News From Kevin Lembo

COMPTROLLER LEMBO PROJECTS $79.1-MILLION SURPLUS FOR FISCAL YEAR 2020

FOR IMMEDIATE RELEASE                                                  FRIDAY, NOVEMBER 1, 2019

 

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


Comptroller Kevin Lembo today, again noting that it remains very early in the fiscal year and that significant updates will be made in the coming months, reported that the state is on track to end Fiscal Year 2020 with a surplus of $79.1 million. 

Lembo also highlighted key trends in his monthly economic report, including that construction jobs have suffered the greatest loss compared to other sectors of the economy on a percentage basis when you compare September 2019 to September 2018.  

“Trends like this should be closely monitored because when government strategically invests in its infrastructure – including roads and bridges – then it has an opportunity to directly energize job and economic growth,” Lembo said.  

In a letter to Gov. Ned Lamont, Lembo said he is in agreement with the state Office of Policy and Management’s (OPM) most recent projection, which is a decrease of approximately $5.2 million from the prior month, largely attributable to the costs of state settlement claims from the unappropriated adjudicated claims account. 

“These results only reflect the first quarter of the fiscal year and my projections will be updated as more information becomes available in the coming months,” Lembo said. “This experience through the first quarter reinforces the wisdom of building an additional safety margin into the budget plan.”  

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 2020 surplus of $79.1 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 14.5 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, Connecticut’s budget results are dependent upon the performance of the national and state economies. Lembo said trends are more fully explained in the economic summary below, including details on construction job losses but he said some other trends that deserved highlighting include an Oct. 17 report by the Connecticut Department of Labor (DOL) that showed the state gained 3,600 net jobs in September – almost all of which came from an unusually high increase in the education sector. 

Lembo said that the state has recovered 85.1 percent of the jobs lost in the Great Recession – however, a distinction must be made clear that the private sector has actually recovered 105.6 percent of jobs lost, while the remaining employment losses are due to the government sector shrinking.  

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



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