Connecticut State Comptroller Sean Scanlon announced that Connecticut is projected to have a $113.2 million General Fund surplus in a press release on Sept. 3. Scanlon has also projected a Special Transportation Fund surplus of $126.4 million.
As comptroller, Scanlon does a monthly financial and economic update in which he looks at the state’s finances. For the last six years, Connecticut has had a surplus in their General Fund, and Scanlon projects that once this fiscal year ends on June 30, 2025, it will be the seventh consecutive year. He described it as “the new norm” in a recent online interview.
“This is a sign of the fact that we continue to turn Connecticut’s finances in a better direction,” he said.
The General Fund surplus will be partially rolled over into the next year, and parts of it will be put into “boosting our rainy-day fund and paying down our pension debt,” according to Scanlon. The $126.4 million dollar surplus from the Special Transporation Fund will specially go back into funding related to transportation with Scanlon naming “infrastructure improvements in the state, building new bridges, new roads” as a few examples of what that goes towards.
In his press release, Scanlon mentioned that the General Fund surplus is down from the previous month, but “revenue projections are $148.6 million higher than budgeted, partially offsetting projected higher-than-expected expenditures.” The Special Transportation Fund’s surplus is $58.3 million higher than budgeted.
Scanlon talked about why these surpluses have been so consistent for the past six years.
“The change that we made that precipitated this fiscal turnaround was a bill that we passed in the legislature in 2017,” he said.
In 2017, a bill was passed in Connecticut that accomplished multiple state goals, including revising the spending cap and instituting a bond insurance cap, a revenue cap and a volatility adjustment, which is the aspect that Scanlon accredited for the yearly surplus. This volatility adjustment made it so that the state must save a portion of its income tax receipts from quarterly filings.
“Connecticut is really reliant on people who live in Connecticut but go to work every day on Wall Street,” he said. “Those people pay their taxes on a quarterly basis, and we would be riding this very volatile roller coaster… knowing that their income fluctuates from quarter to quarter [based on how the stock market is doing].”
This made it so that money collected from income tax became supplementary instead of relied upon. Income tax that makes up the surplus goes directly into a “rainy-day fund,” and if that fund is full it goes straight into paying down pension debt. Since 2017, Connecticut has paid over $7.7 billion of pension debt, and by the end of this year another payment of $940.5 million will be made. As of February 2024, Connecticut’s rainy-day fund had amassed over $3.3 billion dollars.
Scanlon said that although the economic future of the country and the world is always uncertain, this bill and the surpluses that Connecticut consistently makes means that the state will be able to face any future economic challenges that it could face.
“We’ve been able to make a lot of progress turning around our finances and we continue to feel very positive about Connecticut’s fiscal future and our economic future, and that’s a really good thing for us,” he said. “We have certainty for the first time in a long time in Connecticut.”