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June 2005 — Vol. 83, No. 5 Businesses helping fuel surge in state surplus
Connecticut businesses are continuing to drive the state’s economic recovery, helping to swell the state budget surplus for fiscal year 2005. Higher-than-expected corporate and personal income tax revenues have led the state to increase the projected 2005 budget surplus. The surplus is now expected to be between $602 million and $700 million — at least $585 million higher than what the legislature’s Finance Committee had projected when it set the budget last year. As of early May, the surplus was projected to be $602 million by the governor’s Office of Policy and Management, $603.2 million by the state comptroller and $700 million by the legislature’s Office of Fiscal Analysis (OFA). According to the state comptroller, the corporation tax has produced $60 million more in revenues than the estimate issued in April. “Economic growth is largely responsible for revenues in excess of original budget projections,” said Comptroller Nancy Wyman. Personal income tax revenues also grew, by $110 million more than the comptroller’s April estimate, as a result of final payments associated with the April 15 filing deadline. Given the stronger revenues, OFA has revised its revenue projections for the next biennial budget (2006–2007), which could lessen the need for tax increases to balance that budget. That would be welcome news, because higher taxes would discourage job growth — something Connecticut cannot afford. Job growth here is already far behind the national pace. Connecticut has recovered only about 36% of the jobs lost in the last recession, while the country has recovered 101% of the jobs that were lost.
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