State of Connecticut

Comptroller's Seal
STATE OF CONNECTICUT
NANCY WYMAN
COMPTROLLER

OFFICE OF THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775

MARK OJAKIAN
DEPUTY COMPTROLLER

LETTER OF TRANSMITTAL

October 10, 2006

The Honorable M. Jodi Rell
Governor of the State of Connecticut
State Capitol
Hartford, Connecticut

Dear Governor Rell:

I write to provide you with the Annual Report of the State Comptroller for Fiscal Year 2005. The statements have been prepared on the budgetary, modified cash basis of accounting as detailed on the inside front cover of this report.

The General Fund ended Fiscal Year 2005 with a surplus of $363,863,247. The ending balance in the Transportation Fund for Fiscal Year 2005 was $133,067,491. The entire General Fund surplus For Fiscal Year 2005 was transferred into the Budget Reserve Fund in accordance with Connecticut General Statutes, Section 4-30a. Prior to this deposit, the Budget Reserve Fund had a balance of $302,155,301. With this deposit, the reserve fund totaled $666,018,548 at the close of Fiscal Year 2005.

Within the General Fund, $694,422,468 in Fiscal Year 2005 spending authority was carried forward to Fiscal Year 2006. Absent this carry forward, these appropriations would have lapsed thus increasing Fiscal Year 2005 surplus. Between Fiscal Years 2004 and 2005, spending authority brought forward to the next fiscal year increased by $481,560,411. This number indicates the growth in the amount of planned future fiscal year spending that is covered by prior year revenue. The use of prior year revenue to fund current year spending can result in structural budget deficits to the extent that the spending is recurring.

Between Fiscal Years 2004 and 2005, General Fund expenditures grew by $786.8 million or 6.3 percent. Double digit rates of growth occurred in the areas of health care, conservation and development, and in the judicial and legislative branches of government. Lower than average growth rates were recorded in education, human services and general government. Transportation Fund spending grew 4.4 percent or by $39.5 million in Fiscal Year 2005.

General Fund revenues in Fiscal Year 2004 increased by $939 million or 7.2 percent from the prior year. Two-thirds of the revenue increase was attributable to the income tax, which experienced growth of 12.7 percent from the last fiscal year.

Growth was experienced in all major General Fund tax categories. In Fiscal Year 2005, Transportation Fund revenue increased $35.9 million or 4 percent.

Connecticut added 14,700 jobs to payrolls in Fiscal Year 2005. The state's unemployment rate was below 5 percent for the majority of the fiscal year. The state's Personal income rose 5.3 percent in Fiscal Year 2005. Gross State Product expanded 6.6 percent in 2005.

The Transportation Fund ended Fiscal Year 2005 with a positive balance of $133,067,491. This is a fund balance increase of $3,795,633 through Fiscal Year 2005 operations.

I would be happy to discuss any information contained in this report with you at your convenience.

Sincerely,

Nancy Wyman
State Comptroller