As lawmakers and Gov. Dannel P. Malloy privately discuss if there should be any last-minute changes to the state budget before next week’s vote they were handed some good fiscal news Friday. This year’s general fund is up about $464 million from projections in January.
The consensus revenue estimates calculated by the governor’s Office of Policy and Management and the legislature’s Office of Fiscal Analysis not only show this year’s revenues increasing, but also next year’s revenues. Those are up by about $282 million, according to the consensus revenue estimates. The Office of Fiscal Analysis also released numbers Friday forecasting a $458.1 million surplus.
House Minority Leader Lawrence Cafero, R-Norwalk, said he’s urging Democrats to use the money to lower the proposed $1.4 billion in tax increases.
“It’s unconscionable for him not to take that into consideration,“ Cafero said following Friday’s Bond Commission meeting.
But Democratic legislative leaders and Malloy have said the money should used to pay down the borrowing the state needs to do in order to balance this year’s budget or begin building up the depleted Rainy Day fund.
“These numbers are further evidence of a thaw in Connecticut’s long economic winter,” House Speaker Chris Donovan, D-Meriden, said in a statement Friday.
“We learned today that not only does it appear we will finish the current year in the black, but that the amount of surplus by the end of the fiscal year could eliminate any need for borrowing,” Donovan said. “The steps we took to resolve the challenges we faced are working for our state.”
“How can you ignore revenue?” Cafero said.
But Malloy’s spokeswoman said the governor’s isn’t ignoring the revenue.
“Governor Malloy believes we should use additional revenue to continue to stabilize the state’s finances,” Colleen Flanagan, Malloy’s spokeswoman, said. “He thinks this year’s revenue surplus should be used to avoid securitization and pay down existing debt, both of which were incurred because this budget was put together using borrowed money for operating expenses.“
The state planned on borrowing close to $1 billion to close this year’s budget gap, but as revenue projections improved the number continued to shrink. Earlier this year the state had planned on borrowing $646.6 million, which will be paid back with a tax on consumers’ electric bills. But that number was lowered to $432.5 million just last week prior to the release of the consensus revenue estimates Friday.
“Going forward, he believes we should use that revenue to continue to do the responsible thing and stabilize the state’s finances, including reducing even more debt, putting money into the rainy day fund, and continuing to finance our conversion to GAAP,” Flanagan said.
Sen. President Donald Williams urged caution regarding the new numbers.
“This is good news, but it does not mean that Connecticut’s economy is in great shape. We must use these dollars to pay down the state’s future obligations – that will help improve the state’s fiscal health,” he said.
Cafero said if the governor wants to ignore the additional money that’s fine with him, but the legislature shouldn’t.