WYMAN SAYS YEAR-END BUDGET SURPLUS REDUCED SHARPLY BY SPENDING ON STATE PROGRAMS
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State Comptroller Nancy Wyman today projected the state will end the fiscal year with a budget surplus of $216.9 million, and expressed concern about the state's high levels of spending and bonded debt.
Wyman said the surplus would have reached nearly $500 million if about $283 million of it had not been appropriated last month for various programs.
The major programs funded by the $283 million appropriation from the surplus include $116.5 million for tax rebates; $80 million for the Year 2000 computer conversion; $32 million for the timely payment of Medicaid billings; $40 million for additional payments to towns in lieu of property taxes and $8 million for additional property tax relief for the elderly.
Most of the remaining $216.9 million surplus will be used to fill the state's emergency Rainy Day Fund, and a small percentage will be put toward paying down state debt.
Overall, General Fund spending will end the year about 7 percent higher than last year - a historically high level of spending growth that Wyman said cannot be sustained. The current level of spending is possible only because of the unexpectedly strong revenues from taxes, she said, especially the income and sales taxes.
Wyman estimated that the income tax will bring in about $3.6 billion this year, and the sales tax about $2.8 billion.
"Our state's positive budget position continues to hinge on tax receipt growth that more than compensates for the increases in spending," Wyman said. "But as the state reaches full employment and growth in the financial market slows, revenue gains will be far less dramatic. We need tighter controls on spending if we want to avoid deficits in the future."
Wyman said she also is concerned about the high level of the state's bonded debt, which at $9.2 billion is the highest per-capita debt in the country. She noted that while a small portion of the year-end surplus ($55.2 million) is dedicated to payments on the debt, new bonding authorizations for next fiscal year will add another $1.2 billion to the bill.
"It makes no financial sense to pay off a little of the state's credit card and then turn around and add another billion dollars to it," Wyman said. "I think we need to re-examine the type of projects that we pay for through bonding in this state."
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For Immediate Release
June 1, 1998
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