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Lembo Projects $250M Surplus for Fiscal Year; Rainy Day Fund to Increase to $2B

December 4, 2018 By Staff
Lembo Projects $250M Surplus for Fiscal Year; Rainy Day Fund to Increase to $2B

The comptroller's projections are slightly worse than those of the nonpartisan Office of Fiscal Analysis (OFA), but still have the state in strong fiscal shape in fiscal year (FY) 2019.

Comptroller Kevin Lembo (D-Conn.) projected Monday that Connecticut’s budget will close fiscal year (FY) 2019, which ends September 30, 2019, with near a $250-million surplus.

Lembo’s projections are close to those of the nonpartisan Office of Fiscal Analysis (OFA), which released their estimate of a $271.2-million surplus several weeks ago.

Lembo predicts the state will ultimately transfer just short of $900 million to the state’s Budget Reserve Fund (BRF), also known as the ‘Rainy Day Fund.’ That, Lembo says, would leave Governor-Elect Ned Lamont (D-Conn.) with $2.1 billion in the Rainy Day Fund for his first full fiscal year as governor, FY 2020.

Adding the estimated transfer to the BRF, as well as the anticipated surplus of $245.7 million, would bring the year-end balance of the BRF to just under $2.1 billion (about 10.9 percent of the General Fund expenditures).

…“While predicting the timing of recessions can be notoriously difficult, the lesson for Connecticut policy makers should be clear: State government should maintain spending discipline and continue building the balance in the Budget Reserve Fund to protect against the inevitable downturn whenever it comes. For this reason, my office has traditionally recommended the BRF reach a level of 15 percent of General Fund spending.[“]

Lembo was just reelected to a third term as comptroller by Connecticut voters. He briefly ran for governor in the 2018 cycle, but eventually dropped his campaign and ran for reelection instead.

The bright fiscal times for the state are not expected to last. After a FY 2019 surplus, multibillion-dollar deficits will return to the state in FY 2020, FY 2021, and beyond.