Citing a tax amnesty program that pumped more than $175 million into the state’s coffers, Comptroller Kevin Lembo is projecting that Connecticut will end fiscal year 2014 with a $245.9 million surplus.
That’s about $110 million more than what the state Office of Policy and Management projected it would be.
In addition to the tax amnesty, Lembo credited the growing surplus on increases in state revenue: sales and corporation taxes are each up by $30 million from budget targets. The real estate conveyance tax is $15.6 million over initial estimates, he said.
“Month after month the state’s financial outlook for the current fiscal year is improving,” Lembo said.
While Lembo said the revenue boost is “a great sign for Connecticut’s economic recovery,” he also sounded a cautionary note to politicians who may be tempted to spend the extra cash.
“[T]here are…uncertainties and future liabilities that we need to brace for,” he said in a press release. “I strongly recommend that any General Fund surplus amount should be transferred to the state’s budget reserve fund at the close of the current fiscal year.”
The budget reserve fund, aka the rainy day fund, contained about $270.7 million, or 1.6 percent of planned spending, at the end of fiscal 2013.
“I have called for a reserve level of 15 percent of spending – beyond the 10 percent statutory requirement,” Lembo said. “It is essential to the state’s long-term fiscal stability that sufficient reserves be established as soon as possible. Too often in the past, opportunities to build reserves have been missed as other perceived budget priorities were pursued.”