State Comptroller Kevin Lembo announced Tuesday that the state is on track to end the fiscal year with a $4.4 million surplus under Generally Accepted Accounting Principles.
But he warned that the fiscal year is still young and there are several unknowns that could adversely impact the state budget.
In his letter to Gov. Dannel P. Malloy, Lembo said he shares the same concerns as the Office of Policy and Management when it comes to items that could impact budget estimates.
“Medicaid spending has historically experienced significant budget volatility,” Lembo wrote. “Because of the Medicaid savings built into the Fiscal Year 2014 budget and the impact of the Affordable Care Act on Medicaid reimbursements and enrollment, this account will require careful monitoring as the fiscal year progresses.”
Lembo also agrees there could be some “volatility in settlement payments relating to claims against the state.” Then there’s the federal government shutdown and its impact on the state, which the Malloy administration is still assessing.
On Tuesday, Lembo added to those concerns a dip in sales tax revenue collections.
“At this point in time, the trend is not sufficiently established to result in a revenue revision,” Lembo wrote. “However, I will be closely monitoring this and other revenue sources and will make adjustments to my projections as required.”
On the bright side, Lembo said the “state economy continues to post moderate monthly growth.”
According to the state Labor Department, the state has now recovered 62,200 of the 121,200 jobs lost during the 2008 recession. In the month of August, the state lost 6,000 jobs. This was the first monthly employment loss after five consecutive months of job gains.
Hourly earnings and weekly pay have remained relatively flat over the last 12 months and unemployment is stuck at 8.1 percent. Existing home sales in the Northeast were up 12.7 percent from one year ago, and prices were up 7.6 percent for the same period.
In August, advance retail sales were up 4.7 percent from the same period last year and motor vehicle sales posted double-digit growth, while department store sales were down 5.5 percent, according to economic indicators Lembo uses to put together his monthly report.
Last year at this time the state’s budget already was $27 million in the red. By December the deficit had grown to $415 million, forcing lawmakers and the governor to sit down and come up with a deficit mitigation plan. They ended up reducing the budget by about $365 million. That combined with a hiring freeze in January allowed the state to end the year with a $236.6 million surplus.