With the books on the 2010 fiscal year now closed, officials say the state of Connecticut ended up in slightly better fiscal shape than anticipated.
A gradually improving economy helped boost tax revenues and enabled the state to finish the year ahead of budget plan by about $450 million, according to the state comptroller and governor’s office.
That’s good news--but it’s not a “surplus” because the state budget was kept above water by using up the Rainy Day Fund, using about $1 billion in federal stimulus funds, and delaying payments to the state employee pension fund.
Those one-time infusions masked the fact that state spending actually overshot revenues by $844 million in a total budget of $18.6 billion, according to the state comptroller.
Still, because of the better results, the state will now have to borrow less--$646.6 million instead of the planned $1.3 billion, and interest costs will be shaved by $124 million.
General Fund tax revenues grew by about 1.7% for the year, which is significantly weaker that typical growth of around 5%, said the comptroller.
“We’re not in a surplus situation,” says CBIA Economist Pete Gioia. “We only had less of a deficit because of the slowly improving economy. There are some good indications in our economy for private-sector job growth in 2011, but we have a long way to go and we face even steeper deficits in the next two fiscal years.”
Voters are nervous about the state’s fiscal condition. By a 2-to-1 margin, Connecticut voters responding to a summer public opinion poll commissioned by CBIA said that state government should “cut spending and do better with the money [it] already has,” versus “find new ways to generate revenue.”
For more information, contact Gioia at 860.244.1945 or email@example.com.