State Comptroller Projects Another Year Of Budget Surpluses

Continuing a trend that has now lasted more than half a decade, Connecticut’s first budget projections of fiscal year 2025 indicated the state would likely see another surplus.

Comptroller Sean Scanlon said Tuesday that his office had projected a General Fund surplus of $113.2 million and a Special Transportation Fund surplus of $126.4 million, which would put the state in position to continue making significant contributions toward its debts and further improve its finances.

Speaking of those debts, the state expected to contribute $940.5 million toward state employee and teacher retirement pension debts once the 2024 fiscal year was closed out, Scanlon added in the report. This would represent a total of $8.5 billion in such payments since 2020, progress that has reduced projected interest on that debt by hundreds of millions of dollars.

Scanlon noted those pension debt payments were possible because of the state’s Rainy Day Fund, a reserve fund that represents up to 15% of the state budget that can be accessed in times of financial crisis. The comptroller’s report projected the Rainy Day Fund would be at its statutory limit of more than $4 billion.

“Connecticut’s fiscal health continues to be in prime condition as we prepare to make another historic pension payment and embark on the next budgeting season,” Scanlon said in a press release. “While the stock market remains strong, our office is closely watching the Federal Reserve to see what impact an anticipated – and overdue – rate cut will have on our overall economic picture, and we remain optimistic, especially in light of our full Rainy Day Fund, which will ensure we can weather any downturn.”

An initial review of the state’s budget found the surplus lower than expected due to increased medical costs and similar pressures, Scanlon said. However, revenue projections were $148.6 million higher than budgeted, which works to offset the higher-than-expected spending expectations and preserve the state’s current standing.

In late 2023, Scanlon issued a report of the state’s actuarial valuation, which found progress made toward that debt. In 2023, the state contributed $1.05 billion to the State Employee Retirement System. Those payments helped reduce the state’s payment obligations by $87.5 million for the 2025 fiscal year.

Over the last five years, payments to pay down the state budget have freed up more than $500 million in annual spending, which increased to $738 million when combined with the Teachers’ Retirement System, the report found.

Of additional note, Scanlon said that from 2016 to 2023, Connecticut’s payments helped fund the state employee pension fund from 35% to 52%, the highest it’s been since 2008, which helped the state invest in tax cuts and education spending in the process.

By Joe O’Leary