State's Fiscal Policies Yield ResultsJanuary 15, 2021
Projected deficit now projected surplus for FY21
Speaker of the House Matt Ritter (D-Hartford), House Majority Leader Jason Rojas (D-East Hartford, Manchester) and the House Chair of Finance, Revenue and Bonding Committee, Rep. Sean Scanlon (D-Guilford) today were briefed on the consensus revenue estimates between the Governor's Office of Policy and Management (OPM) and the legislature's nonpartisan Office of Fiscal Analysis (OFA). The consensus revenue projections erase a previously estimated deficit and predict a budget surplus in fiscal year 2021, which ends June 30.
According to OPM and OFA, sales tax and income tax revenue is growing at 5% which hasn't happened in more than a decade – leading Connecticut from an $854 million projected deficit to a surplus of $70 million in FY21 and cutting the FY22 and FY23 deficits almost in half.
"This is incredibly positive news," Speaker Ritter said. "Mid-year consensus revenues are certainly not the final numbers upon which we craft a budget, but this is an important snapshot of where the state is heading. I also expect these numbers to improve even more as the full impact of the federal stimulus bill and any future federal stimulus bills are felt here in Connecticut."
Increased revenue projections also impacted the state bond cap. Under previous estimates, the state would have only been able to bond approximately $200 million next fiscal year. The cap is now closer to $2 billion.
Ritter said, "Interest rates are at historic lows. During a pandemic, where unemployment numbers are high; it makes sense to bond for infrastructure improvements and help people get back to work."
"This is an encouraging report made possible by the strong fiscal policies we put in place over the past few years. We are working to develop additional policies that strike a balance between meeting our state's contractual obligations, safeguarding access to quality healthcare, ensuring high-quality education for all students, and rebuilding our state economy,” said Majority Leader Jason Rojas (D-East Hartford, Manchester).
OPM and OFA also said the state's budget reserve fund (rainy day fund) is at $3 billion, its highest balance ever, and will grow to $3.4 billion by end of this fiscal year.
"It's incredibly encouraging to see that despite the challenging times we're living in, Connecticut's fiscal outlook appears to be getting stronger," said Rep. Scanlon. "At a time when other states are seeing ballooning deficits, our projections are going in the opposite direction, our rainy day fund is at the highest level it's ever been in history and consumer confidence and spending is up. Make no mistake: we are not out of the woods yet and we still face big challenges but today's news is a very welcome step in the direction of progress when it comes to Connecticut's economic recovery from the COVID-19 pandemic."
Consensus revenue projections are released three times per fiscal year.