NEW YORK Jan 30 Connecticut Governor Dannel
Malloy proposed Thursday to use a surplus in the state's budget
to boost the rainy day fund, pay into depleted pension funds and
provide modest tax relief to state residents.
Malloy, a Democrat, said he would introduce legislation to
ensure that future surpluses were used for these three aims as
he tries to keep the state's economy and finances on track.
"Connecticut has faced more than its share of challenges
over the last few years. Now that things are beginning to
improve, it's critical that everyone shares in the recovery," he
said in a statement.
The state currently estimates a surplus of $505 million in
the present financial year. Malloy proposes using that to boost
the rainy day fund by $250 million, to $520 million.
The rainy day fund was almost completely depleted during the
financial crisis and recession, which hit Connecticut
particularly hard due to its exposure to the financial, and
defense and aerospace industries.
The governor also wants to increase the legal maximum of the
rainy day fund from 10 percent to 15 percent of state revenue.
Connecticut was the only state whose economy shrank in 2012,
the last year for which data is available. Economists at TD
Economics expect the state's economy to expand just 1.6 percent
this year, a full percentage point below the national rate.
The rainy day fund, together with high pension liabilities,
has worried investors who buy the state's debt. Connecticut's
borrowing costs are about 0.3 percentage point above top-rated
U.S. municipalities. That spread puts the state among the 10
states paying the most to borrow money.
Malloy also wants to use $100 million of the surplus to pay
into the state's pension system, which is one of the
worst-funded in the country, with about 42 percent of the assets
needed to meet obligations, according to actuarial numbers.
The governor, who faces re-election in November, also wants
to return $155 million to tax payers in the form of a gas and
sales tax refund that he says will return $55 to taxpayers
earning less that $200,000 and $110 to joint filers earning less