Wyman Criticizes Spending $925 Million Budget Surplus

By Susan Haigh

Associated Press

HARTFORD (AP) — The state comptroller criticized the new, two-year $36 billion state budget Monday for spending too much of Connecticut’s $925 million surplus on one-time expenses.

Comptroller Nancy Wyman, a Democrat, said more of the surplus should have been socked away in the state’s emergency rainy day fund.

“Using the great majority of this one-time windfall to fund ongoing programs is a very questionable financial practice,” she said in a written statement.

The legislature’s nonpartisan Office of Fiscal Analysis has projected that the state could see budget deficits totaling $1.7 billion from fiscal years 2010 to 2012.

“This year’s enormous surplus was created mainly by workers through the payroll tax and investors through the capital gains tax,” Wyman said. “Government should be using that surplus money to safeguard the taxpayers’ financial future, not on a one-year spending spree.”

Senate Majority Leader Martin Looney, D-New Haven, said the majority Democrats wanted to raise more revenue by increasing the income tax for wealthier taxpayers, but that idea died in budget negotiations with Republicans.

“That would have meant less surplus money would have been required for program needs and more could have been earmarked for the Rainy Day Fund,” Looney said.

The state’s fiscal year, which ended Saturday, ended $925 million in the black — an $85 million jump in the surplus from May, Wyman announced Monday.

About $40 million of the increase stemmed from the state paying less in personal income tax refunds than originally anticipated. Another $32 million was due to lower-than-expected spending by state agencies.

The new, two-year, $36 billion budget, finalized late last month by the Democrat-controlled legislature and Republican Governor M. Jodi Rell, spends about $790 million of the $925 million surplus on about 70 initiatives, according to an OFA report. A large portion of that money, $300 million over two years, is spent on payments to the state’s underfunded teachers’ pension fund.

A laundry list of smaller programs will receive surplus funds, including $10 million over two years to reduce diesel emissions from school buses; $30 million to create a pool of funds for financially distressed hospitals; $4 million in assistance to dairy farmers; $250,000 to study a possible arena in Hartford; $50,000 for recreational fields in Griswold; $500,000 for supportive housing for the mentally ill; and $1 million to speed up the processing of birth certificates.

About $80 million of the surplus was reserved for use in fiscal year 2009. The remainder, about $135 million, will be deposited in the state’s emergency Rainy Day Fund, which will now total $1.2 billion.

Both Rell and majority Democrats have said they are pleased so much of the surplus was spent on key initiatives, such as whittling down the state’s unfunded liability for the teachers’ pension fund. They’ve also said many of the expenditures are one-time and won’t need additional funds down the road.

Looney said the state has made great strides toward filling the Rainy Day Fund, which was entirely depleted four years ago during a budget crisis. At $1.2 billion, he said it’s close to the amount recommended by financial rating services.

“I believe we have shown an enormous respect for and commitment to protecting the state’s financial interests against any potential downturn in the economy,” he said.

But Wyman said she believes more of the surplus should be saved for a fiscal rainy day and to protect against potential tax increases when the economy weakens.