CTNJ File Photo

The state’s budget surplus for the fiscal year that ended on June 30 has grown to around $400 million because of low spending growth and an increase in revenue, Comptroller Kevin Lembo reported Tuesday.

In a monthly letter to Gov. Dannel P. Malloy, Lembo said Connecticut will end the fiscal year with a $398.79 million surplus. He said $220.8 of last year’s surplus will be dedicated to spending in this fiscal year and $178 million will be used to shore up the state’s “Rainy Day Fund.”

The deposit will bring the fund’s balance to $271.5 million, which Lembo called a good first step in restoring the Rainy Day Fund. However, he said the fund has a long way to go before it’s an adequate buffer against economic turmoil.

“The ultimate goal for funding the Rainy Day Fund should be approximately $3 billion — or 15 percent of the current General Fund — in order to fully protect taxpayers against future economic downturns,” he said.

Lembo cautioned against drawing too many conclusions from the surplus. He said it is a good sign but one that could be caused in part by one-time revenues.

“The growth was largely driven by strong stock market performance and an increase in the federal capital gains tax rate that pushed future year gains into Fiscal Year 2013. The payroll component of the income tax, which accounts for 60 percent of the total income tax receipts, was down slightly from last year,” he said.

State spending in the last fiscal year increased by about 1.3 percent over the prior year. For “historical context,” Lembo compared that growth to the increases in state spending that occurred in the four years preceding the recession, when spending grew by 7.3 percent annually.

Despite the current surplus, Lembo said he had concerns about the current fiscal year when spending on Medicaid could exceed what the state has budgeted. The budget reduces Medicaid expenditures by $169 million over the biennium in anticipation of savings.

“The Fiscal Year 2014 is predicated on significant savings being realized in the Medicaid program. Current spending patterns do not reflect the budgeted level of savings,” he said.