STATE OF CONNECTICUT
THE STATE COMPTROLLER
|Comptroller Wyman Projects 2008 Surplus at $100 Million|
|Contact: Steve Jensen|
The Honorable M. Jodi Rell
Governor of the State of Connecticut
Dear Governor Rell:
I write to provide you with General and Transportation Fund financial statements For Fiscal Year 2008 based on activity through September 30, 2007.
The Office of Policy and Management has projected a General Fund surplus for Fiscal Year 2008 of $88 million. The estimated Transportation Fund balance for Fiscal Year 2008 is $221 million. The OPM General Fund projection has increased by $83.1 million since last month with revenue gains of $104 million partially offset by expenditure increases of $20.9 million.
I am estimating a General Fund surplus of $100 million, an increase of $95.1 million from last month. My variance from OPM results from differences in revenue projections. My income tax projection exceeds the OPM estimate by $29 million. This is partially offset by corporation tax projections that are $15 million lower than OPM, and refunds that are $10 million higher. My estimate for gaming transfers and interest income are also above the OPM projections by $6 million and $8 million respectively. I am in agreement with OPM's Transportation Fund figure.
The original General Fund budget plan for Fiscal Year 2008 anticipated a small surplus of $800,000. Current OPM projections show $122 million in additional revenue, which is partially offset by deficiencies of $25 million and miscellaneous expenditures of $9.7 million. My projections reflect $134 million in additional revenue. The largest revenue gain, as in past years, is within the income tax. The attached Exhibit C contains revenue detail through the end of September.
Deficiencies are projected in the Department of Corrections ($16 million) due to increases in the prison population and in the Department of Mental Health and Addiction Services ($9 million) due to higher personnel costs and overtime. Adjudicated claims, escheat payments and other adjustments account for the $9.7 million in miscellaneous expenditures.
The Transportation Fund began Fiscal Year 2008 with an estimated balance of $221 million comprised of a Fiscal Year 2007 balance of $193 million and a Fiscal Year 2008 operating surplus of $28 million. No significant adjustments to the original budget estimates have been made this month.
Overall the economy is showing mixed signs. In the first three months of Fiscal Year 2008 the state added 3,000 payroll jobs; however, the rate of employment growth appears to be slowing. The state's unemployment rate has increased slightly over the past six months from 4.1 percent to 4.5 percent. Consumer spending has been somewhat off of last year's pace, but has exceeded some forecasts expanding 5.7 percent in the 2nd quarter. Advance retail sales for September were up 5 percent from last year. Corporate profits while showing positive growth in the 2nd quarter of 2007 were well off the pace set over the past several years. Consensus forecasts see slow growth in corporate profits over the next twelve months; however, it is noteworthy that 3rd quarter profits reported by blue chip companies have exceeded estimates and have had a positive impact on equities. Complete 3rd quarter results are not yet available Existing home sales in Connecticut have been weak; however, they have exceeded the activity for the New England region. Home prices have been flat. Nationally, sales of existing homes fell 8 percent in September to the lowest level in eight years as home inventories rose to a 20 year high. In Connecticut, existing home sales declined 4.8 percent in the 2nd quarter and permits also declined. The leading index of economic indicators rebounded modestly in September.
I also issue a Comprehensive Annual Financial Report. This report is prepared in accordance with Generally Accepted Accounting Principles (GAAP). The cumulative General Fund deficit as of June 30, 2006 was $1.059 billion, an increase of $21 million from the prior year. The shortfall as of June 30, 2005 was $1.038 billion, an increase of $137 million from Fiscal Year 2004. I will provide final GAAP figures for Fiscal Year 2007 on or before February 28, 2008.
I would be happy to provide any additional information that you require, or to discuss this report with you at your convenience.
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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