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WYMAN ISSUES MIXED REPORT CARD ON STATE'S FINANCES IN ANNUAL COMPTROLLER'S REPORT

Contact: Steve Jensen
860-702-3308 or 860-702-3301

The fiscal performance of Connecticut's state government received mixed grades in a report card issued today by State Comptroller Nancy Wyman in her annual analysis of the state's finances, The Comptroller's Report: Connecticut's Economic Health.

While the national and state economies continue to outperform all expectations, Wyman said, state government has not taken full advantage of the opportunity to safeguard Connecticut's financial future. She urged policymakers to capitalize on the strength of the economy, and the state's projected $225 million surplus, by addressing the state's growing debt and deficiencies in other significant budget areas.

"Connecticut has finally become a full partner in the longest period of sustained national economic growth in three decades," Wyman said. "Our citizens have worked hard to bring this state back from recession. But we need to continue to take steps to build a secure financial future in which our children and grandchildren can thrive, instead of running up the debt and sticking them with the bill."

Wyman gave the state fair to poor grades for its financial practices, growing debt, and overall financial position. She also noted that while Connecticut is one of the wealthiest states in the nation, it also carries the fifth-highest debt load ($16.3 billion). Nearly one of every ten dollars the state spends goes toward principal and interest on the debt, instead of being available for tax relief or programs to help state residents.

Higher grades were given to the national economy, and to the state's economy and 1997 fiscal performance.

Comptroller Wyman said economic expansion is the driving force behind the state's extraordinarily strong revenues from the income tax (nearly $3.5 billion this fiscal year), which is the major reason for this year's projected $225 million surplus. Growth in wages, salaries and employment are robust, as well as in new business and housing starts.

The Comptroller's Report also details several initiatives Wyman is undertaking to improve the state's overall fiscal health, including:

Tax Rebates - Comptroller Wyman has proposed creating a Tax Relief Fund that would return a portion of any year-end state surplus to taxpayers in the form of a rebate check, to be spent however they choose. Other components of the plan would address the state's long-term financial stability. In the first year of the plan, rebates would be paid from the surplus remaining after the state's emergency Rainy Day Fund - currrently about $130 million short of its statutory level of about $450 million - is filled. In subsequent years, rebates would be distributed from 90 percent of the surplus, with the other 10 percent going to reduce state debt.
Budget and Performance Accountability - Comptroller Wyman will continue her advocacy for the state to convert its budgeting system to Generally Accepted Accounting Principles (GAAP), the method used by businesses and required of all Connecticut municipalities. The state's current system counts revenues well before they are received, but does not record expenses until a check is actually cut, distorting the state's true financial position. GAAP is honest budgeting, measuring expenses when they actually occur, and revenues only when they are actually earned. The Comptroller's performance budgeting initiative will help policymakers determine which state programs are working and which are failing.
Health Care Issues - In the past year, Comptroller Wyman has been a leader in expanding health-care coverage to thousands of uninsured children. She also filed a class action lawsuit against Anthem Blue Cross/Blue Shield of Connecticut on behalf of 900,000 state residents, seeking to force the company to return a $270 million surplus to its members instead of taking the money to its new corporate headquarters in Indiana. The Comptroller will continue to monitor these issues and seek new opportunities to provide fair and affordable health coverage for Connecticut's citizens.

The Comptroller's Report: Connecticut's Economic Health, is available on our Internet Home Page, at the address
http://vvv.osc.state.ct.us/public/reports/98cmprpt/crpttitl.htm

For Immediate Release
January 29, 1998

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