The Importance of Connecticut’s Budget Reserve Fund As Connecticut Relies Increasingly on Its Personal Income Tax

Back • Publication Date: June 20th, 2007

Authors: Douglas Hall, Ph.D. and Shelley Geballe, J.D., M.P.H.

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As proposals for a more progressive personal income tax are discussed, it is important to use some of the state surplus to increase the state’s Budget Reserve (Rainy Day) Fund to provide some buffer against the increased volatility of that tax. The Fund, now at 8% of net General Fund appropriations, is not adequate and is capped, by state statute, at 10%. This report discusses the importance of the Fund, and urges that it be increased to 15% of net General Fund appropriations.