HARTFORD, Conn. (AP) — Gov. Dannel P. Malloy's budget director said Friday that about $102 million can now be set aside to replenish the state's budget reserves because the budget picture has improved, including a modest improvement in income tax collections.
In a letter to state Comptroller Kevin Lembo, obtained by The Associated Press, Office of Policy and Management Secretary Benjamin Barnes said the budget deficit for the fiscal year that ended June 30 is now $120.3 million, compared with an earlier projection of $192.3 million.
State lawmakers had passed a budget plan in May that covered the deficit in the approximate $20 billion, 2011-12 budget, by using $220 million in funds originally earmarked to pre-pay some debt payments. Barnes said $102 million of that will now be left in the state's rainy day fund, which has been empty, in case a fiscal emergency develops.
"What we see is an improvement over a month ago of $72 million," said Barnes, adding how that includes an increase in revenue of about $56.3 million and a $15.7 million reduction in state spending. He said there's been an uptick in income tax revenues, which he credits to people getting more hours of work, more overtime or more people working.
Besides personal income taxes, Barnes said inheritance and estate tax collections are also up so far in the month of July, due to several large payments received prior to the end of the fiscal year. Additionally, there have been modest improvements in revenues generated from licenses, permits and fees.
Sen. Andrew Roraback, R-Goshen, the ranking Republican on the General Assembly's Finance Revenue and Bonding Committee, said while it's good to see the deficit shrinking, it's "a cruel hoax" to the state's taxpayers to avoid paying off debt in order to deposit money into the rainy day fund, which he said has been empty since 2007.
"It's smoke and mirrors," said Roraback, who is the endorsed Republican candidate in the state's 5th Congressional District race. "Having money in the rainy day fund is not a victory when we have it there at the expense of paying off our indebtnesses as originally budgeted."
Barnes said it makes sense to keep the extra money in the rainy day fund, especially if another recession occurs. He also said the state is already making significant progress toward whittling down the debt, originally approved in 2009 to help balance the budget.
"We need to begin rebuilding the rainy day fund. That's clearly one of things that the governor has identified as a long-term challenge of ours," he said. "So it's great to be able to put aside $100 million there now."
Republican lawmakers, the minority party in the General Assembly, had criticized Malloy and the majority Democrats for covering the deficit by using pre-paid debt payments — money that originally came from an earlier budget surplus. Instead, the Republicans said more spending reductions should have been made to the state budget instead.
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