Governor M. Jodi Rell today announced that her budget office estimates that the state budget year that ended June 30 finished with a surplus of $393.3 million – an increase of about $150 million from last month’s estimate. Governor Rell said the surplus – achieved through tight fiscal controls imposed by the Governor and a gradual improvement in the Connecticut economy – will enable the state to cut in half the amount of money the budget originally called for securitizing.
The estimate from the Office of Policy and Management (OPM) is their final projection for the past fiscal year. The state Comptroller must officially “close the books” on the fiscal year before the budget surplus is certified.
“After a long and difficult slog, our economy is showing some positive signs,” Governor Rell said. “We have seen six consecutive months of job growth – slower growth than we need or want, but a far better trend than we saw at this time last year. And our unemployment rate of 8.8 percent, while still too high, is well below the national rate of 9.5 percent.
“All too many Connecticut families are struggling, and the pain is not yet over because the recovery is just beginning,” the Governor said. “However, the surplus news today means that there will be far less borrowing needed to help balance the budget this year than originally planned – and that is good news for every Connecticut family.”
The two-year state budget originally passed by lawmakers in September 2009 – a document Governor Rell refused to sign – called for borrowing nearly $1.3 billion in the current budget year (Fiscal 2011). This spring, as Governor Rell and lawmakers were making adjustments to that budget, the Governor insisted on reducing the level of planned borrowing to less than $1 billion.
The final adjusted budget agreement, signed by the Governor on May 7, cut the amount of planned borrowing to $956 million. It further specified that the first $140 million of any surplus from Fiscal 2010 would go into the state’s General Fund and – at the Governor’s insistence – that any additional surplus would be used to further reduce the amount of borrowing required in Fiscal 2011.
If OPM’s current estimate holds, it means $253.3 million will be available to reduce the amount of planned borrowing – bringing the total to be borrowed down to $702.8 million, or less than 55 percent of the original $1.291 billion proposed.
“Not only does this reduce our debt burden, it also reduces the ‘structural deficit’ for Fiscal 2012 and beyond because it means the payments we will have to make will be smaller,” Governor Rell said. “It has a positive ripple effect for years to come.”
In its letter, OPM credited the increased surplus, in part, to marked improvements in a number of revenue sources, including higher-than-expected sales tax collections, insurance company revenues and license, permit and fee revenues. Expenditures, meanwhile, are $560.7 million below projections, including the $100 million deferred payment to the state employee retirement system.
