Despite Pandemic, Connecticut Sees Revenue Growth — But It Could Be Short-Lived

Jul 30, 2020

Connecticut has had an unexpected increase in revenue since the COVID-19 pandemic. The extra money could be seen as a short-term windfall.

In March, Connecticut officials predicted a billion dollar deficit this year ahead of the worst of the pandemic. They now project a $250 million surplus based on the tax returns filed by the July 15th deadline.

Fred Carstensen, an economist at University of Connecticut, said capital gains from the stock market are responsible.

“Because of our wealthier citizens being more active in the stock market and therefore paying more in the way of capital gains," Carstensen said. "But it doesn’t reduce the challenge that Connecticut faces to restructure its economy.”

The state’s deputy budget director said while the increased revenue may appear as good news for Connecticut, his office still anticipates a $2.5 billion shortfall for the next fiscal year 2021. And that would consume nearly all of the state’s $2.8 billion rainy day fund.