After 20 months of bad news, State Comptroller Nancy Wyman finally had some good fiscal news to deliver Monday—the state may have $105 million surplus if her projections are accurate.
In this monthly letter to Gov. M. Jodi Rell, Wyman remained cautiously optimistic about the state’s surplus which is “largely the product of payment deferrals, one-time transfers and federal stimulus dollars.”
The $323 million deficit reduction plan passed by the legislature and signed by Rell also helped the state’s fiscal outlook.
Wyman noted, however, that most of the approximately $500 million deficit on the books for the bulk of fiscal year 2010 was not eliminated by tax revenue gains, but by various elements of a deficit-mitigation plan passed by the General Assembly.
Income tax collections were trending up after the April 15 deadline, but not above the previous year’s receipts.
“While the improvement in the income tax trend is welcome, even after a significant tax increase in Fiscal Year 2010, receipts are projected to be almost 13 percent below the level attained in Fiscal Year 2008,” Wyman wrote. “The current year surplus does not substantially alter the fiscal challenges that the state will face in the next biennium.”
Wyman continued: “With respect to the income tax, after twenty months of persistent declines in year over year withholding receipts, gains were experienced in March and April. The more volatile estimated payment component of the income tax improved with April collections but was still about 14 percent below last fiscal year.”
Altogether, estimated and final income tax receipts were down by more than $500 million and large deficiencies remain at several state agencies.