Wyman: Declining corporate profits, smaller surplus
A sharp decline in receipts of the tax that corporations pay on profits has reduced the estimated 2008 budget surplus to $226.8 million, said State Comptroller Nancy Wyman in a written statement.
Collection of the corporation tax is expected to bring in about $30 million less than originally estimated, Wyman said. Another major reason for the lower surplus estimate is that the state is expected to pay out about $20 million more in tax refunds that was originally budgeted.
Wyman indicated both of those factors are the product of a slowing economy in Connecticut and nationally.
"Connecticut is expected to slightly outperform the national economy," Wyman said, "but most projections show the state having either a modest slowdown or flat economic growth over the next year."
Wage growth nationally has been just over 2 percent, while in Connecticut wages increased by 4.7 percent in fiscal 2007 and have remained in that range in recent months. That has led to relatively strong receipts of the income tax, which have increased by slightly less than 8 percent in fiscal 2008.
Job growth in the state has been stagnant since the fiscal year began July 1. Existing home sales in Connecticut have dropped by 20 percent over last year.
The comptroller's overall surplus estimate dropped by $54.4 million since last month, and is $33 million lower than that of the governor's budget office.
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