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

December 31, 2009

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 2009. The report has been prepared on a modified cash basis of accounting, which is the basis on which the state budget is formulated. I also issue a Comprehensive Annual Financial Report that is prepared in accordance with Generally Accepted Accounting Principles (GAAP).

Fiscal Year 2009 ended with a General Fund deficit of $947,578,504. General Fund expenditures exceeded revenues in Fiscal Year 2009 by $1,534,054,000. A portion of Fiscal Year 2009 spending was funded through the use of reserves that were accumulated during prior fiscal years. The release of these reserves reduced the Fiscal Year 2009 deficit to the reported level. Schedule B-1 provides the adjustments to the operating deficit in the General Fund.

The State Treasurer was authorized within Public Act 09-2 of the June Special Session, "An Act Authorizing Economic Recovery Notes" to issue short-term debt up to the total amount of the General Fund deficit for Fiscal Year 2009.

General Fund revenues in Fiscal Year 2009 totaled $15,700,800,884, which was more than $1.2 billion short of original budget projections. Realized General Fund revenues in Fiscal Year 2009 were 4.4 percent below the prior year.

The income tax alone fell $1.1 billion below Fiscal Year 2008 receipts. Declines were experienced in almost all revenue categories. Increased federal assistance helped to offset a portion of the revenue shortfall. Federal assistance grew by more than $900 million from the prior year.

Overall, Fiscal Year 2009 General Fund revenue posted a decline of $718 million from the prior fiscal year. Over the past three fiscal years, revenue had grown by an average of almost $800 million per year, or over 5 percent annually. The decline in revenue in Fiscal Year 2009 was directly attributable to the national economic down turn. During the course of the Fiscal Year 2009, Connecticut lost 67,000 payroll jobs and saw its unemployment rate rise to 7.9 percent.

General Fund Spending was $17,234,854,884 in Fiscal Year 2009. This was an increase of $607 million or 3.7 percent from the prior year's spending. In the three fiscal year's preceding Fiscal Year 2009, General Fund spending grew at an annual rate of almost 8 percent.

During the course of Fiscal Year 2009 several deficit mitigation plans were implemented. These mitigation plans relied on revenue enhancements, transfers and spending reductions. Total mitigation efforts approached $600 million in Fiscal Year 2009. Most of the mitigation relied on one-time revenues or reductions rather than on recurring, structural budget changes. Forced budget savings exceeded the initial target by $354 million.

Transportation Fund operations in Fiscal Year 2009 reduced the accumulated fund balance of $178,269,566 by $84,699,136 to a July 1, 2009 balance of $93,570,430.

Transportation Fund revenues totaled $1,032,704,135 in Fiscal Year 2009 a decline of $30.9 million or 2.9 percent from the prior fiscal year. Transportation Fund spending amounted to $1,128,201,531 in Fiscal Year 2009 increasing $31.3 million from the prior year, which is a change of 2.9 percent. Adjustments to operations are shown on Schedule C-1.

If you have any questions regarding this report, please contact my office.

Sincerely,

Nancy Wyman
State Comptroller