Connecticut’s budget continues to spill black ink, while Republicans argue that some of that surplus should go back to taxpayers.
The Office of Policy and Management reported that Connecticut will end the year with a $445 million surplus, which is up $146 million over the $299 million surplus built into the budget approved in May.
General Fund revenues have been revised upward by $125.2 million this month compared to last month and if all stays on track Connecticut will end the fiscal year with a $2.3 billion surplus.
Still, OPM Secretary Jeff Beckham urged caution in his monthly letter to state Comptroller Natalie Braswell.
“As the year progresses, these estimates, which are coming early in the fiscal year, will continue to be revised to reflect the impact of changes in the economy, expenditure patterns, and other factors,” Beckham said.
State finances have exceeded expectations and allowed the rainy day fund to amount to 15% of annual operating costs. Those surpluses in turn have been used to paydown the state’s pension debt.
On Wednesday, Braswell certified that $2.8 billion captured from volatile revenue sources during 2022 is now available to pay down pension debt.
“The fund balance and the end of FY 2023 will exceed $5.6 billion, or 25.4 percent of net General Fund appropriations for the current year,” Beckham wrote. The maximum allowed by law is 15% which means anything over that will automatically be used to pay down pension debt.
Republican gubernatorial candidate Bob Stefanowski unveiled a proposal Tuesday that would give some of that money back to taxpayers.
He said that his $2 billion tax-cut plan should result in an average of $2,000 being returned to Connecticut households. “We’re gonna give it back to the people who need it.” He said that those tax cuts will be paid for largely by depleting the state’s rainy day fund “surplus.”
“It’s wrong to keep that only up there [in Hartford] when people are struggling,” Stefanowski said.
Stefanowski’s proposal would leave about $2 billion in the rainy day fund.
Democrats have called it irresponsible.
New Haven Mayor Justin Elicker said draining the rainy day fund would be devastating for municipalities.
It would “cause many, many challenges financially for our municipalities” by throwing into doubt future state finances, he argued.