Governor Dannel Malloy announced a budget agreement on Friday which would not raise new taxes, and would deposit the smaller-than-expected $43.4 million surplus into the state's rainy day fund.
Broadly speaking, Malloy said that without a deficit, it's time to focus on future growth.
Among other things, the budget would commit to pre-kindergarten education statewide; give parents up to $250 in a tax-free college savings account for their children; hire more engineers to work on transportation projects, like the expansion of I-84 in Waterbury, and a New Haven-to-Springfield rail line; and invest in mental health services.
The budget would also eliminate keno, and defer some tax breaks. More measures include money for school security, an agreement to keep United Technologies Companies in the state for nearly 20 years, and help the long-term unemployed with a five-week job readiness program.
The full list is here.
Malloy said he's proud that the state has $43.4 million in surplus, which will all be put in the rainy day fund. He reminded reporters that just four years ago, he inherited a $3.6 billion deficit, which had to be eliminated with budget cuts and tax increases. "I actually feel pretty good," Malloy said. "There will no tax increase in the future. We will not overspend. We have a pretty consistent rate of increase of spending, which was about 2.8 percent. It'll now be less when we recalculate the final budget into it."
Malloy added, "The proof of the pudding is what we performed, and we performed pretty darn well. I don't think there's a lot of pain in the budget. There is delaying some things by months. We are going to lower taxes, but we may lower them a month later, or nine months later, or six months later, here and there."
Earlier, Malloy had to reverse his plan to give every taxpayer a $55.00 refund when the state didn't get nearly as much money from capital gains taxes as expected. He explained that was because it was hard to figure out the effect of tax cuts in 2013, and that his estimates were conservative, even when compared to numbers from the Office of Fiscal Analysis. He also said that around 15 other states are in the same situation, including New York and New Jersey.
Currently, the projected deficit in the next budget year following the election is $1.3 billion.