With the volatile stock market still setting periodic records on Wall Street, state officials announced Tuesday that $1.1 billion in state income taxes will be set aside to pay off pension debts in a move that was described as shockingly good.

The better-than-expected increase means that the projected state budget surplus for the current fiscal year is now $256 million, up by $170 million from only 11 days ago. The biggest increase in taxes came from capital gains taxes on Wall Street, which are paid largely by Fairfield County millionaires and billionaires on a quarterly basis.

House Speaker Matt Ritter of Hartford emphasized that the state budget remains in solid shape after years of deficits in the past.

“This might be the most shocking consensus revenue numbers we’ve seen in years,” Ritter told reporters at the state Capitol. “Positive, yes. Right now, we’re in good times. Yes, it is [Wall Street] money, so we’ll have to continue to talk about that as we go forward. If I hear the word deficit … folks, the state is in a very solid financial position.”

Ritter has been optimistic recently, saying that he expects a vote in the coming days as the legislature expects to finalize its 2025 spending plans by reallocating about $300 million to $400 million in federal coronavirus money. That money remains unspent, and it will be reallocated by the legislature.

Tax collections in April were surprisingly better than expected in several major categories, except for the sales tax, officials said.

“Estimates and finals under the personal income tax have been revised upward by $500 million as April collections were particularly strong,” state budget director Jeffrey Beckham said. “April collections under the corporation tax were also strong, and that tax has been revised upward by $30.0 million. Similarly, pass-through entity tax revenue has been revised upward by $145.0 million as collections have exceeded estimates for this year. … Offsetting this positive news, the sales and use tax has been revised downward by $20.0 million, continuing a string of disappointing monthly collections.”

At the same time, Wall Street showed its volatility with a bad performance Tuesday on the final day of April as the S&P 500 index dropped 1.57%, the Dow Jones Industrial Average fell 1.49%, and the Nasdaq lost 2%. The Dow’s drop of 5% for the past 30 days marked the worst monthly loss since September 2022.

Lawmakers will keep the numbers in mind as they craft the final details of the spending plan before the 2024 regular legislative session adjourns on May 8. They are currently concentrating on allocating the federal money that has remained unspent.

Two of the biggest pots of money will be reassigned to public higher education and nonprofits that hold state contracts that provide services often at a lower price than state employees who operate group homes and other services. Two other major allocations will go to mental health care for children by boosting Medicaid rates for doctors and other providers, along with money for cities and towns that receive municipal aid. Those four items, he said, would take up about 75% of the reallocated federal money.

In a rare move, the legislature’s budget and tax committees did not issue wholesale recommendations to change the second year of the two-year budget that they originally approved last year. Instead, lawmakers will leave the second year of the budget intact and instead cover fiscal policies through the unspent federal funds under the American Rescue Plan Act, known in the common parlance as ARPA.

Lawmakers are planning to create a new “Stabilization Support and ARPA Replacement Fund” that would be held by the state treasurer, separate from other funds, and provide money for public higher education, including UConn and its health center, lawmakers said.

Despite spending hundreds of hours of public hearings and meetings during recent months on the $26 billion state budget for the fiscal year that starts on July 1, the budget will not be formally adjusted. One of the key issues is that lawmakers have little wiggle room as the proposed budget is about $1 million below the mandated spending cap, a tiny percentage of the overall budget.

House Republican leader Vincent Candelora of North Branford said he would not agree with Ritter’s characterization that the numbers were so good that they were “shocking” when compared to the past.

“I wouldn’t go that far,” Candelora said before the final numbers were released. “Certainly, we’ve seen capital gains earnings, so you’re going to see more revenue.”

Despite the good budget news, Candelora said lawmakers need to look to the future with caution.

“I’m not sure there’s a lot to really crow about,” Candelora said, “especially given the fact that these guys are going to gavel out without adjusting the budget as required and leave it in the hands of the governor to make those cuts.”