STATE OF CONNECTICUT
THE STATE COMPTROLLER
|WYMAN PROJECTS $940.5 MILLION SURPLUS FOR 2006
Rainy Day Fund Will Reach More Than $1 Billion for First Time
|Contact: Steve Jensen|
State Comptroller Nancy Wyman today projected the state will end the 2006 fiscal year with a budget surplus of $940.5 million.
The main source of the surplus is higher-than-expected revenue from the income tax, including the payroll tax and capital gains paid by investors. The income tax will bring in about $6 billion this year - about $384 million more than original estimates.
"The good news about this surplus is that nearly half of it will be put into the Rainy Day Fund to protect taxpayers against an inevitable future economic slowdown," Wyman said.
With the expected deposit of $455 million of surplus revenue, the Rainy Day Fund will reach more than $1 billion for the first time. That is slightly less than 10 percent of the current $15.2 billion state budget.
Another major contributor to the surplus is the tax that corporations pay on their profits. Corporate profits had been fairly weak for most of 2005, but have grown by an average of 13 percent over the last two fiscal quarters. Collection of the profits tax is now expected to total more than $780 million, about $135 million more than was expected.
While corporate profits are rebounding, other economic indicators such as the housing market and consumer spending are showing signs of weakening.
Connecticut also is still seeing fairly sluggish job growth, gaining a net total of about 7,000 jobs for the year. That is about half the growth rate of the 2005 fiscal year. The state's unemployment rate of 4.1 percent remains lower than the national average of 4.6 percent.
Also contributing to the surplus are higher-than-expected energy prices, which are straining consumers but are at the same time producing higher receipts of the taxes paid by oil and utility companies. That tax is expected to generate about $212 million in revenue.
The state also continues to see strong revenues from casino gaming ($427 million) and from the inheritance and estate tax ($196 million).
The budget approved by the Legislature this spring called for $245 million of the surplus to be put into the underfunded teachers' pension plan and $85.5 million to pay economic-recovery notes issued to deal with a budget deficit in 2002.
The State Comptroller appreciates input on this and other issues from residents of the state. Please feel free to contact her office by phone - (860) 702-3300; mail - OSC, 55 Elm Street, Hartford, CT 06106; or, via E-mail - firstname.lastname@example.org
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