Cathy Osten

Sen. Osten Notes ‘Exceedingly Good’ State Economic News in Latest Comptroller’s Report

HARTFORD – State Senator Cathy Osten (D-Sprague), who is Senate Chair of the legislature’s budget-writing Appropriations Committee, said today that State Comptroller Kevin Lembo’s December 2 financial statement shows Connecticut is on-track to finish the fiscal year on June 30, 2020 with its largest state budget reserve in history: $2.79 billion, or 14% of annual state spending.

The statutory target for Connecticut’s budget reserve (aka the Rainy Day Fund) is 15%.

“This is exceedingly good news for the state and its taxpayers. It shows that the legislature has the fiscal discipline to save money while at the same time paying down its debts,” Sen. Osten said. “It’s incredible to think back that in the first year Governor Malloy took office after Governor Rell left, Connecticut’s budget reserve fund was at zero. It was empty. The next year it was $93 million, then $270 million. We’ve been saving ever since. Now we’ve got the largest Rainy Day Fund in state history, approaching $3 billion – all with Democrats at the helm. It’s something worth recognizing and celebrating.”

In his report (https://www.osc.ct.gov/public/news/releases/20191202.html), Comptroller Lembo states, “The statutory revenue volatility cap requires revenues above a certain threshold to be transferred to the Budget Reserve Fund (BRF). For FY 2020, the cap is $3,294.2 million 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 BRF. The balance of the BRF presently stands at $2,505,537,507. Adding the estimated $318.3 million volatility transfer, less the projected FY 2020 deficit of $31.6 million would bring the year-end balance of the BRF to approximately $2.79 billion. This would represent approximately 14.0 percent of net General Fund appropriations for FY 2021. In order to help protect against future economic downturns, Connecticut must maintain financial discipline and continue building the BRF balance to the statutory target of 15 percent.”

The Comptroller’s report also makes an important distinction when it comes to Connecticut’s job growth numbers: the difference between private sector job growth and government sector job growth. Private-sector jobs have rebounded well since the end of the Recession, but government jobs in Connecticut have been decimated – thereby hurting Connecticut’s overall ‘jobs recovery’ numbers.

“Within the job recovery numbers, DOL points out a significant distinction. The private sector has recovered more than the total jobs lost in the recession (105.5 percent), which means the remaining employment losses are from the government sector. This sector includes all federal, state and local government employment, including public education, and Native American tribal government,” Comptroller Lembo states in his report.

“This distinction has really been lost on the general public, and it’s a shame, because Connecticut gets no credit for shrinking the size of state government while creating a climate that allows private sector jobs to grow,” Sen. Osten said. “The state Labor Department noted in its November report that Connecticut needs to add 18,300 new jobs to reach our pre-Recession employment levels. But 24,500 government jobs in Connecticut have been lost over the same time period. If we didn’t cut any government jobs, we’d be well over 100% recovery.”