Connecticut’s state budget surplus projection increased sharply to $511.8 million from $327 million in the past month, Gov. M. Jodi Rell announced Friday.
Rell attributed the increase to a rise in revenue from state and corporate taxes. Most of the money, Rell said in a statement, will likely be deposited into the state’s Rainy Day Fund. A portion of the surplus may also be put toward paying off some of the state’s debt or financing the state pension system.
“Connecticut citizens expect their tax dollars to be handled prudently, and that is exactly what I will do,” she said. “As bright as the picture looks today, it will not last forever, and we need to set aside what we can.”
Last month, the surplus grew by $21 million. Then, too, Rell had indicated she would continue trying to cut state spending, specifically by cutting energy consumption in state buildings by 10 percent in 2006.
“The steadily rising surplus is no guarantee that the economic upswing will continue,” she said in a statement at the time.
This surplus follows a nearly $1 billion deficit for the fiscal year 2005-06. That deficit had been caused, in part, by a $90 million increase in aid to Conn. towns and cities that year.
The two Democratic mayors campaigning for Rell’s seat have identified a number of areas to which they would like to see the money directed, in addition to Rell’s plan to save part of the surplus through the Rainy Day Fund.
Chris Cooney, campaign manager for current Stamford Mayor Dannel Malloy, said Malloy wants to see the extra money used to fund pensions for public servants, to expand the number of Connecticut children who have health insurance and to modernize the state’s transportation infrastructure.
“First of all, [Malloy] would throw a reasonable amount of money into the Rainy Day Fund,” Cooney said. “Also, he would look at the unmitigated crisis that is health care in Connecticut … and the transportation issue that is such a huge, huge issue and has barely been addressed by Governor Rell.”
Shonu Gandhi ’03, campaign director for New Haven Mayor John DeStefano Jr., said Rell has failed to use the budget surplus to design a proactive response to Connecticut’s economic problems.
“The real issue is that we continue to fail to create new jobs or keep the ones we have,” she said. “Nothing has been done to resolve that fundamental problem.”
On Jan. 12, the Secretary of the State’s Office of Policy and Management warned that the state was facing low rates of job growth and rising health expenses for retirees, which would force the state to exercise fiscal restraint and curtail spending in anticipation of a period of slower growth.
Rell will present her budget for the upcoming fiscal year to the state’s General Assembly on Feb. 8.