Positive trends in jobs, the housing market and on Wall Street are helping push a projected state budget up to a revised $273.3 million for this fiscal year, according to the state comptroller and Office of Policy and Management (OPM).
But the biggest reason for the increase, officials say, is the state’s tax amnesty program that has yielded $175 million, over four times what was targeted.
State Comptroller Lembo, in his monthly letter to the Governor, again urged that any surplus funds at the end of the year (June 30) be tucked away in the state’s Rainy Day Fund.
At the end of fiscal year 2013, the Rainy Day Fund stood at $270.7 million, representing 1.6% of planned state spending. The comptroller is recommending a 15% reserve, which is 5% more than what state law currently allows.
Lurking ahead in the next few fiscal years are projected deep state budget deficits.
“It is essential to the state’s long-term fiscal stability that sufficient reserves be established as soon as possible,” said Lembo.
Just as important, said Pete Gioia, CBIA vice president and economist, is for state government to continue leaning its operations to become as effective and efficient as possible.
“That will help create a better fiscal picture to potentially roll back recent tax increases and have funds for needed infrastructure improvements,” said Gioia.
Gioia and other economists and business leaders will discuss the state of Connecticut’s economy on Tuesday, Jan. 7 at the 2014 Economic Summit & Outlook in Hartford.