Connecticut’s Comptroller Sean Scanlon warns of an uncertain economic outlook this year despite an anticipated bump to consumer spending expected from higher tax returns.
The higher tax returns are due to a change to the SALT (state and local tax) deduction, which has increased from $10,000 to $40,000 for taxpayers with incomes below $500,000.
“So those people, upper middle-income families, are potentially going to have thousands more dollars in their pockets,” Michelle Parlos, an economist with the state Comptroller’s office, said during an economic update briefing on Tuesday.
Scanlon is concerned that the state lost 2,200 jobs last year.
“What is happening on the job market right now is what is happening during a recession,” he said.
He’s also concerned because of uncertainty from Washington, especially with the appointment of a new Federal Reserve chair.
“Does that do what the president thinks it's going to do and rapidly accelerate growth? Or is it going to be too much too soon and send us into a bad spiral?” Scanlon said.
In the meantime, the state is in good fiscal shape despite a reduction in this year’s projected budget surplus, he said.
“There are some things that we need to get a hold of here, like Medicaid on our budget side. But I continue to believe that Connecticut is in good fiscal shape. And we are in a good fiscal position, but that doesn’t mean we don’t have our work to do,” Scanlon said.
The state’s projected fiscal year budget surplus is now about $86 million. That’s about $50 million less than had been projected a month ago.
