Comptroller Braswell Projects $1 Billion Surplus, Warns Of Housing Affordability Challenges - Office of the State Comptroller - CT.gov
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Natalie Braswell
Natalie Braswell
Former CT State Comptroller
2022-2023

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Comptroller Braswell Projects $1 Billion Surplus, Warns Of Housing Affordability Challenges

December 1, 2022

Comptroller Natalie Braswell today, in her monthly financial and economic update, projected a Fiscal Year 2023 General Fund surplus of $1 billion following this week’s special session and the most recent consensus revenue forecast.

“State revenues continue to perform well thanks to the overall strength of the labor market and robust consumer spending,” said Braswell. “While it’s still early in the fiscal year, we are on track to record another significant surplus and make another sizable contribution to pay down pension debt.”

In a letter to Gov. Ned Lamont, Braswell noted the consensus revenue estimate, produced by the Office of Policy and Management (OPM) and the Office of Fiscal Analysis (OFA), increased revenue projections in several categories including the sales tax and investment income resulting in a forecasted increase in the surplus despite some additional spending during this week’s special legislative session.

A law originally proposed by former Comptroller Kevin Lembo in 2015 requires the final surplus amount, plus excess revenue in certain volatile categories, be deposited into the state’s Budget Reserve Fund (commonly known as the “Rainy Day Fund”). Because that fund has already reached its statutory cap, a projected $2.8 billion will be available to pay down debt in the pension systems for retired state workers and teachers. If that projection holds, it will mark the sixth consecutive year of progress in growing the state’s reserves and reducing pension debt.

Nationally, job growth has begun to moderate, with the unemployment rate ticking up. However, there are still almost two open jobs for each unemployed person. Connecticut added 500 jobs in October, the state’s tenth consecutive month of job growth.

Inflation continues to punish American families, with costs of essentials like housing, food, gasoline, and utilities remaining high. While there are signs that recent interest rate increases will be successful in lowering costs over the long-term, the short-term effects are increasing household debt (particularly in credit cards) and growing mortgage payments.

Rising mortgage rates, now topping 7%, high home prices, and a consistent lack of inventory, have cooled the national housing market. The median existing home sales price dropped for the fourth month in a row but remains much higher than before the pandemic. However, the National Association of Realtors reports that the annual rate of first-time homeownership has now reached its lowest point in history. The average age of first-time homebuyers is the highest it’s ever been at 36 years old.

“Housing affordability is a critical component to economic growth, and a key tool in combating chronic racial, ethnic, and geographical inequities,” said Braswell. “While many national conditions are outside of our control, policymakers in Connecticut should prioritize increasing housing inventory and look for ways to help young people purchase their first home.”

View PDF for full economic indicators.

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