Lembo affirms CT’s estimated $701M budget surplus

PHOTO | Matt Pilon Comptroller Kevin Lembo in downtown Hartford's Bushnell Park last March.

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By Joe Cooper

Comptroller Kevin Lembo has confirmed the state is on pace to close the books on fiscal year 2019 with a roughly $701 million surplus.

Lembo in a monthly letter to Gov. Ned Lamont on Monday said his latest projected $700.9 million surplus aligns with an estimate recently announced by Office of Policy and Management Secretary Melissa McCaw.

Almost $541 million of the estimated surplus will be used to cover funding for a new special capital reserve fund for the Teachers’ Retirement System and a tax settlement with hospitals, which were both part of the adopted biennial state budget.

The comptroller’s office said revenue projections are approximately $129.1 million higher than they were from its June 1 estimate. That’s because of “over-performing” revenue categories including a sales tax revenue increase of $39.9 million, and higher corporate tax inheritance and estate tax revenue of $25 million and $16.5 million, respectively. The public service corporations tax is also $17.5 million ahead of projections.

Lembo said the state’s budget reserve fund, or so-called rainy day fund, will also jump to $2.24 billion thanks to an estimated volatility cap transfer worth $895.5 million and the remaining year-end surplus of $160 million.

The projected year-end surplus would represent about 11.6 percent of the total general fund appropriations for fiscal year 2020, which has a target of 15 percent.

“These over-performing revenue categories are positive signs -- however, in order to help protect against future economic downturns, Connecticut must maintain financial discipline and continue building the budget reserve fund balance to the statutory target of 15 percent,” Lembo said. “Connecticut’s budget results are ultimately dependent upon the performance of the national and state economies.”