Connecticut starts FY 2019 with projected surplus

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.