HARTFORD, CT — Gov. Dannel P. Malloy’s budget office projected Thursday that Connecticut will have over $2 billion in the Rainy Day Fund by June 30.
It’s estimating that, under the new budget rules, $648 million will be deposited in the Rainy Day Fund to bring the reserve fund up to a healthy 10 percent of the general fund.
In his monthly letter to State Comptroller Kevin Lembo, Office of Policy and Management Secretary Ben Barnes said the adopted budget assumes a decline in the estimates and finals portion of the personal income tax.
However, “we have revised our estimate upward by $200 million to reflect collections that are running ahead of FY 2018, as well as favorable economic conditions,” Barnes wrote. “Even with this change, our projection does not reflect an increase in collections over last year’s levels. The increase in Estimates and Finals collections will, however, boost the anticipated transfer to the Budget Reserve Fund (BRF) pursuant to the statutory volatility cap by a like amount.”
The new volatility cap requires that any revenue from the pass-through entity tax and the estimates and finals portion of the personal income tax that exceeds $3.19 billion be deposited in the Rainy Day Fund.
However, spending is still on track to slightly outpace what was budgeted — exceeding the budgeted plan by $11.3 million.
According to Barnes’ letter, the Office of the Chief Medical Examiner is running a $600,000 deficiency. The Department of Correction is $26.5 million short of what was projected, and the Department of Children and Families is $8.4 million behind its spending targets.
When the General Assembly adjusted and adopted the 2019 budget in May, it was projected to end the year with a $2 billion deficit.
Earlier in the day Malloy said a substantial amount of the deficit in future years is attributed to future tax cuts. Malloy, who was largely left out of budget negotiations, said he urged the legislature to eliminate those.
“Let’s stop passing future tax cuts, particularly when we know we’re not going to be able to make them,” Malloy said. “Back those tax cuts out of the next budget and that deficit drops precipitously.”
The budget the legislature passed May 9 included $120 million in tax cuts in the first year and $163 million in the second year.
Malloy said the state is also seeing a level of economic activity and employment that will reduce the deficit.
Malloy is leaving office in January and it will be up to the next governor and General Assembly to balance the budget.