As It Hikes Taxes, Connecticut Expects a $1 Billion Budget Surplus

In just five months on the job, Connecticut Governor Dannel Malloy has dramatically overhauled the state budget, approving the largest tax hikes in state history, slashing spending and wresting another $1.6 billion in concessions from state workers to address what he sees as a chronic imbalance in the state’s books.

But the $40 billion, two-year budget that Malloy signed into law earlier this month also contains a less-publicized $1 billion surplus, The Connecticut Post points out , leading to a fresh debate over whether the state should be raising taxes and cutting spending so aggressively.

Republicans in the General Assembly believe the surplus – which is expected as the economy improves over the next two years – is reason to scale back some of the legislature’s tax increases , which amount to $1.4 billion in the first year and $1.2 billion in the second. Among other things, lawmakers raised taxes on sales, income, cigarettes and alcohol. “ I would want to see some of the most hurtful tax increases be repealed, “ Senate Minority Leader John McKinney tells the Post .

But an adviser to Malloy believes the built-in surplus is necessary to accomplish the governor’s goal of balancing a budget without gimmicks, including his administration’s plan to shift to new, more transparent accounting principles. Passing the budget with a surplus included, Roy Occhiogrosso tells the Post , “ sends an incredibly strong message to the business community and Wall Street “ that the state is serious about repairing its finances.

While Malloy already has signed the budget, lawmakers still must approve “implementer bills ” to finalize the spending plan, and the debate over the state’s surplus is sure to continue.