Good Fiscal News for CT
While the COVID-19 pandemic has hit all states extraordinarily hard financially, it's important to recognize hard work, especially when it offers some light on Connecticut's current and upcoming fiscal picture.
Thanks to a record $3 billion in our state's rainy-day fund and responsible state budget practices, Connecticut's consensus revenue estimates from state budget analysts predict a budget surplus of $70 million in Fiscal Year 2021. This is an incredibly positive change as state budget analysts had previously projected a deficit of over $850 million. In addition, the projected deficits for fiscal years 2022 and 2023 were both cut in half.
This announcement also impacts the state’s bond cap, which functions as the state’s credit card limit. Under previous estimates, the state would have only been able to bond approximately $200 million next fiscal year. Today our bond cap is closer to $2 billion. This is good news as it allows Connecticut to bond for infrastructure improvements and efforts focused on helping people get back to work.
Connecticut is in much better shape than many of our neighbors, with states such as Massachusetts and Texas facing billion dollar deficits. We are certainly not out of the woods yet and our state still faces significant challenges, but this is a step in the direction of progress as we work towards recovering from the COVID-19 pandemic.
A few takeaways to consider:
- These positive numbers do not account for the stimulus package passed in late December or one that may pass in the early days of President-elect Biden's administration. We fully expect the impact of those will further erode our deficit.
- Our Budget Reserve Fund (aka rainy day fund) balance currently stands at $3 billion and is projected to be at $3.4 billion when the fiscal year ends on June 30, which is the highest in state history.