For two months now Gov. M. Jodi Rell’s budget office has been projecting the state would end the year with a $300,000 surplus, but in its latest letter to state Comptroller and Lt. Gov.-elect Nancy Wyman it’s increasing the projected surplus to $1.2 million.

In her letter to Rell earlier this month Wyman projected an $18 million deficit due mostly to the increases in refunds of unclaimed property from the state Treasurer‘s “Big List.”

Rell’s Budget Director Brenda Sisco acknowledges the increase of $20 million in unclaimed property refunds, but maintains that General Fund revenue increased by $8.8 million over the past month as projections for the inheritance and estate tax have increased by $15 million.

The real estate conveyance tax, which the legislature extended last year, has been reduced by $11 million “as collections continue to be significantly lower than anticipated as the result of weak demand in the housing market,” Sisco wrote in her monthly letter. And expenditures will exceed appropriations by $165.2 million as several state agencies continue to struggle with meeting their budgets.  The largest deficiency of $15 million is within the Department of Social Services where caseloads have increased.

Asked about the latest budget projections at a press conference Tuesday, Gov.-elect Dan Malloy said “we’re not in surplus.”

“We simply have to stop using that term in an environment where we don’t apply GAAP rules,” Malloy said.

He said there‘s certainly a way a person could get it to look like the state has a surplus on paper.

“But do we have balanced books in the state of Connecticut? The obvious answer is no and we haven’t had them for a long time,” Malloy said.

Malloy and Ben Barnes, his budget director, are currently working on his inaugural budget which will be released in February, but must go to the printer by the end of January.

“I think it’s gloomy but we’re going to get the job done and that’s the message I would like the citizens of Connecticut to concentrate on over the forthcoming Christmas break,” Malloy said. “Be prepared that we are all going to be required or asked at least to participate in the sacrifice necessary to put the state on a sustainable basis.”