The state may be ending the year with a $393.3 million surplus, but no one seems to be jumping for joy.
State Comptroller Nancy Wyman certified the $393.3 million surplus Monday for 2010. The surplus is due mainly to a jump in sales tax receipts, which increased $39 million over last month.
“The improvement in the sales tax is a good indicator that our economy is slowly turning around,” Wyman said, “but overall growth is still far below what we need for a full recovery.”
Even with the recent upswing, the sales tax is expected to generate about 4 percent less revenue than in 2009. And even with significant increases in income tax and corporation tax rates, overall net General Fund revenues are estimated to end the year just 1.2 percent higher than last year.
According to consensus revenue estimates calculated by the Office of Fiscal Analysis and the Office of Policy and Management, the sales tax is actually down $70.2 million and total tax revenues are down $108.7 million from the projections included in the budget estimates.
Wyman again noted that a $500 million deficit projected for most of the fiscal year was mainly eliminated not by revenue gains, but by deficit-mitigation measures that included federal stimulus dollars, deferral of payments to the state pension fund and one-time transfers of money from accounts including the Rainy Day Fund.
Overall, Wyman’s surplus projection rose by $150.4 million in the last month. Estimated receipts from licenses and permits were up by $20 million; insurance company tax receipts rose by $12.9 million and tax refunds paid by the state dropped by $14.1 million. Net government spending was estimated to be $41.7 million lower than last month’s projection.
The General Fund budget for fiscal year 2010 was balanced through the use of $1.278 billion in budget reserve funds, $843.5 million in federal stimulus dollars, and payment deferrals and one-time transfers.
“In the absence of these non-recurring revenues and expenditure reductions, the Fiscal Year 2010 General Fund operating budget deficit would exceed $2.0 billion dollars,” Wyman wrote in her letter to Republican Gov. M. Jodi Rell.“In Fiscal Year 2009, the state issued $947.6 million in Economic Recovery Notes to close that year’s operating deficit.”
Next year’s deficit is already estimated at about $3.4 billion.