Economists and business leaders said that the state is in good fiscal shape, but warned that troubles could approach with the prospect of a national recession.
After meeting with Gov. M. Jodi Rell on Monday, they said state officials should realize that fiscal discipline is needed, but they also cautioned against enacting tax cuts that could erode the projected budget surplus.
Estimates of the state surplus vary from between $160 million and $263 million.
“Certainly you don’t want to have a situation where you’re building promises on money you think you’ve got but you don’t have,” said Peter Gioia, an economist with the Connecticut Business and Industry Association.
Some legislative Democrats want to use the surplus to help taxpayers. Senate Democrats want to enact a state economic stimulus package coinciding with the federal package that includes rebates of $600 to $1,200 to most taxpayers and $300 checks to disabled veterans, the elderly and other low-income people.
Connecticut is set to receive about $2 billion from the federal program, Rell said. But the economists said it’s unlikely all the money will be spent because so many people say they plan to save their checks or use the cash to pay off debt.
Rell would not commit Monday to a state stimulus plan.
“We cannot spend money we do not have,” said Rell, a Republican. “I will not be stampeded into any kind of stimulus package until we know where we are and also, frankly, I’d like to see the results of the federal stimulus package that we get.”
The federal checks aren’t expected to be mailed until May.
Senate President Donald E. Williams Jr., D-Brooklyn, said he’s disappointed that Rell does not believe there’s an urgent need for a state stimulus plan.
In January, Senate Democrats proposed a package that includes a higher property tax credit for middle-class homeowners, tax credits for low-income workers, help for small businesses, energy assistance, a revolving loan fund for those about to lose their homes and restoration of the state Payment in Lieu of Taxes to municipalities for public housing.
“We proposed using the state surplus to pay for this one-time relief plan,” Williams said in a statement. “The idea is simple: the state has a surplus, but Connecticut families do not.”
The economists also warned that although 95 percent of the state’s labor force is employed, layoffs are expected in the financial services and insurance industries.
And Rell said the state should be concerned about a slump in slot machine revenue to the state from Connecticut’s two tribal casinos, and losses on Wall Street.
