Higher revenue from income, sales and inheritance taxes will help the state end the fiscal year with a General Fund surplus of $679.8 million, state Comptroller Kevin Lembo predicted Wednesday.
In his monthly letter to Gov. Dannel P. Malloy, Lembo said those revenue surges increased the projected surplus by $170.2 million at the beginning of May. It is $563.4 more than the surplus predicted at the beginning of April.
Lembo said revenue from income tax increased by $497.5 million, the sales tax increased by $177.1 million, the inheritance tax by $144 million and the corporation tax by $107.5 million.
“The income tax is showing its strongest gains in the estimated and final payment portion of receipts, both with double-digit growth rates,” he wrote.
In addition to increased revenue, spending estimates $68.4 million lower than last month’s contribute to the higher surplus, Lembo said.
With the extra money, the state will not have to issue economic recovery notes, he said. It also enables the legislature to repeal an assessment fee that has been imposed on Connecticut Light & Power ratepayers and is scheduled to be added to the bills of United Illuminating customers, Lembo said.
The CL&P surcharge, imposed in January and scheduled to end at the end of June, has generated $40 million for the state, Lembo said. He asked Malloy to think about refunding some of that money to ratepayers.
“I hope you will consider seeking legislative authorization to apply any remaining surplus toward rebating CL&P electric rate payers for the 0.379 cents per kilowatt hour surcharge imposed between January and June 30,” he wrote.
Lembo said he supported Malloy and the legislature in their efforts to repeal the economic recovery revenue bonds it sought to borrow and pay back with money from the Energy Conservation and Load Management fund and the surcharge on electric bills.
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If the revenue increase is sustained throughout the next year it would give the state an opportunity to use surplus funds to pay down and debt and replenish the “Rainy Day Fund,” Lembo said.
The revenue growth is good news, he said, but it’s tempered by the state’s 9.1 percent unemployment rate and a decline in home sales in the first quarter of the fiscal year. Also, there is a projected $344.6 million General Fund agency deficiencies, Lembo said. The Department of Social Services accounts for $262 million of that figure, he said.
“As the economy has faltered, the Department of Social Services has seen dramatic caseload increases in basic support programs,” he said.