Comptroller Projects $120 million General Fund Surplus
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State Comptroller Nancy Wyman is projecting a state general fund surplus of $120 million. Comptroller Wyman attributes the surplus to continued strong performance of the income tax and increased sales tax revenues due to improved national consumer confidence. "Connecticut is finally catching up to the rest of the country in terms of a strong economy," said Wyman. "We should see continued growth in the state through the remainder of this fiscal year."
In her monthly letter on state finances, Wyman projects that income tax collections would exceed estimates by $116.3 million and that sales taxes would be $98.3 million more than estimated for the year ending June 30, 1997.
Wyman also noted that state spending will likely be greater by about $81.5 million than the state budget estimate. The higher spending will come mostly for Medicaid ($44.2 million more than the budget), and in Department of Children and Families programs ($35 million more than planned).
Wyman said increased income tax collections were probably due to the continued rise in the stock market (up 25 percent from the same time last year), recent job growth in Connecticut, and a 2.5 percent increase in hourly earnings from last year. Sales tax estimates are higher because of strong preliminary sales figures for August and September and higher consumer confidence, Wyman wrote.
Repeating a warning she made when the year ending June 30, 1996 showed a surplus of $250 million, Wyman said policy makers should guard against using any surplus monies for new programs that may require large expenditures in future years. Economic performance in the out years may not be so robust.
State law requires that surpluses go to the rainy day, or budget reserve, fund until it reaches 5 percent of the general fund budget. "I would prefer to see that, after fulfilling our rainy-day fund commitment, we work toward reduction of our state debt or other long-term obligations," Wyman said. Debt service accounts for about 10 percent of state spending.
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For Immediate Release
November 1, 1996
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