Revenue

Revenue is the income or money the State receives from taxes, fees, and other sources. Almost all of Connecticut’s revenues come from taxes on Connecticut residents. Since fiscal year 2000, Connecticut's General Fund gross tax revenues have increased 40.8 percent overall — rising from $13 billion in fiscal year 2000 to $18.3 billion in fiscal year 2018.

The State's largest source of revenue in fiscal year 2018 was the Personal Income Tax, which yielded nearly $10.8 billion or 59 percent of the State's total gross tax revenues. Along with the Personal Income Tax, Connecticut's greatest sources of tax revenue for fiscal year 2018 came from the Sales & Use Tax ($4.2 billion or 23 percent) and the Corporations Business Tax ($921 million or five percent). Together, these three revenue sources alone accounted for $15.9 billion (86.7 percent) of Connecticut's $18.3 billion in gross tax revenues in fiscal year 2018.

Over the past 18 years, there have been numerous changes to the tax code, including Personal Income Tax rate increases (2003, 2009, 2011, and 2015), an increase to the Sales and Use Tax rate (2011), and multiple changes to the surcharge rate for the Corporation Business Tax. Despite these changes, overall revenues have stagnated in recent years (with the exception of a boom in Personal Income Tax revenue in fiscal year 2018 attributed in large part as a response to federal tax policy changes), and the State's actual realized revenues have routinely fallen short of the revenues projected in the budget.

Since fiscal year 2000, annual realized revenues have fallen short of annual projected revenues eight times. The other 11 years, realized revenues exceeded projections. However, of the eight years with revenue shortfalls, six have occurred since the Great Recession.

The average revenue surplus in years where realized revenues exceeded projections was $648 million while the average revenue shortfall, in years where realized revenues fell short of projections, was $578 million. In fact, the cumulative revenue shortfall since the Great Recession, less the surpluses in fiscal years 2010, 2011, 2013 and 2014, is approximately $1.95 billion.

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