A report released Tuesday projects a sizable state budget surplus in the coming years.

The consensus revenue report from fiscal years 2021-23, agreed on by the Legislative and Executive branches’ Office of Policy and Management and Office of Fiscal Analysis, predicts the state to have a more than $2.2 billion surplus for this fiscal year and $1.9 billion for next year’s.

The state is projecting $600 million more in revenue than originally estimated when the budget passed last year. However, between state employee pensions and teachers’ pensions, the state faces almost $41 billion in unfunded pension liabilities.

State Sen. Cathy Osten, D-Sprague, is the co-chair of the Appropriations Committee and deeply involved with the process of determining how the state should spend its money. She said that while funding programs is important and lowering taxes is possible, paying down the unfunded obligations is the most important development, calling it “the biggest thing of all.”

“Our problem continues to be that debt we achieved before 1986, which has continued to hang around our shoulders and not allowed us the resources to deal with big issues, like the recession, in the past,” she said. “In 2008, we were dead in the water, and now, in the pandemic, based on the federal dollars but also based on the fact we’re starting to pay this pension debt down, we have options.”

The state’s rainy day fund, currently at $3.1 billion, is capped at 15% of the state’s budget, and excess money is legally bound to go toward paying down pensions. Last year the state paid down $63 million, Osten said, and “this year we paid about $1.6 billion and we have about $2 billion that could go on our pension plan after the books close in September.”

Osten confirmed that federal COVID-19 relief funding “certainly” helped the state. “It helped stabilize us for the next at least three years because without that, we wouldn’t have had the surplus in each year,” she said. “Having the federal dollars allowed us to be stable, to spend the money we needed for our social safety net programs and it certainly was something that allowed us to have this surplus.”

Following Tuesday’s report, Osten said she will be prioritizing issues like “making sure our nonprofits are making a living wage” and “to make sure those most vulnerable people, whether it’s a group home with developmental disabilities or children waiting in hospitals for beds or people with mental health issues — these are things I believe we have an obligation to take care of, and this will allow us to do some of that.”

According to a CT Community Nonprofit Alliance survey of member nonprofit organizations, 91% of respondents reported it difficult or extremely difficult to recruit employees over the past year. The survey also found that there is an 18% average job vacancy rate for member nonprofits.

According to the survey and multiple nonprofit leaders at a Tuesday news conference, many nonprofits are having trouble hiring in part because the organizations are competing with the service industry for employees.

The nonprofit groups also noted on Tuesday that Connecticut is in good economic standing, flush from federal pandemic aid, increased revenue and a full rainy day fund.

“Like Mental Health CT and some of the other nonprofits we’re referencing this morning, at Community Solutions now 175 of our positions are vacant, and we’re struggling to hire and retain qualified staff at all levels of the organization,” president and CEO of United Services Fernando Muniz said Tuesday. “The rainy day fund is full, and if this is not the rainy day we’ve been waiting for, I don’t know what is.”

On Wednesday, Osten highlighted another way Connecticut’s budget surplus could help people.

“This will allow us to give municipalities the resources they need to drop the property tax, the worst tax that we have of all, but also municipalities’ sole source of revenue aside from what they get from the state,” she said. “That will help out the normal middle class family that’s making between $50,000 and $100,000 to see an end in sight on rising costs.”

s.spinella@theday.com