The governor stated in his budget address this week that his proposed budget for the fiscal year starting July 1 (FY 2015) had a “responsible surplus of over $300 million.”
The proposed budget’s surplus of $313 million is one of the smallest ever in terms of real dollars, and at an all-time low for the second year in a row if the surplus is measured as a share of the overall budget.
Why does the size of the surplus matter? Just like families don’t spend their bank accounts down to zero on December 31 because a new year is dawning and keep a cushion on hand for emergencies, so the state is obligated to run a surplus against unexpected expenses (like this year’s expenses for road salt) or lower-than-projected tax collections. The size of the surplus is even more important if revenue estimates are overly optimistic. (Of course, smaller surpluses also mean more money available to spend, and larger surpluses mean the opposite – a fact also particularly important during tight budget times.)
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