Last year at this time, Gov. Lowell P. Weicker Jr. of Connecticut and state legislators confronted a $965 million deficit.
Now the state has a projected $30 million surplus for fiscal 1992, according to a preliminary report by the state Office of Policy and Management and the Connecticut Development Authority.
The report attributes this surplus to revenues in calendar 1992 from a new income tax, higher-than-expected corporate tax revenues, and streamlining of the state government.
The $30 million figure is a conservative estimate, the report notes, because payments are still being received on products purchased in fiscal 1992.
Avice A. Mechan, press secretary to Gov. Weicker, said that although $30 million does not represent that much money, it suggests "a light at the end of the tunnel" for the first time since 1989.
"It's really our first sign of recovery," Ms. Meechan said. "More than anything else, the report says that we have the economic ability to overcome the state's problems."
Ms. Meehan pointed to several segments of the state economy that contain positive news.
For one, she said, increased revenues through corporate taxes indicate that businesses in the state now expect to be more profitable in calender 1992 than originally expected.
Ms. Meehan said that new incentives for business include incremental tax financing for major projects, expanded eligibility for enterprise zones, tax credits for firms involved in research and development and for new firms that promise to create over 1,000 jobs, and an update on manufacturing tax codes.
"We are very encouraged about the long-term prognosis for the state's economy," said William J. Cibes Jr., secretary of the Office of Policy and Management. "We expected some degree of improvement this year, but the reversal of the deficit is extremely encouraging."
According to Ms. Meehan, Connecticut's fall from prosperity began with the first whiff of an economic slowdown in the mid-1980s.
In 1986, spurred by defense spending and pharmaceutical companies two of Connecticut's largest industries, the state had a $350 million surplus.
The following year, the surplus measured at $387 million, but a slowdown in real estate purchases signaled future problems.
But by 1988, a $104 million deficit was reported. A $27 million deficit was reported in 1989, a $260 million deficit in 1990, and a $965 million deficit in 1991.
In the most recent report, the employment sector registered some of the largest projected gains.
The report says that although jobs will be lost in 1992, the rate of decline will lessen.
Some companies, especially those that are service-related, continue to struggle.
In 1986, 28,700 new jobs were created in Connecticut. Since then, the new-job rate has decreased at least 30% each year. In 1991, the new-job rate fell 67% from 1990. Preliminary figures have the new-job rate increasing 54% in 1992.
The manufacturing sector has been particularly hard hit by Connecticut's fiscal woes, the report says. Last year, 21,700 manufacturing jobs were lost.
Including the month of May, manufacturing jobs shrank at an average yearly rate of 11,900 jobs, marking a 45% improvment.
The report states this will be the largest single-year reversal in the manufacturing sector since 1968.
At a press conference held Friday morning to announce the committee's findings, Gov. Weicker said that one reason the state is heading toward a surplus is because of aggressive efforts to shrink state government, according to Ms. Meehan.
From Jan. 31, 1991, to July 1, 1992, there were 939 fewer fulltime employees in state agencies, the report says.
Most hurt by the cuts have been the state Department of Environmental Protection, which shrunk by 214, and the Department of Public Safety, reported off by 191.
Another sector of the economy that has improved is the lending ability of the banks operating instate, the report says.
According to this year's report, the survey projects $45 billion in loans. In 1989, 111 banks in the state lent $46.7 billion. Last year, banks loaned $42 billion.
Mr. Cibes said the state has received a further boost from the state's controversial income tax.
"The improvement in revenues realized this year through the income tax has been encouraging," Mr. Cibes said. "So far, withholdings have been where we expected and revenues are up, suggesting forward movement in individual earnings."
Ms. Meehan said that Connecticut hopes to bring in $1.95 billion through the income tax.
The report said that the improvements in income tax revenues reflect underlying economic strength.
Steven Hochman, vice president at Moody's Investors Service, said the deficit reversal is a plus for the state because it will be able to reduce the amount of outstanding deficit notes.