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WYMAN PROJECTS $193 MILLION SURPLUS DRIVEN BY INCOME TAX RECEIPTS

Contact: Kevin Lembo
860-702-3306/3301

State Comptroller Nancy Wyman today projected a fiscal year-end General Fund surplus of $193 million, due mostly to continued strong revenues from the state income tax.

Wyman, in her monthly report to the Governor on the state's finances, also cautioned that overspending in the current fiscal year could result in the state's constitutional spending cap being exceeded, the second consecutive year that this would have occurred.

Wyman said the state is expected to overspend by nearly $112 million.

"This level of spending will, for the second straight year, exceed the statutory spending cap calculation for budget growth. Last fiscal year the cap was exceeded by $194.1 million. Based on this year's current projections, spending will be $29.5 million above the cap," Wyman said.

The additional spending resulted from the appropriation of $80 million for the New England Patriots sports stadium; $17.6 million for the Department of Children and Families; $6,416,000 for the State Employee Health Insurance Account; $1 million for the Teacher's Retirement Board; $1.3 million for the Department of Mental Health and Addiction Services; $50,000 for the Office of the Child Advocate; $19,000 for the Ethics Commission; and miscellaneous adjustments of $5.4 million, Wyman said.

Wyman projected that the income tax would generate almost $210 million in higher than anticipated revenues. Also contributing to the surplus is the corporation tax ($53.6 million higher than budgeted); the sales tax ($21.1 million above budget); and tax refund payments ($52.6 million less than budgeted).

"While the income tax continues to produce strong revenues, there is evidence that its growth is slowing as the economy nears full employment," Wyman said. "There are now clear signs that the exceptional revenue growth that we have been experiencing is slowing."

During the first five months of the last fiscal year, income tax receipts grew 13.7 percent. During the same period this year, the growth rate was 4.5 percent. This corresponds to a reduced rate of growth in state employment, from over 2 percent last fiscal year to half that level this year.

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For Immediate Release
January 4, 1999

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