in the dark.

Normally they project revenues each spring immediately following the April 15 income tax filing deadline. But there was almost no data available to budget agencies when they prepared their April 30 estimates.

That’s because Lamont deferred that deadline to July 15 to ease financial burdens during the height of the pandemic.

Hundreds of thousands of Connecticut residents were receiving unemployment benefits, many temporarily enhanced with emergency federal funds. Those benefits are subject to income taxation, but analysts also warned it’s impossible to predict how those numbers would trend.

How long would the federal government prop up these enhanced benefits? How many of these people would return to work as the pandemic eased? And what if the coronavirus worsens, taking unemployment with it, this fall or winter?

The update provided Tuesday to the finance committee, only the second since the post-July 15 analysis began, upgraded revenues for the just-completed fiscal year by nearly $640 million compared with an April 30 projection.

In fairness, roughly two-thirds of that is a phantom gain. Federal Medicaid payments expected in July simply arrived before the last fiscal year ended on June 30, wiping away a big chunk of the nearly $1 billion deficit projection from three months ago.

But other revenue growth isn’t tied to an accounting switch.

Keith M. Phaneuf :: CTMirror.org

Sen. Cathy Osten of Sprague (left) and Rep. Toni Walker of New Haven, Democratic leaders of the Appropriations Committee.

Tax receipts accruing back to the just-completed fiscal year are running $200 million higher than expected. And based on that data, analysts also bumped expectations for 2020-21 tax receipts by $50 million.

Economists have said many investors sold their stocks in late 2019 amidst growing fears of a recession. And even more did so as the markets plunged in March, reaping big, one-time capital gains.

Still, OFA staff warned nothing is certain at this point. “Our FY 21 projections are preliminary and subject to significant change pending further analysis,” staff wrote in a memo to the finance committee.

Kosta Diamantis, the governor’s deputy budget director, also cautioned against the temptation to spend reserves quickly.

“While it may certainly appear as good news for our state, and testament to strong financial management, that we are able to … improve our estimates for the deposit into the Budget Reserve Fund, we cannot lose sight of the challenges that are ahead in FY21,” Diamantis said. “Uncertain times require we stay the course of fiscal stability.”

Connecticut’s coffers also are swelling, however, because the Lamont administration spent hundreds of millions of dollars less than originally planned this fiscal year, and legislators have been pressing all summer for more details.

The budget routinely tasks the Executive Branch annually with achieving savings targets through attrition or other efficiencies. The savings goal for the just-completed fiscal year was $209.2 million in the General Fund, which covers about 90% of all operating costs in the overall budget.

The Lamont administration estimates it saved $544.1 million.

The Appropriations Committee has been meeting since June with agency heads, particularly those whose departments returned large sums of money.

Sen. Cathy Osten, D-Sprague, who co-chairs the panel, said lawmakers are concerned, but aren’t drawing conclusions yet.

“I don’t know that that’s fair yet,” she said, adding that a key meeting still must be held in August with Lamont’s budget director, Office of Policy and Management Secretary Melissa McCaw. “That’s why we have to finish our meetings with all of the state agencies.”

Osten added that some legislators are worried that more money should have been sent to social service agencies, other care providers, and to public colleges and universities to cope with the pandemic.

“I don’t think we can wait too long,” she said. “Clearly we have some concerns we have to address.”

Sign up for CT Mirror's free daily news summary.

Free to Read. Not Free to Produce.

The Connecticut Mirror is a nonprofit newsroom. 90% of our revenue comes from people like you. If you value our reporting please consider making a donation. You'll enjoy reading CT Mirror even more knowing you helped make it happen.

YES, I'LL DONATE TODAY

ABOUT THE AUTHOR

Keith M. Phaneuf A winner of numerous journalism awards, Keith Phaneuf has been CT Mirror’s state finances reporter since it launched in 2010. The former State Capitol bureau chief for The Journal Inquirer of Manchester, Keith has spent most of 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. A former contributing writer to The New York Times, Keith is a graduate of and a former journalism instructor at the University of Connecticut.

SEE WHAT READERS SAID

RELATED STORIES
With billions in federal relief on the way to CT, legislators assert their role in deciding how to spend it
by Keith M. Phaneuf and Mark Pazniokas

With an unusual bill, state legislators are reminding Gov. Ned Lamont they have significant role in disbursing federal coronavirus relief.

CT hasn’t started collecting new payroll tax from state workers
by Keith M. Phaneuf

Connecticut established a new payroll tax surcharge on Jan. 1 but still isn't deducting it from state workers' paychecks.

Lamont’s budget offers another round of tax amnesty
by Keith M. Phaneuf

Gov. Ned Lamont’s proposal waives penalties and caps interest at 3% over each of the next two fiscal years.

Senate sends data center incentives and town aid pledge bills to Lamont’s desk
by Keith M. Phaneuf

Senate endorsed an omnibus fiscal bill that lays the groundwork for a major boost in PILOT aid to many municipalities.

House approves big municipal aid pledge, tax incentive bills
by Keith M. Phaneuf and Mark Pazniokas

The House approved bills Wednesday pledging $100 million-plus in new municipal aid and offering tax incentives to attract data centers.

Support Our Work

Show your love for great stories and outstanding journalism.

$
Select One
  • Monthly
  • Yearly
  • Once
Artpoint painter
CT ViewpointsCT Artpoints
Opinion The Board of Regents’ changes must not shortchange its students or faculty
by Carrie Andreoletti, PhD

As a university professor and a lifespan developmental psychologist, I tend to approach my work from a developmental perspective. This means I aim to foster a lifelong love of learning and to help others find a sense of meaning and purpose, as well as confidence in their ability to reach their goals. My approach to higher education is shaped by my desire to provide the best possible education for my students. This is why the recent Board of Regents’ proposed changes at the four state universities have me worried.

Opinion How to close schooling opportunity gaps created by the pandemic
by Carol Gale

We ask school district leaders to trust your public servants whose daily work life involves assessing student needs and planning or modifying instruction to meet those needs. Listen to their voices, as we have, and allocate precious resources on interventions that will offer increased opportunities for Hartford students to succeed.

Opinion A new guide for schools: How to work with families this spring
by Michael Arrington and Erika Haynes

With months of remote and hybrid learning to go, families and educators continue to adapt and innovate to meet the moment. Since August, we’ve spoken with hundreds of parents, caregivers, family support groups, educators, and students across Connecticut and the country about things things that have worked --strategies, big and small, that have made this time more manageable and helped children learn and stay connected with peers.

Opinion Housing is a human right
by Tenaya Taylor

Nonprofit Accountability Group is a queer- and trans-led group based in Hartford that is dedicated to creating racial equity by directing resources to Black, Indigenous and People of Color (BIPOC) and disabled children and families. NAG was founded in 2020 as an organization with a transformative approach to implementing nonprofit accountability by creating relationships within the community, nonprofits, and their funders.

Artwork Grand guidance
by Anne:Gogh

In a world of systemic oppression aimed towards those of darker skintones – representation matters. We are more than our equity elusive environments, more than numbers in a prison and much more than victims of societal dispositions. This piece depicts a melanated young man draped in a cape ascending high above multiple forms of oppression. […]

Artwork Shea
by Anthony Valentine

Shea is a story about race and social inequalities that plague America. It is a narrative that prompts the question, “Do you know what it’s like to wake up in new skin?”

Artwork The Declaration of Human Rights
by Andres Chaparro

Through my artwork I strive to create an example of ideas that reflect my desire to raise social consciousness, and cultural awareness. Jazz music is the catalyst to all my work, and plays a major influence in each piece of work.”

Artwork ‘A thing of beauty. Destroy it forever’
by Richard DiCarlo | Derby

During times like these it’s often fun to revisit something familiar and approach things with a different slant. I have been taking some Pop culture and Art masterpieces and applying the vintage 1960’s and 70’s classic figures (Fisher Price, little people) to the make an amusing pieces. Here is my homage to Fisher -Price, Yellow […]

Twitter Feed
A Twitter List by CTMirror

Engage

  • Reflections Tickets & Sponsorships
  • Events
  • Donate
  • Newsletter Sign-Up
  • Submit to Viewpoints
  • Submit to ArtPoints
  • Economic Indicator Dashboard
  • Speaking Engagements
  • Commenting Guidelines
  • Legal Notices
  • Contact Us

About

  • About CT Mirror
  • Announcements
  • Board
  • Staff
  • Sponsors and Funders
  • Donors
  • Friends of CT Mirror
  • History
  • Financial
  • Policies
  • Strategic Plan

Opportunity

  • Advertising and Sponsorship
  • Speaking Engagements
  • Use of Photography
  • Work for Us

Go Deeper

  • Steady Habits Podcast
  • Economic Indicator Dashboard
  • Five Things

The Connecticut News Project, Inc. 1049 Asylum Avenue, Hartford, CT 06105. Phone: 860-218-6380

© Copyright 2021, The Connecticut News Project. All Rights Reserved. Website by Web Publisher PRO