Following years of fiscal shortfalls, state lawmakers finally have some optimistic news — indications that the state will actually run a surplus this year. But while state tax receipts may exceed spending by as much as $100 million, Mayor John DeStefano Jr. said he expected little of that money to come to New Haven.
An emerging economic recovery and improvements in the stock market last year have increased the state’s tax revenues substantially, state and local officials said. But since even $100 million amounts for only a small percentage of the state’s projected $14 billion budget for the next fiscal year, the surplus is unlikely to create any major changes in the state’s spending when its final value is revealed later this month.
As a result, as New Haven officials have expressed concern that they will receive less in state aid than the city originally projected, DeStefano said this week he was pessimistic about the prospect of receiving additional funds due to the surplus. Some Connecticut lawmakers have expressed interest in devoting the surplus revenues to ease local property tax burdens across the state, but DeStefano said he did not expect New Haven residents — faced with their third consecutive tax increase — to find much relief.
“In the context of the size of the budget and where we’ve been, it’s better than a deficit, but I don’t think it’s much stronger than that,” DeStefano said. “I don’t think that $100 million buys a lot statewide, nor do I think it is the governor’s or legislature’s intention to direct it to places like New Haven.”
Before the surplus was announced, city officials believed that state aid to New Haven — which makes up just over half of the city’s budget — might be about $1.2 million less than the mayor’s budget originally predicted in March. But even as New Haven and other Connecticut cities are lobbying the General Assembly for increased funding, several competing fiscal priorities may upstage municipal aid.
Most importantly, while some legislators have pushed for some form of tax hike — particularly a “millionaire’s tax” on the state’s richest residents — Connecticut Gov. John G. Rowland said earlier this week that he intended to veto any increases in state levies passed by the General Assembly. Although Rowland’s position has been weakened by an impeachment inquiry, Rep. Pat Dillon, a New Haven Democrat on the Appropriations Committee, said it was unlikely the assembly could muster a two-thirds vote to override the governor’s veto.
In addition, the surplus has led to calls for the additional money to be put in the state’s “rainy day fund” or to reinstitute property tax credits that were reduced during recent lean fiscal times.
“I don’t know what we are going to do,” Dillon said. “I don’t think we’re going to see a dramatic increase in spending.”
Michael Cicchetti, an undersecretary with the state’s Office of Planning and Management, said while the governor had expressed opposition to further tax increases, the Rowland administration was waiting until more definite figures are available before crafting any plans for the surplus.
“It’s a little bit premature to talk about how you are going to spend the money,” Cicchetti said. “There are still some deficiencies for the current year. Beyond that, there really haven’t been any concrete proposals.”
Leaders in the General Assembly held negotiations last night over the budget, and while the General Assembly’s deliberations have lasted into the summer each of the past two years, state leaders have said they are hopeful an agreement can be reached by the time the legislative session ends on May 5.