State Comptroller Kevin Lembo certified a $504.9 million budget surplus Tuesday. It’s a number that could grow following April’s revenue collections and “barring any last-quarter spending increases,” he said.
The surplus is a slight $500,000 increase over last month, but April is a significant month for revenue collection — accounting for almost 17 percent of general fund revenue last fiscal year.
“If these trends carry into the last quarter of this fiscal year without offsetting spending increases, the current General Fund surplus projection would be expected to grow,” Lembo said. “All major revenue categories are exceeding or are close to original budget estimates.”
The revenue for 2014 is expected to exceed initial projections by about $421.2 million. Income, sales, and corporation taxes are all exceeding their initial estimates. The largest gain, $213.1 million, is from the income tax. Lembo said the increase in that tax is based on stock market gains that have fueled income tax payments.
On the spending side the budget is expected to grow 3.8 percent this fiscal year, but remain below initial targets, Lembo said.
However, he also warned Gov. Dannel P. Malloy that the budget relies on about $190.8 million in nonrecurring revenue reserved from the prior year and $112.4 million in carry forward funding.
Malloy had planned to put about $250 million of this year’s surplus away in the Rainy Day Fund, $100 million away in the state employees pension account, and $155 million in tax refunds for 2.7 million taxpayers.
Malloy was non-committal Friday about how hard he would fight to keep the $55 tax refund in the budget for taxpayers.
Lembo also warned Malloy in his monthly letter that most of the 2014 surplus comes from “a one-time tax amnesty program, and from the most volatile component of the income tax, which relies on strong stock market performance.” He also reminded the governor that the legislature’s Office of Fiscal Analysis and the Office of Policy and Management has estimated budget shortfalls beginning in 2016.
“I recommend that any General Fund surplus realized by the close of Fiscal Year 2014 in excess of this month’s estimate be deposited directly to the Budget Reserve Fund,” Lembo wrote Malloy.