Comptroller Kevin Lembo has updated his monthly financial and economic update forecast with the projection of a $265.3 million surplus in the state”™s General Fund. This marks Lembo”™s first projection for the current fiscal year.
Lembo noted that Connecticut”™s Budget Reserve Fund ”“ more commonly known as the “Rainy Day Fund” ”“ is projected to exceed its statutory cap, which could be used for payments towards unfunded pension liabilities. He estimated the excess revenue from volatility transfers for Fiscal Year 2021 to be $1.14 billion, which will be deposited after final year-end auditing.
“Connecticut”™s economy continues to grow modestly,” said Lembo. “It”™s encouraging to see so many in Connecticut finding employment and wages rising to meet the new demand for labor. Our state largely avoided the worst-case economic scenarios forecast at the onset of the pandemic due to the strength of the stock and housing markets and essential federal aid.”
However, Lembo warned that uncertainty connected to the Delta variant of Covid-19 could impact the economic progress that the state has recorded in recent months, including seven consecutive months of job gains and a strong housing market.
“After all the nation has endured since March of 2020, it”™s natural for consumers to be wary of the surge of this new variant,” Lembo said. “I expect we”™ll continue to see an erratic recovery, and may experience some short-term setbacks, but with increasing rates of vaccinations and thoughtful continued government assistance, I”™m hopeful that we will see more economic progress over the next few months.”
He also expressed caution on the potential problems that could that will be created when federal pandemic relief programs begin to expire.
“As many federal programs come to an end, it will be critical to monitor the effects on residents and employers and intervene when necessary to protect the economic gains we”™ve achieved and continue to build on that momentum,” he said.
