State Comptroller Kevin Lembo certified a $33.2 million surplus Tuesday, but warned that while the 2015 fiscal year officially begins today the final 2014 surplus won’t be determined until later this year after the books are audited.
In his monthly letter to Gov. Dannel P. Malloy, Lembo agreed with Malloy’s budget office and reduced the surplus by $10.1 million from last month’s estimate.
This month’s revenue projection is down $75.5 million from last month — the vast majority related to outstanding federal reimbursements that the state has claimed, but not yet received. The state is actively seeking to recover $65.5 million from the federal government for costs incurred by the Departments of Developmental Services and Mental Health and Addiction Services, Lembo said.
The drop in revenue was offset by a $65.1 million increase in anticipated budget savings, which is money state agencies have promised not to spend.
“The state’s budget, ending in surplus, is reflective of the overall economic outlook — a saw-tooth recovery that is headed in the right direction, but slowly,” Lembo said, pointing to the state’s fourth consecutive month of employment growth. “Connecticut’s overall economy has shown signs of gradual but erratic improvement.”
Under state law, the 2014 surplus determined after the numbers are audited will be deposited in the Rainy Day Fund.
General fund revenue for fiscal 2014 is expected to be $116 million below the original budget plan. The largest shortfall in 2014 was the income tax, which underperformed by about $176 million, or 2 percent lower than anticipated. Both the sales tax and the corporation tax exceeded initial budget estimates by $65.6 million and $42.5 million respectively, according to Lembo.
Overall, general fund spending for 2014 is expected to be $144 million below the original budget plan.
None of this changes what’s in store for lawmakers and the governor in fiscal year 2016.
According to the Office of Fiscal Analysis, the state faces a $1.278 billion deficit in 2016 and a $1.5 billion deficit in 2017.