Connecticut Senate Democrats: Guide to the Connecticut State Budget
Guide to the Connecticut State Budget
Prepared by Senate Democrats
This guide seeks to outline in fairly simple terms the many complex
aspects of the state budget. It includes a look at revenues and
expenditures, a description of how the budget is formulated and
distributed, a timeline of the budget process, a list of other budget facts
and a glossary of budget terms.
In the General Assembly, the Finance, Revenue, and Bonding Committee oversees the
revenue side of the state budget, which includes fees and taxes. The committee also has
cognizance over contributions to the state’s unemployment compensation fund, and all
matters relating to the state Department of Revenue Services and the revenue aspects of the
Division of Special Revenue.
On the spending side of the budget, the legislature’s Appropriations Committee handles
matters regarding state agency budgets and other state spending such as state employees’
compensation (including salaries, benefits and retirement), the state teachers’ retirement and
veterans’ pensions plans. It also has the authority to approve or reject collective bargaining
agreements and arbitration awards for all state employees.
A BUDGET TIMELINE
The state budget is certainly not made in a day...
May through July: State agencies and commissioners prepare biennial budget projections.
June 30/July 1: Fiscal Year ends/New Fiscal Year begins.
August 1: State agencies and commissioners receive forms and instruction re: budget
requests.
September 1: Biennial budget requests due.
September through December: OPM reviews recommendations and makes adjustments.
December through January: OPM prepares proposed biennial budget.
February: Governor transmits budget to General Assembly.
February through May: General Assembly reviews governor’s budget recommendations,
holds public hearings, debates and makes adjustments.
May through June: Negotiations reconcile governor’s budget with General
Assembly budget. July: Reconciliation and balancing of just-ended fiscal year.
Connecticut Senate Democrats: Guide to the Connecticut State Budget
During odd-numbered years (i.e., 2015), the General
Assembly generates a two-year (biennial) budget. The
process begins with the Executive Branch, when the
governor asks the commissioner of each state agency to
prepare draft budgets for the following biennium. Over
several months the governor’s budget office, the Office of
Policy & Management (OPM), compiles this information,
makes changes as it sees fit, and then works to match the
agencies’ spending projections with revenue estimates for
the same period.
The result, often referred to as the ‘governor’s budget,’
is delivered to the General Assembly in a formal address
by the governor in early February. The annual budget
address often includes policy initiatives, spending
proposals, and vehicles through which additional
revenue may be generated. In the address, the
governor identifies his priorities for the biennium.
Beginning immediately thereafter, the legislature goes through a similar process to
determine spending priorities and corresponding revenue requirements. Later in
the session, the Appropriations and Finance Committees approve a budget, which
is often different from the governor’s. Negotiations with the governor’s office
reconcile the two versions and determine the final budget language and the state’s
fiscal roadmap for the following two years. Finally, the budget must be voted on
and passed by both the House and Senate and signed into law by the governor.
For additional, more detailed information, the General Assemby’s
nonpartisan Office of Fiscal Analysis has numerous documents
available on all aspects of the budget process.
After the budget has been finalized and adopted, the next step is implementation
and administration of the appropriated funds. Agency commissioners are responsible
for budget administration throughout the biennium. Funds are generally allocated
quarterly based on a plan submitted by the agency and approved by the governor
through the Office of Policy and Management.
Agencies may require additional allocations due to higher demand for programs
and services or higher-than-expected costs. Conversely, line-item surpluses may be
reallocated within an agency, subject to review and approval by the state’s Finance
Advisory Committee.
Connecticut Senate Democrats: Guide to the Connecticut State Budget
OTHER BUDGET FACTS THE RAINY DAY FUND
Since 1978 Connecticut state law provides for deposits into a Budget Reserve Fund, most
commonly referred to as the Rainy Day Fund. The Fund was created to close fiscal year-end
budget gaps; other uses would require new state law.
Current state law sets the maximum allowable balance for that fund at 10 percent of the
state’s General Fund appropriation. The fund has been depleted in recent years to help
balance the budget during the economic downturn.
CASINO REVENUE
Through a compact signed more than 20 years ago with Connecticut’s two federallyrecognized Native American tribes, the state receives a percentage of the slot machine revenue from the tribes’
two casinos. For the current (FY 17) fiscal year, that revenue is forecast to be about $267 million.
The revenue goes into the Mashantucket Pequot and Mohegan Fund ($58.1 million in FY 17), which is distributed to
municipalities, particularly those that are home to the Foxwoods and Mohegan Sun casinos. The balance of the
revenue is deposited into the state’s General Fund.
MUNICIPAL GRANT PROGRAMS
In the current fiscal year, Connecticut is poised to distribute over $3 billion — about 16 percent of the total
budget — in direct aid to the state’s cities and towns through a variety of grant programs. The vast majority of that
funding is channeled through the Education Cost Sharing (ECS) grant to help finance public education.
Some of the other primary municipal grant programs include: the Excess Cost Grant,
designed to mitigate the high cost of educating special needs students; Town Aid Road
(TAR) Fund, which helps maintain local streets and roads; and Payments In Lieu of Taxes
(PILOT), which compensates local governments for hosting tax-exempt institutions like notfor-profit hospitals and state-owned buildings that don’t pay local property taxes.
Municipal grants are awarded on a sliding scale based upon criteria including the economic
status of the city or town, the income level of its residents, and the worthiness of specific
infrastructure improvement projects.
BONDING
The General Assembly regularly enacts wide-ranging bond authorization legislation, the first of a two-step process
through which the state borrows money to finance long-term projects like statewide school construction,
transportation upgrades, and other capital improvement projects. The second phase of this two-step process is
allocation of funds by the State Bond Commission, which is chaired by the governor. It should be noted that simply
because the General Assembly authorizes bonding does not necessarily mean the Bond Commission will approve it.
Bond allocations are made directly to state agencies, which in turn administer distriibution of the funds.
A BUDGET GLOSSARY Below is a comprehensive glossary of budget terms, courtesy of the Office of Fiscal Analysis.
Allotment: A portion of an appropriation or Special fund made available to cover encumbrances and expenditures
for the certain period or purpose.
Appropriations: An authorization by the General Assembly to make expenditures and incur liabilities for specific
purposes.
Appropriations Committee: Composed of forty-four members including chairmen of several substantive
committees, this committee reviews all expenditure related matters. Subcommittees are utilized for the purpose of
reviewing agency budgets in detail with agency and budget staff.
Bond Allocation: After enabling legislation (Bond Authorization) is enacted, on agency needs a bond allocation in
order to actually commit funds for a project. Responsibility for allocating bond funds rests with the Bond
Commission. Allocations may be for planning, construction or both.
Bond Bill: Recommendations to the General Assembly by the Finance, Revenue and Bonding Committee for the
financing of new and revised capital projects.
Bond Commission: The Commission is composed of 10 members, 6 executive members and 4 legislative as
follows: the Governor, the Treasurer, the Comptroller, the Attorney General, the Secretary of the Office of Policy
and Management, the Commissioner of Administrative Services plus the chairpersons and ranking members of the
Connecticut Senate Democrats: Guide to the Connecticut State Budget
Finance, Revenue and Bonding Committee. The Commission determines which projects will go forward through its
power to allocate funds.
Budget: An estimate of proposal expenditures for a given period or purpose and the means of financing them, as
expressed in appropriation and revenue acts.
Budget Options: Significant increases or decreases to the "present level" budget are accomplished through an
accompanying budget option package which details individual adjustments to agency programs.
Budget Reserve Fund: (Rainy Day Fund) Consists of surplus funds from the operations of the General Fund (up
to a total of 10% of the General Fund). This fund is used to finance a state operating deficit at the end of a fiscal
year.
Capital Budget: That portion of the budget which deals with the estimates of proposed expenditures for land,
nonstructural improvements to land, structural replacements and major; or improvements and the means of
financing them (normally bond funds, paid off over a 20-year period).
Capital Projects Funds: A total of eighty funds established to account for bond funds used to acquire or construct
major capital facilities including highways and bridges.
Comptroller’s Office: The state’s office bookkeeper. The financial activities of state agencies are recorded
centrally in the records of the Comptroller. The constitution of the State of Connecticut vests in the Comptroller the
authority to prescribe the mode of keeping and rendering all public accounts. The Comptroller’s office is responsible
for producing and distributing monthly financial reports and also an Annual Report on the state’s revenue,
expenditures and related information.
Debt Service Funds: A group of eight funds in which are credited moneys to provide for the retirement of
principal and payment of interest on certain state-issued bonds. (Examples: University dormitories; rental
housing.)
Deficiency Appropriation: An additional (supplemental) appropriation made for an agency based on a need for
increased funding during a fiscal year.
Deficit: The excess of the liabilities and reserves of a fund over its assets, or the excess of the obligations,
reserves an unencumbered appropriations of a fund over its resources.
Disbursements: Payments in cash or check regardless of the purpose.
Equipment: This appropriation is used for the purpose of items which meet the definition of equipment.
Categories include: office equipment, motor vehicles, general plant equipment, educational, medical,
telecommunications and data processing.
Expenses: Costs of operating maintenance, interest, and other current expenditures for which no permanent or
subsequently convertible value is received.
Federal Grants: Funds made available to the state by the federal government for the purpose of reimbursing the
state for specific expenditures or to encourage specific programs or projects.
Fiduciary Funds: These funds account for assets held by the state as an agent for individuals or government
units. In the future, these assets will be transferred to other state funds or to sources outside the state (Examples:
various retirement funds, higher education endowed chair investment, real estate guarantee.)
Finance Advisory Committee: This committee is a joint legislative – executive body. It is composed of the
Governor, Lieutenant Governor, Treasurer, Comptroller, two Senate members and three house members of the
Appropriations Committee. The committee’s main task involves the approval of transfers between accounts within
an agency.
Finance, Revenue and Bonding Committee: This committee has cognizance of all matters relating to finance,
revenue, capital bonding and taxation and all bills on such matters favorably reported by any other committee.
Also, all matters relating to the Department of Revenue Services and revenue aspects of the Division of Special
Revenue are referred to this committee.
Fiscal Note: A fiscal note (fiscal impact statement) is a brief statement of costs or revenue impact, based on the
best available information, which is attached to favorably reported bills and also to amendments.
Fiscal Year: The 12-month period (July 1-June 30) at the end of which the state closes its books in order to
determine its financial condition and the results of its operations.
General Fund: The main operating fund of the state Government, within which are financed the ordinary,
everyday operations of the state for which special funds have not been established. This fund is financed by taxes,
federal aid, licenses, permits and fees. The fund operates principally under a budget plan adopted by the General
Assembly.
Governor’s Budget: The financial recommendations of the Governor contained in his budget document used to
Connecticut Senate Democrats: Guide to the Connecticut State Budget
present a comprehensive financial program to the General Assembly.
Internal Service Funds: These funds account for the financing of goods or services provided by one department
or agency primarily or solely to other departments or agencies of the state, or to other governmental units, on a
cost-reimbursed basis. (Examples: Correction industries, Data Processing; purchasing.)
Grant Payments to Towns: Directs payments for a specified purpose or reimbursements for expenses already
made. Education grants make up the largest portion of the state’s payments to towns. It should be noted that such
payments are made to the towns, not to the Boards of Education in each town.
Grant Payments Other Than Towns: These represent state obligations that are not part of an agency’s
operating budget. Examples are assistance payments to individuals, Aid to Families with Dependent Children
(AFDC), Medicaid, and payments to the Teachers’ Retirement Fund. Other examples are payments for contractual
services provided by non-profit entities and payments to retire state debt.
Lapse: The unexpended portion of an appropriation remaining at the end of the fiscal year.
Office of Fiscal Analysis: The General Assembly’s budget office which support the legislature in both budget
formulation and execution. This unit analyzes the Governor’s budget recommendations, determines fiscal impact of
legislation by completing fiscal notes on bills and amendments. The office also responds to fiscal requests by
legislators.
Office of Policy and Management: The executive branch budget office. Develops forms and instructions to be
used by state agencies in submitting their budget requests. Works closely with the Governor in developing his
budget for presentation to the legislature.
Other Expenses: This appropriation is to be used for operating expenses of the agency as well as miscellaneous
purposes not included in some other appropriation. The items charged to this appropriation are those under the
headings of contractual services, commodities (supplies) and Sundry charges.
Personal Services: An appropriation common to a state agency is to be used only for actual direct personal
services. All expenses changeable to this appropriation must be on a state payroll. Regular salaries, overtime,
payments for vacation and sick leave, longevity and shift differential are examples of items covered by this
account.
Program Budget: An estimate of proposed expenditures expressed as major programs of sub-programs of the
budgeted agencies and the means of financing them. Includes program objectives, description of program,
performance measures, and an explanation of significant program changes requested and recommended.
Reimbursement: Cash or other assets received as a repayment of the cost of work or services performed, or of
other expenditures made for or on behalf of another governmental unit, fund or department.
Revenue: Additions to cash or the current assets which neither increase any liability or reserve nor represent the
recovery of an expenditure.
Special Revenue Fund: Any fund which is to be used only in accordance with specific regulations, including any
fund created by law authorizing and requiring the receipt of specific taxes or other revenues to be used to finance
particular activities. (Examples: Transportation Fund, Soldiers, Sailors and Marines Fund, Regional Market
Operating Fund, Higher Education Tuition Funds.)
Surplus: The excess of the assets of a fund over its liabilities or the excess of its resources over its obligations and
reserves.
Transportation Fund: The operating fund of the State Transportation Department within which are financed the
ordinary, everyday operations of the department plus debt service on bonds issued for transportation purposes,
fringe benefits for DOT employees and other related costs.
Turnover: A reduction made in the personal services account of an agency based on the loss of employees
through attrition (retirement, quits), replacing them with new employees at lower salaries and delays in filling
vacant positions.
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