Connecticut went from massive deficits to a billion-dollar surplus

Over the past twelve years, Connecticut has gone from massive deficits to a now-record $1 billion surplus. Cooperation from public servants’ unions, an influx of new residents in the pandemic, and strong income and sales tax collections have put the state in a strong financial position, even though more than 4,300 veteran states the workers retired before the end of June.

Billions of dollars in federal pandemic relief have also kept the state in positive financial shape, for now.

Gov. Ned Lamont and majority Democrats in the General Assembly are bragging about the state’s fiscal stability as fall election campaigns heat up in a few months. Republicans are focused on raising diesel fuel taxes on July 1 and renewing their demands for additional tax relief, which is unlikely since Democrats won’t agree to return in a special legislative session.

State House Minority Leader Vincent Candelora, R-North Branford, said much of the fiscal stability was the result of a 2017 bipartisan budget deal that created mandatory spending limits that forced the state to save billions of dollars.

“The governor likes to sing about it,” Candelora said of Lamont. But Republicans warn that underfunded liabilities, including pensions, remain major warning signs of precarious state finances, especially after the current two-year budget ends on June 30, 2023.

Candelora said a key need for the new fiscal year that began on Friday is to avoid more long-term capital debt that is doled out in projects approved at regular meetings of the Government Bonds Commission, which is overseen by Lamont and his fellow Democrats.

“Going forward, we really need to restrict the connections we make,” he said. “It’s a subtle battle we’re in right now.”

Candelora, in a phone interview last week, warned of the state’s continuing cycle of deficits and surpluses that goes back far beyond the 2006 election that brought him to the Legislative Assembly. . The next fiscal crisis, economic downturn, or recession, is seemingly just around the corner, even with more than $3 billion in state emergency reserves.

In April, less than a month from the legislative session, Republicans offered $1.2 billion in tax relief, nearly double what Democrats ultimately pushed through in the $22.4 billion budget. dollars which began on July 1.

On Friday, Comptroller Natalie Braswell noted the country’s volatile inflationary spiral, but called the state’s fiscal outlook “relatively strong.” She pointed out that Lamont will soon make another multi-billion payout to reduce the state’s long-term pension debt. “If the nation slips into a recession, as a number of economists are warning, the state is well positioned to ride out this downturn and protect Connecticut taxpayers,” she said.

In a statement on Friday, Braswell estimated that $3.7 billion will be available to invest in state employee and public school teacher retirement plans, the over $1.6 billion additional — on top of the $2.9 billion annual investment — put into the funds last year, around the time the nonpartisan Pew Trusts reported Connecticut had a A pension of 40 billion dollars responsibility.

Noting that the state’s minimum wage rose to $14 an hour on Friday, Braswell said the state’s labor market remains strong, with 1,600 new jobs added in May, indicating that 83% of jobs lost during the pandemic have been recovered. In particular, Braswell said, jobs in construction, professional services, trade, transportation and utilities have returned to pre-pandemic levels, and per capita income of $82,918 is the third highest. from the country.

But consumer confidence is weakening due to rising prices for housing, travel and food and with rising mortgage interest, average monthly payment costs for homeowners are 45% higher than the last year, when it was still easy to get a 3% refund. mortgage. Now, mortgage rates have reached 5.9% and more.

On Friday, Candelora and Senate Minority Leader Kevin Kelly, R-Stratford, again called for a special legislative session. “Today, Connecticut becomes even more unaffordable,” Kelly and Candelora said in a statement marking the new fiscal year. “The diesel tax increases by 23%. New increases in energy prices come into force. Prices for goods, groceries, services and energy are all rising, and Connecticut Democrats are doing nothing to stop the pain from getting worse.

But Pro Tempore Senate Speaker Martin Looney, D-New Haven, pointed out that the surplus allows Democrats to increase social expenditureespecially in the areas of mental health children’s programming which were major objectives for the House and the Senate.

“We were very pleased both to increase spending in areas where we had to cut in the past and to be able to cut taxes by $650 million,” Looney said. “We believe the outlook for the future is good because of the additional money we have been able to contribute to pension plans.”

[email protected] Twitter: @KenDixonCT

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