HARTFORD, CT — All the revenue hasn’t been counted, but Department of Revenue Services Commissioner Scott Jackson said Monday he was optimistic about recent tax collections following the April 15 deadline.
The revenues won’t be reconciled until April 30, but Jackson said “receipts have been strong.”
Jackson said last year can’t be used as a baseline because of the repatriation of foreign dollars, but revenues are currently “above tax year 2016 numbers, which is sort of our last good benchmark.”
Office of Policy and Management Secretary Melissa McCaw reported Monday that the current fiscal year is expected to end with a $566.6 million surplus, which is up $70.2 million from last month’s forecast largely as a result of revised revenue projections.
Income tax receipts from paycheck withholding are running about $100 million ahead of projections, according to McCaw’s monthly letter to state Comptroller Kevin Lembo. And the Corporation Tax has been revised upward by $20.4 million to reflect stronger than anticipated March payments.
Based on its statutory volatility cap that means the state is on track to end the fiscal year with $2.6 billion in the Rainy Day Fund.
“You don’t touch a Rainy Day Fund,” Gov. Ned Lamont said Monday. “That Rainy Day Fund is supposed to be there for a rainy day.”
However, he’s not opposed to using some of the surplus to pay for things that aren’t part of the general operating budget.
For instance, Lamont has pitched using $20 million a year over the next five years to match the $100 million gift from Dalio Philanthropies. The General Assembly would still have to sign off on the use of that money.
Lamont said he doesn’t have a number in mind for how much of the surplus he’s willing to spend.
“What I don’t want to do is use a short-term surplus to pay for long-term operating costs,” Lamont said.
As far as this year’s tax receipts, “Now that we have a good idea, post-April 15th, of what our revenues look like, I think we know that they’re steady,” Lamont said.
The bipartisan budget and the volatility cap, which dampens the impact of the financial services sector on Connecticut’s revenue stream, may offer Connecticut more predictability than in past years.
Last year, Connecticut’s income tax revenues came in 46 percent better than initially projected, largely due to the 2017 federal tax law changes. The year before that revenues fell about $450 million below projections.
Lamont didn’t argue that the bipartisan budget over the last two years may have contributed to the increased predictability of the tax receipts. New York didn’t fare as well with revenues, coming in 4.7 percent below projections.
The legislative and executive branch reconcile revenue numbers three times a year, but April is the most important one because it’s the last one before lawmakers and the governor craft a state budget for the next two years.
The legislature’s two budget writing committees are expected to release their budgets the first week of May.