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May 25, 2024

New study shows Connecticut Rainy Day Fund improving

A new study shows The Constitution State can survive for about 70 days on its Rainy Day Fund, which is a far cry from where the fund stood just over a decade ago.

Pew Charitable Trusts reports that in 2021, Connecticut has an estimated $3.749 billion in its Rainy Day Fund, allowing the state to operate for 69.7 days if it had no other funding source. That number is above the 29.4 day national average.

In 2010, the state had no money in the fund, according to data provided by Pew.

Pew cites “unprecedented federal aid” and “smaller-than-anticipated” tax revenue shortfalls that have put states in a position where they haven’t dipped into the Rainy Day Funds since the pandemic began in early 2020. The report shows that with states not having to use the funds and combined with budget surpluses, Rainy Day Funds are expected to exceed where they were before the pandemic.

In the study, it was reported that the state could operate for 69.7 days on total balances from the FY21 budget, above the 55.1 days national average.

Since 2010, data shows, Connecticut has slowly built the Rainy Day Fund, going from zero days that fiscal year to 4.8 days and $237 million in 2011. Since then, the state has grown the Rainy Day Fund.

Over the past three years of the study, the fund grew significantly from 23.2 days and $1.185 billion in 2018 to 47.4 days and $2.506 billion in 2019. In 2020, the fund saw a balance of $3.075 billion that would last 58.5 days.

Across the nation, Pew reported, Rainy Day Fund balances dropped as states relied on those reserves to address the recession and public health emergency caused by the COVID-19 pandemic.

The report indicated that states are putting funding aside during the current fiscal year, according to the National Association of State Budget Officers, for future use.

This article was originally posted on New study shows Connecticut Rainy Day Fund improving

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