Comptroller Natalie Braswell today, in her monthly financial and economic update, projected a General Fund surplus of $956.4 million for Fiscal Year 2022, the first since adjustments to the biennial state budget were passed into law last month.
Braswell noted that the legislation, which was signed into law by Governor Ned Lamont, reduces reliance on federal funds, carries certain funds over into the next fiscal year and funds certain tax relief measures including the new Child Tax Credit.
Connecticut’s economic outlook continues to trend positive, said Braswell. The state added an estimated 1,600 jobs in April and has now recovered 82.1% of jobs lost at the onset of the pandemic. While some month-to-month volatility remains, every sector has added jobs in the last year.
“Competition for labor remains intense, creating new opportunities for workers and driving up wages,” said Braswell. “Nationally, there are about two job openings for each unemployed worker. However, persistent inflation is keeping prices high and preventing those workers from feeling the full benefits of the strong job market.”
Housing and rental prices also remain high, a concern of Braswell’s in recent months. Low inventory of single-family homes has pushed prices up and rental costs have followed.
In a letter to Governor Lamont, Braswell noted that several revenue categories continue to perform well including income tax withholdings which are up 9.6% from the same period in Fiscal Year 2021. Another large deposit into the state’s Budget Reserve Fund (“Rainy Day Fund”) is also anticipated. The fund has already reached its statutory maximum of 15% of General Fund appropriations. If current projections hold, that will leave approximately $3.6 billion available to pay down pension debt and other liabilities.
“Connecticut’s big picture economic position remains strong,” said Braswell. “Our substantial reserves, and the additional funding to pay down debt, will be a tremendous advantage to our state should the nation suffer another economic downturn. However, there is still a need to help residents overcome high prices and navigate the lingering volatility from the pandemic.”
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