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HARTFORD, CT — It’s still unclear if Connecticut’s borrowing capacity was limited by language adopted as part of the May budget adjustments, but Wall Street did appreciate its recent $200 million contribution to the Rainy Day Fund.

As a result, the state is expected to end the year with $2 billion in the Rainy Day Fund. That’s $2 billion the next state governor and legislature can use to balance the state budget, which over two years was $4.6 billion in deficit when it was adopted on May 9.

“The balance in the fund would be the highest ever, a credit positive for a state that has experienced a stagnant economy and numerous financial challenges,” Marcia Van Wagner, vice president and senior credit officer for Moody’s Investors Service, said Friday in an analysis.

Some of the improvement is because Connecticut’s estimates and final portions of personal income tax collections are trending higher than year-ago levels.

Some of that can be attributed to changes made at the federal level, which required the windfall from the repatriation of hedge fund-related foreign earnings to be deposited in the Rainy Day Fund, along with accelerating the realization of capital gains at the end of 2017 in order to take advantage of the disappearing state and local tax deduction on federal tax returns.

“While there is no similar incentive to accelerate capital gains in fiscal 2019, the continuing strong stock market and other positive economic developments in the state are bolstering revenues,” Van Wagner said. “The pace of employment growth, though still lagging nationwide trends, has picked up and appears to be returning to levels the state experienced in earlier years of the economic recovery. The forecast adjustment follows a $262 million upward adjustment in fiscal 2019 revenues the budget office announced in August. That adjustment was primarily due to improved collections in the withholding component of personal income taxes and in sales tax collections.”

Gov. Dannel P. Malloy reminded the state where the glass is always half-empty that this is good news.

“This is a great, objective piece of news that affirms the positive economic and budget information we have received over the past several months,” Malloy said.“The fact is that when I was sworn into office in January 2011, Connecticut was still reeling from the Great Recession. The Budget Reserve Fund was absolutely empty, the state had more than $900 million of debt from deficit borrowing the year before, and we faced a formidable deficit.”

He said Connecticut has made a lot of progress since 2011 even if Republicans don’t want to admit it.

“We responded by mitigating the state’s exposure on some long term obligations, cutting expenditures by billions of dollars, shrinking the executive branch by more than 11 percent, paying off the deficit bonds, and restructuring our agreement with state employees,” Malloy said. “Now, we should all be proud to see the budget reserve fund grow to $2 billion- a record amount. Connecticut has many challenges ahead and this statement from Moody’s makes it clear that the work we have done is putting us on the right track.”

But Malloy wasn’t always a welcome presence. In 2017, legislative leaders kicked him out of budget negotiations. They found a way to balance the budget without doing some of what Malloy wanted.

As part of the bipartisan budget first adopted in October 2017, the state’s new volatility cap requires that revenue from the estimates and finals portion of the personal income tax and from the state’s new pass-through entity tax to be transferred to the rainy day fund when those revenues exceed $3.19 billion in 2019.

As for the error in the legislation related to bond covenants that state Treasurer Denise Nappier pointed out on Sept. 18, Van Wagner said it “is likely to limit the ability of the state to reach its capital investment goals,” and will “necessitate close management of its short-term cash flows, but would also somewhat reduce the state’s high-leverage profile.”

Both those things are “credit positive” for the state of Connecticut.