State Comptroller Nancy Wyman today projected a year-end budget surplus of $560.7 million, and called on legislators to use the excess revenue to reduce the state's enormous debt and return a portion to taxpayers through rebates.

Wyman said the surplus is being driven by the continuing strength of income tax revenues, expected to bring in nearly $4 billion this fiscal year.

"With a surplus of more than a half-billion dollars created mainly by the income tax, there is plenty of room to both reduce our debt and provide some meaningful relief for taxpayers with a rebate," Wyman said. "Paying off debt will help get our financial house in order and a rebate will recognize the efforts of the taxpayers who created this cash windfall for the state."

Although slightly off from last year's pace, job and wage growth, combined with continued increases in capital gains revenue from the financial markets, have propelled income tax receipts about $427 million higher than originally expected.

Other factors contributing to the surplus include robust revenues from the sales tax and corporation tax, and an anticipated savings of about $72.6 million through lower-than-expected state income tax refund payments.

Under current law, any unappropriated surplus must be used to reduce the state's bonded debt, now standing at about $9.3 billion. Wyman, however, is urging legislators to pass a bill that would allow the state Treasurer discretion to instead invest surplus money in the state's pension system, which is now underfunded by about $6.8 billion.

"It is not sound fiscal policy to retire bonded debt that was obtained at a low borrowing cost when we could earn double-digit returns on our money by investing in the underfunded pension system," Wyman said. "Investing in the pension fund would have a more dynamic impact on reducing the state's overall long-term debt."

Wyman also called on legislators to pass a bill that would convert the state's accounting system to Generally Accepted Accounting Principles; a system that she said would give taxpayers and policymakers an honest picture of the state's financial health.

The State Comptroller appreciates input on this and other issues from residents of the state. Please feel free to contact her office by phone - (860) 702-3300; mail - OSC, 55 Elm Street, Hartford, CT 06106; or, via E-mail - osc.opinions@po.state.ct.us

Learn more about the Connecticut Comptroller's Office by calling up our Internet Home Page, at the link below.

For Immediate Release
June 1, 1999

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