Comptroller Kevin Lembo sees bump up in projected surplus

State officials had predicted anticipated tax revenue of $213.1 million last month, but Comptroller Kevin Lembo today says it jumped by $232.9 million, bringing the projected surplus in the budget that runs through June 30 up to $506.1 million. In a letter to Gov. Dannel P. Malloy, Lembo told his fellow Democrat that he approves of the governor’s plan to invest most of the surplus in budget reserves and debt relief.

“As you know, I have advocated for the deposit of General Fund surplus dollars to the state’s Budget Reserve Fund in accordance with current law,” Lembo wrote. “I have advocated for a reserve level of 15 percent of spending, which is also endorsed within your surplus distribution plan. Significant dollars in reserve will guard against future tax increases and service reductions during inevitable future recessionary cycles. As the disposition of the surplus is debated, policy makers should remember that the Fiscal Year 2014 General Fund budget relies on $190.8 million in nonrecurring revenue reserved from the prior year and $112.4 million in carry forward funding. In addition, the majority of the surplus dollars in Fiscal Year 2014 result from a one-time tax amnesty program, and from the most volatile component of the income tax, which relies on strong stock market performance. Finally, both OFA (Office of Fiscal Analysis) and OPM have estimated budget shortfalls beginning in Fiscal Year 2016 if current policies remain unchanged. I recommend that any General Fund surplus realized by the close of Fiscal Year 2014 in excess of this month’s estimate be deposited directly to the Budget Reserve Fund.”

 

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