Surplus is State's Highest Since 1987;
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The state of Connecticut ended the fiscal year with a general-fund surplus of nearly $250 million, the largest such surplus since 1987, State Comptroller Nancy Wyman reported today.
Wyman repeated her advice to the legislature and the governor not to spend the surplus on programs that will have recurring costs and said it would be better left in the state's rainy-day fund.
The surplus in the general fund was $249,967,339. State law dictates that $89.5 million of the total will be used to pay principal and interest from the accumulated debt of 1991 and that the remaining $160.5 million be deposited in the Budget Reserve Fund.
Wyman said it's especially important not to spend the surplus on recurring programs because much of it represents income-tax collections from booming financial markets. As such, there is no guarantee that similar amounts will be collected in the future, rendering the revenue a one-time occurrence. "The one-time nature of these receipts may prove problematic in meeting revenue targets for the current fiscal year," which ends June 30, 1997, Wyman said.
Wyman also praised Gov. John Rowland's administration for increasing lapses -- unspent state agency funds -- $56 million for the year.
In a separate letter describing the situation for the fiscal year ending June 30, 1997, Wyman said she remains concerned about economic indicators pointing to slower growth in the second half of 1996. State tax projections, the Comptroller said, may be too optimistic. And Wyman projected deficiencies in accounts for Medicaid and home placement of children totaling $86 million.
In addition to the $250 million surplus estimate, which is based on the so-called "modified cash basis" of accounting prescribed under state law, the Comptroller's office publishes an annual estimate of the accumulated deficit (or surplus) under Generally Accepted Accounting Principles, of GAAP. The cumulative general fund GAAP deficit at June 30, 1996, is projected at $598 million. According to a 1995 law, GAAP will become the official accounting method of the state beginning July 1, 1997. Under the law, the GAAP deficit will begin to be amortized over a 15-year period starting July 1, 1998.
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For Immediate Release
September 3, 1996
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