Connecticut eked out a $38.7 million surplus in the recently completed fiscal year, though the state still faces multibillion-dollar deficits moving forward.
According to Comptroller Kevin Lembo, the state”™s budget reserve fund, also known as the rainy day fund (RDF), exceeded its statutory cap of 15% of general fund expenditures, meaning the Office of the State Treasurer must now use the excess as well as the surplus to help pay down Connecticut”™s unfunded pension liability.
The RDF has long been viewed as particularly strong in Connecticut, whose utility was recently ranked by the Pew Charitable Trusts as ninth among the 50 states.
Lembo had previously projected a $900 million budget deficit for FY20, proof of the difficulties of economic predictions in the midst of the Covid-19 pandemic.
“We know that the global pandemic is having an impact and we will continue to monitor the trends,” said Office of Policy and Management Secretary Melissa McCaw in a statement. “The news that we are receiving today demonstrates we are in a strong starting position as we enter this new fiscal year with many challenges that lie ahead.”
The administration is predicting a $2.1 billion deficit for FY21, which began on July 1, and a $3.5 billion deficit for fiscal 2022 and 2023. Debt and unfunded pensions make up some 33% of the state”™s GDP ”“ one of the highest such rates in the country, according to Gov. Ned Lamont.
