|STATE OF CONNECTICUT|
THE STATE COMPTROLLER
LETTER OF TRANSMITTAL
December 31, 2010
The Honorable M. Jodi Rell
Governor of the State of Connecticut
Dear Governor Rell:
I write to provide you with the Annual Report of the State Comptroller for Fiscal Year 2010. These statements have been prepared on the budgetary, modified cash basis of accounting.
For Fiscal Year 2010, General Fund expenditures exceeded regular operating revenue by $843.1 million. The operating shortfall in the General Fund was more than offset by net transfers of $1,323.6 million. Budget Reserve Fund transfers represented $1,278.5 million of the total Fiscal Year 2010 transfer activity. The remaining balance in the Budget Reserve Fund is $103.3 million, which is dedicated for use in Fiscal Year 2011.
After adjusting for transfers and other actions as detailed on Schedule B-1, the General Fund ended Fiscal Year 2010 with a balance of $449.9 million. This balance has been reserved for General Fund operations in Fiscal Year 2011.
Total General Fund spending in Fiscal Year 2010 was $26.8 million below the prior fiscal year, a decline of 0.2 percent. The lack of growth was partially attributable to payment deferrals; however even after adjusting for the deferrals, spending growth was historically low. By contrast, in the three fiscal years preceding Fiscal Year 2010, General Fund spending increased at an average annual rate of 6 percent, adding $2.7 billion in expenditures over the period.
In the five largest General Fund spending categories-Medicaid, state employee salary and wages, education equalization grants to towns, debt service payments, and higher education grants-only debt service posted noteworthy growth in Fiscal Year 2010 up 6.5 percent or $89.3 million from Fiscal Year 2009. The other four spending categories posted a combined decline in outlays of $204 million from the prior year. The largest drop was in state employee salary and wages, which was down $188.5 million.
General Fund revenue in Fiscal Year 2010 increased $1,987.7 million or 12.7
percent. The largest portion of this increase was attributable to transfers,
most notably transfers from the Budget Reserve Fund as discussed above. In
addition, tax and fee increases enacted in 2009 contributed to the growth in
General Fund revenue from taxes underperformed budget expectations by $33.5 million. Despite notable tax increases, General Fund tax revenue growth was 1.7 percent between Fiscal Years 2009 and 2010, which was well below the historical growth rate of over 5 percent. General Fund tax revenue in 2010 was $1.6 billion below Fiscal Year 2008 receipts.
Non-tax General Fund revenue was largely supported by federal stimulus dollars. General Fund federal grant receipts grew by $446.8 million or 12.3 percent in Fiscal Year 2010 as compared to the prior year. General Fund federal grant receipts in Fiscal Year 2010 were $1.4 billion higher than in Fiscal Year 2008.
The stagnant tax revenues experienced in Fiscal Year 2010 were the result of a poor economy through much of the fiscal year. During Fiscal Year 2010, Connecticut lost 1,800 payroll jobs. During the first six months of the fiscal year job losses totaled 15,100 payroll positions; in the second half of the fiscal year the state regained 13,300 of the lost jobs. The unemployment rate for Connecticut at the end of Fiscal Year 2010 was 8.8 percent. Nationally, monthly retail sales were up 5.2 percent at the close of Fiscal Year 2010 from the same period one year ago. Again, retail sales growth was not experienced until the latter part of the fiscal year. Existing home sales and the stock market both rebounded during Fiscal Year 2010. The overall economy as measured by Gross Domestic Product showed solid growth in the middle of Fiscal Year 2010, but had slowed to growth of just 1.6 percent in the last quarter of the fiscal year.
The Transportation Fund ended Fiscal Year 2010 with a balance of $105.4 million. The Fiscal Year 2010 ending balance was increased by $11.8 million through the year?s operations. Fiscal Year 2010 expenditures were $26.8 million or 2.4 percent below the prior year; revenues were $85.2 million or 8.2 percent above the prior year?s level.
This report is available on-line at my web site or can be obtained in hard
copy upon specific request.