Cathy Osten

Sen. Osten Wecomes More Great Budget News for Connecticut

HARTFORD – The State of Connecticut will end its fiscal year tomorrow, June 30, with even more money in the bank than was even envisioned just a few weeks ago – meaning Connecticut will be able to put even more money toward paying off its 70-year-old pension debt.

State Senate Cathy Osten (D-Sprague), who is Senate Chair of the budget-making Appropriations Committee, said a new report from the non-partisan Office of Fiscal Analysis (OFA) (link below) shows the state’s General Fund surplus has grown to $260.4 million. This surplus has materialized over the past few weeks since the biennial state budget and its revenue projections were adopted by the state legislature on June 9.

OFA Monthly Statement – June, 2021

The increased revenues come from higher than anticipated collections from the Pass-Through Entity Tax, inheritances and estates, real estate conveyance fees (from the increased sale of homes in Connecticut), sales and use taxes (from the increased sale of goods in Connecticut), and corporations (from the increased profits of Connecticut business). All combined, these revenues increased over $434 million from the OFA estimate in May. This robust revenue growth is a clear sign of a strengthening Connecticut economy –a recovery also reflected in last week’s improvements in our state’s unemployment rate and healthy growth in employment.

With the increased budget revenues – combined with the state volatility cap law that diverts certain types of fluctuating revenues into the state Budget Reserve Fund (aka the “Rainy Day Fund”) –  Connecticut is now poised to contribute another half a billion dollars (to about $1.5 billion in total) toward the state pension debt that built up over the previous 70 years as a variety of Republican and Democratic state legislatures and governors repeatedly failed to set aside enough money to pay for promised pension benefits.

This one-time payment into our pension funds will translate to an annual payment savings of at least $130 million every year beginning in Fiscal Year 2023.

“This is more great financial news for Connecticut, and it comes at the end of a long string of recent good financial news for the state, from our Rainy Day Fund at historic highs to our state bond rating at its highest level in two decades to state revenues swelling, as this most recent report shows,” Sen. Osten said. “We put our state on a path of fiscal stability a few years ago with commitments to not spending all the revenue that we collect and putting excess funds into paying off our pension debt, so I think we’re wrapping up the 2021 budget in great shape and we’re looking pretty good for 2022 and 2023 as well.”