Connecticut is beginning the first month of fiscal year 2019 with a projected budget surplus of $137.9 million.
According to a letter from Secretary of the Office of Policy and Management Ben Barnes to Comptroller Kevin Lembo, projected revenues are “up by a net $162.9 million relative to the adopted budget plan, largely due to higher-than-anticipated collections in FY 2018 that form the basis of our FY 2019 forecast.” Barnes noted that the largest revision in the revenue projections involved the withholding portion of the Personal Income Tax, which is up $96.9 million relative to the adopted budget, followed by a $58.3 million upward revision of the Sales and Use Tax.
“The estimates and finals portion of the Personal Income Tax has also been revised upward by $84.9 million, but this sum is anticipated to be transferred to the Budget Reserve Fund (BRF) pursuant to the statutory volatility cap,” Barnes wrote. “As a result, we now anticipate that the transfer to the BRF as a result of the volatility cap will be $448.0 million in FY 2019, which will increase our reserves to a projected $1.6 billion by the end of FY 2019.”
However, Barnes added that two state agencies are projecting shortfalls: the Department of Correction at $23.5 million and the Department of Children and Families at $8 million. Shortfalls totaling $2.33 million are also forecast for four appropriated funds: the Banking Fund (underfunded by $370,108), the Insurance Fund (underfunded by $178,911), the Consumer Counsel and Public Utility Control Fund (underfunded by $92,876) and the Workers’ Compensation Fund (underfunded by $1.6 million).
Barnes also stressed that his projections would “undoubtedly be revised to reflect the impact of changes in the economy, expenditure patterns and/or other factors” as the fiscal year progresses.