The governor’s budget office is predicting the state will end the year with enough of a surplus to deposit $3.7 billion in its unfunded liabilities.
The Office of Policy and Management said earlier this week that the state has $86.2 million more now than it had on May 20, which means the state can transfer more than $313 million a year for the next 25 years into the pension fund. That’s in addition to the $1.7 billion in additional pension payments over the last two years, lowering the pension debt by $144.5 million a year over the next 25 years.
“Our unfunded liabilities have held our state back for far too long. Businesses and credit rating agencies recognize Connecticut is now taking significant action to reduce our unfunded liabilities, actions that will result in hundreds of millions of dollars in savings for taxpayers and businesses over the coming decades,” Gov. Ned Lamont said. “By paying down our unfunded liabilities today, we are ensuring a brighter future for our children and grandchildren.”
The predictability will be appreciated by some.
“The credit rating agencies want us to continue paying down our debts, recognizing that we have done so as reflected by recent credit rating upgrades. With economic uncertainty resulting from the war in Ukraine, supply chain disruptions, and the ongoing pandemic we are well prepared if there is a future economic downturn with historic levels in our rainy day fund,” OPM Secretary Jeffrey Beckham said.
Increased revenue, decreased expenses
The latest budget projections show the state increased revenue by about $81 million and reduced expenses by more than $1.4 million or about $5.2 million over last month’s forecast.
Even the Special Transportation Fund has a surplus of around $167 million.
Republicans have argued Connecticut needs to give some of this money back to the taxpayers through tax relief.
Democratic lawmakers argue the budget is right where it needs to be.
Earlier this year the legislature adjusted the two-year budget to offer around $600 million in tax relief, including a child tax rebate, property tax credit, and a reduction in the car tax.
“The biggest tragedy in all of this is what’s different from any other year is we have a record surplus of money sitting in the bank and these guys won’t release the money back to the people,” House Minority Leader Vincent Candelora has said. “When people realize that there are billions of dollars the state of Connecticut is holding onto, that this governor continues to brag about but not giving it back to them is problematic.”
Lamont argued that Connecticut residents were about to receive some tax relief due to the recently adopted state budget.
“I think right now you’re going to have a significant tax cut dropping into people’s pockets over the next two to three months,” Lamont said. “I think it’s going to represent $1,000 to most folks and that will make a real difference now, not at the end of the year.”