HARTFORD, CT — The Office of Policy and Management isn’t necessarily buying an argument from nonpartisan budget analysts that tax revenue will drop following the April 15 tax deadline.
Secretary of the Office of Policy and Management Ben Barnes wrote in his letter to state Comptroller Kevin Lembo Monday that they are using the January revenue numbers to project that the state will end the year with a $22 million surplus.
“As noted in previous forecasts, April collections reflecting final income tax receipts will be the most significant factor in determining year-end balance,” Barnes wrote.
He estimated that the state will end the year with a $22 million surplus, which is much different than the deficit the Office of Fiscal Analysis estimated just last month.
In its Feb. 27 report to lawmakers, the Office of Fiscal Analysis predicted the state would end the year with a $65.2 million deficit.
In their report, legislative budget analysts attribute the deficit to a projected $60 million drop in personal income tax collections.
Estimated personal income tax payments are down approximately 9 percent year-over-year, but 90 percent of that variance is due to the top 100 taxpayers with the remainder of filers trending flat, according to legislative budget analysts. Last year, Connecticut lost more than $217 million in tax revenue because the top 50 taxpayers lost more than $2.9 billion in income.
OFA said that “the majority of taxpayers are utilizing ‘safe harbor’ provisions in the tax code which may be masking underlying strength for those filers.”
The withholding portion of the income tax was also down over the past month, which prompted OFA to reduce the growth rate from 2.7 to 2.2 percent and lower its expectations by $30 million.
Barnes avoids projecting any revenue trends in the monthly letter he sent Monday to Lembo.
OFA will release their latest projections next week and Lembo will unveil his budget estimates on April 1.