After years of budget surpluses, Connecticut is facing its first deficit, comptroller says

Hartford Courant – Sunday, May 3, 2026
By Stephen Underwood

After years of continuous budget surpluses, Connecticut leaders are now projecting a budget deficit of $109 million in the state’s General Fund, officials said.

Connecticut Comptroller Sean Scanlon announced the updated budget deficit on Friday in general agreement with the Office of Policy and Management’s projections. However, the comptroller said his office projects a lower General Fund ending balance due to rising costs in the retired state employees health service cost account.

Connecticut state employee retirement health benefits include subsidized medical coverage, with employees who have over 25 years of service able to access lower-cost plans, according to the state. But health care costs continue to rise, according to state leaders.

The decrease in the surplus was partly driven by downward revisions in revenue estimates of approximately $81.7 million, according to Scanlon.

Despite the General Fund deficit, the comptroller’s office said the state’s Special Transportation Fund has a surplus of $119.7 million, showing the complexity of the state’s finances. The Special Transportation Fund is considered a “lockbox” fund established in 1983 to finance state highway, bridge and public transit projects, along with Department of Transportation and Department of Motor Vehicle operating costs.

“Yesterday’s consensus revenue forecast demonstrates both the challenges and opportunities facing Connecticut’s budget this year and beyond. The fiscal guardrails have without question gotten us out of a fiscal crisis. They’ve also created the outwardly confusing situation in which, on paper, we have a small general fund budget deficit when, in reality, we have a $1.99 billion surplus across all accounts,” Scanlon said in a release on Friday.

Despite the deficit, the state retains a robust $2.1 billion in “rainy day” savings and has experienced a late-session revenue surge from investment-related taxes, making the overall fiscal outlook stable, Scanlon said. The $109 million shortfall is also relatively small, representing a fraction of 1% of the overall $27.2 billion General Fund budget, he said.

“This is the reality the governor and legislature are grappling with as they work to finalize a budget that continues our fiscal progress while also recognizing the resources we have. And how we find that balance long-term is something I believe strongly we must find consensus on before our next biennial budget,” he said.

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