The General Fund surplus has grown, but Comptroller Kevin Lembo said the news is not all good because it is already accounted for.
The surplus of $85.5 million for fiscal year 2011 is $51.8 million more than the projection last month, but it’s been largely accounted for.
“This is an example of when a surplus is not a surplus,” Lembo said. “Last year, our state was forced to do the financial equivalent of gluing petals back onto a flower in order to address a budget crisis. This repair carried us through the year, but our state needs significant budgetary reform to permanently repair Connecticut’s finances.
The money is going to the state’s trust fund for retiree health, as required by State Employees Bargaining Agent Coalition agreement from 2009, and toward $915.8 million in 2009 Economic Recovery Notes.
The surplus comes on the heels of Moody’s Investors Service revising the state’s financial outlook to negative.
Lembo credited the increase to unanticipated revenue from the income tax, insurance companies tax and oil companies tax.
“The bad news is that this fiscal year surplus – $85.5 million – is a mirage built on one-time fixes. The good news is that revenues have surged far beyond our expectations, providing promise for next year if we sustain this upward trend,” Lembo said.
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The surplus would have been a more than $1 billion deficit had the state not relied on significant one-time financial fixes, including $739.6 million in federal stimulus money; $103.2 million from the Budget Reserve Fund; $114.9 million from other non-General Fund sources; and an assessment on electric ratepayers, Lembo said.
There are, however, some positive sides. Retail sales, corporate profits and personal income have indicated positive, but slow, growth and household debt has declined over the last nine quarters, Lembo said.
