Connecticut may end the just-completed fiscal year with a surplus of $121.3 million, according to the Office of Policy Management (OPM).

OPM said the expected FY 2014 surplus jumped from the previously projected $33.2 million due in part to adjustments to Medicaid reimbursements, higher income tax receipts, and lower spending.

“The yo-yoing of surplus figures underscores the fact that we have a highly volatile tax system and overall weakness in reserve estimation,” said CBIA economist Pete Gioia. “We need to find ways to reduce tax volatility and better forecast reserve.”

The state is facing significant budget deficits in the next several years, underscoring the need for the reserve and for state government to continue streamlining to become as efficient and cost-effective as possible.

Gov. Malloy said the surplus will go to the Rainy Day Fund, bringing the state’s reserve to a balance of $392 million.

After auditing, the state’s books for FY 2014 are to officially close in September.