Democratic Gov. Dannel P. Malloy got some good news Wednesday from budget analysts who predicted that revenue would increase by more than $500 million over the next three years.
The legislature’s nonpartisan Office of Fiscal Analysis and Malloy’s budget office agreed Wednesday that revenue would increase about $365 million in 2014 and $153 million in 2015. If the revenue growth is realized, it’s enough money to cut the projected deficit in fiscal year 2016 in half.
The new consensus revenue report increases the $273 million budget surplus state Comptroller Kevin Lembo projected earlier this month to nearly $500 million. However, it doesn’t completely erase future deficits, which have been estimated by nonpartisan fiscal analysts at $1.1 to $1.4 billion over the next three years.
Still, the Malloy administration pointed to the report Wednesday as a sign that his administration was on the right path and the economy is improving.
“To go from a record-setting $3.6 billion deficit to a surplus of nearly $500 million in three years is an extraordinary achievement, and speaks to the commitment of this administration to hold the line on spending, while at the same time making smart investments in public education and job creation,” Malloy said in a statement. “There’s much work to do, but make no mistake: our economy is improving, private sector jobs are growing at the strongest pace in decades, and we are reducing the state’s overall indebtedness. And we are accomplishing all of this at the same time we are putting money away in the rainy day fund.”
Sen. Minority Leader John McKinney, who is also seeking the Republican nomination for governor, was cautiously optimistic about the numbers and quick to point out the state will still be running a deficit in 2016, even with the increased revenue.
“The surplus figures are positive news, but Governor Malloy cannot ignore the $2 billion deficit that awaits Connecticut taxpayers in FY16 and FY17 as he prepares his budget proposal,” McKinney said. “His use of one-time revenues, accounting gimmicks, and borrowing for operating expenses to balance the current budget leaves the state with few good options to close our future deficits.”
Some at the Capitol believe the current state budget surplus is a mirage because it was build with one-time revenues and other budget gimmicks.
Most of this year’s projected surplus comes from the additional revenue the state received from its tax amnesty program. The state had budgeted revenue of $35 million for the program, but it received more than $175 million from delinquent taxpayers looking to settle their debts.
However, there’s also data in the new report that shows income and sales taxes are expected to increase over the next three years.
The assessment of the state’s revenue is one of the last fiscal reports Malloy receives before finishing his February budget proposal and sending it to the legislature. Consensus revenue reports are issued every January, April, and November.