Lower Tax Refunds To Stretch Surplus, Comptroller Wyman Finds
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Despite overspending in several accounts, increased revenues will allow the state's general fund to run a surplus larger than previously expected for the year ending June 30, State Comptroller Nancy Wyman announced today in her monthly letter to the governor on state finances.
Spending is projected to be $182.9 million more than budgeted, Wyman said, but state income tax refunds will be $64 million lower than previously projected.
"The governor is fortunate that increased spending is covered by these increased revenues," Wyman said. Two-thirds of the excess spending is attributable to Medicaid ($80.4 million), foster care for children ($23 million) and University of Connecticut operations ($9.1 million). The Comptroller said she was especially concerned about an 11 percent increase in Medicaid spending for the AFDC population, since an apparent procedural error may have resulted in some double payments to insurers for behavioral health services. Wyman said she would continue to monitor the performance of the Department of Social Services' dealings with the issue.
Wyman projected the year-end surplus at $221.7 million but quickly pointed out that if the legislature approves Gov. John Rowland's plan to make $116.5 in financial transfers between fiscal years, the surplus would drop to $107.2 million. (The interyear transfers are included in the $189.2 excess spending figure.)
The figures bode well for biennial budget negotiations between the legislature and the governor's office, Comptroller Wyman said. "The good news is that the state is gaining jobs, wages are increasing, financial markets are fundamentally sound, and the national economy is continuing its solid growth," Wyman said. "The strong revenue performance of this past month signals future growth, and increases the likelihood that the governor and the legislature will be able to reach a budget agreement that provides much-needed tax relief while maintaining essential state services."
State tax refunds for the period ending April 15 were much lower than Wyman had previously projected, she said. "It appears that fewer people took advantage of the new $100 property tax credit than we expected, and that people had more income from investments than they might have expected," Wyman said in explaining likely reasons for the increased tax receipts. Income tax collections are projected to outstrip the budget by nearly 7 percent, Wyman noted. General fund revenues will be $325.8 million higher than the budget without including the interyear transfers, Wyman projected.
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For Immediate Release
May 1, 1997
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