State Comptroller Kevin Lembo certified a $236.9 million surplus Thursday to close the books on fiscal year 2011.
In his letter to Gov. Dannel P. Malloy, Lembo said the surplus would have been a $1 billion deficit if the state hasn’t taken temporary measures to fix it.
About $14.5 million of the surplus is required to go toward retiree health care and will help begin to pay the $915.8 million in 2009 Economic Recovery Notes the state borrowed.
But he warned that the temporary steps the state used to close what was projected to be a deficit probably won’t be available in the future as the federal government looks to tighten its belt.
“Those temporary lifelines that saved us in fiscal year 2011 have disappeared this year,” Lembo said. “Instead of the significant federal stimulus money that Connecticut received this past fiscal year, Connecticut could face cuts in federal assistance – depending on decisions made by a joint congressional committee charged with cutting $1.5 trillion in federal spending.
And even though the unemployment rate remains steady, tax revenue in 2011 outperformed collections in 2010 with the exception of the real estate conveyance tax, Lembo said.
The personal income tax, the largest single tax category, expanded by over $660 million from the prior fiscal year due largely to strong financial markets.
But economic indicators for the future are mixed.
The state’s personal income has been growing at a rate in excess of 4 percent, the stock market realized double digit gains over the course of the fiscal year, and retail sales grew 8 percent helping boost the sales tax revenue by $149.2 million or 4.7 percent over last year.
The state’s housing sector continued to struggle. New housing permits declined 5 percent from already depressed levels and existing home sales fell 19 percent during the fiscal year with quarterly sales at about half of the 2005 level, Lembo said.
General Fund spending in 2011 was up $637.2 million or 3.7 percent over last fiscal year. Most of the growth can be attributed to Medicaid, which grew by $417.8 million or 6.2 percent.
And it’s too soon to tell how the state is doing on its projections for the 2012 budget, which went into effect on July 1.
“Collection patterns relating to revenue changes are not yet well established and savings targets included in the budget must be closely monitored,“ Lembo wrote in his letter to Malloy. “Estimated income tax payments collected during September will begin to provide an analytical basis for budget projections.”
