Connecticut Comptroller Kevin Lembo has updated his financial and economic update for the state and is now projecting a fiscal year 2021 surplus of $306.9 million for the state’s general fund.
Lembo noted that his surplus projection is approximately $35 million greater than last month”™s estimate from the Office of Policy and Management, which he attributed to increased revenue projections.
Lembo had forecast a transfer of approximately $1.2 billion to the state”™s budget reserve fund ”“ more commonly known as the rainy day fund ”“ in addition to the projected surplus.
“As the last year-and-a-half have demonstrated, the economy can change course quickly and the best thing government can do is to be prepared,” Lembo said.
“Building our reserves to capacity not only prevents against future downturns, but the policies put in place will also save taxpayers money in both the short and long term.”
Lembo credited the state”™s recovering economy with 3,500 added jobs in June and particular gains the leisure and hospitality sector. He also observed that the Connecticut housing market remained solid despite inventory challenges, but he also warned that a 20% year-over-year increase in home prices will limit opportunities for affordable homeownership.
“Connecticut needs to keep young people in our state,” Lembo said. “We”™ve made great strides in that effort in recent years, but the rising cost of rent combined with the low availability of affordable homes could threaten that progress.
“I encourage policymakers to begin working now on potential solutions and not let the unintended consequences of our strong housing market develop into a preventable crisis.”
Potential negative impacts on this improving financial picture, according to Lembo, was the rise of the Covid-19 Delta variant and the low vaccination rates in other states, which he believed would hurt both the national and state economies.
The pandemic was also creating disruptions in some supply chains, he said, although he felt it was too early to determine if that would fuel further increases in inflation.
