News From Kevin Lembo

COMPTROLLER LEMBO PROJECTS $84.3-MILLION SURPLUS FOR FISCAL YEAR 2020

FOR IMMEDIATE RELEASE                                                  TUESDAY, OCTOBER 1, 2019

 

Contact: Tara Downes
               631-834-5234
               Tara.Downes@ct.gov

Comptroller Kevin Lembo today, while cautioning that it is premature in the fiscal year, issued his first monthly projection of the year on Fiscal Year 2020, reporting that the state is on track for a $126.1-million surplus. 

Lembo's latest projection follows his final unaudited report on the close of Fiscal Year 2019 issued Monday (the final audited report will be issued in December), which confirmed significant progress toward building the state's Budget Reserve Fund.  

In a letter to Gov. Ned Lamont, Lembo said he is in agreement with the state Office of Policy and Management's (OPM), which recently reported that the General Fund is currently exceeding budgeted spending by approximately $56.8 million, while revenue is performing consistent with budget targets. 

"As more data becomes available for first-quarter fiscal year receipts, these projections will be revised as necessary," Lembo said. "A number of economists are predicting slower growth for the United States and other major economies in the coming year. The ongoing trade dispute with China continues to create uncertainty for businesses and could have a negative influence on consumer confidence. My office will continue to monitor these trends and any potential impact they have on the state budget as the fiscal year progresses.   

“While Connecticut cannot prevent global uncertainties – it can prepare for them,” Lembo said, urging continued financial discipline with regard to reaching Budget Reserve Fund targets. 

Based on Fiscal Year 2019 results, the Budget Reserve Fund balance will be just over $2.5 billion, or approximately 13 percent of Fiscal Year 2020 net General Fund appropriations. The state’s revenue volatility cap that Lembo advocated requires that revenues above a certain threshold be transferred to the Budget Reserve Fund. The latest report on the Budget Reserve Fund status is:

  • The Fiscal Year 2020 cap is $3.3 billion for estimated and final income tax payments and revenue from the Pass-Through Entity tax.
  • If current projections are realized, a $318.3-million volatility transfer would be made to the Budget Reserve Fund.
  • Adding the estimated $318.3-million volatility transfer and the projected Fiscal year 202 surplus of $84.3 million to the current Budget Reserve Fund balance (pending audit), would bring the year-end balance of the fund to approximately $2.9 billion (approximately 14.6 percent of net General Fund appropriations for Fiscal year 2021).

“In order to help protect against future economic downturns, Connecticut must maintain financial discipline and continue building the Budget Reserve Fund balance to the statutory target of 15 percent,” Lembo said. 

Ultimately, Lembo said that Connecticut’s budget results are dependent upon the performance of the national and state economies.

[Click to view various economic indicators and trends from national and state sources]

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