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Budget Continues To Bleed Red Ink, Year End Deficit Likely

by | Apr 20, 2012 6:30pm () Comments | Commenting has expired | Share
Posted to: State Budget, Taxes, State Capitol

It doesn’t include the latest tax collections, but the Office of Policy and Management estimated Friday that the state will end the year with a $141.9 million deficit, about $80 million worse than projected last month.

“It’s bad,” Office of Policy and Management Secretary Benjamin Barnes said Friday as he left the Capitol.

In his monthly letter to the state Comptroller Kevin Lembo, Barnes attributed the revenue loss to an increase in Medicaid spending and higher-than-expected tax refunds. However, the numbers released Friday don’t include the income tax collections from the April 17 tax deadline.

But based on where the budget is now, it’s not likely to erase the deficit despite the largest tax increase in the state’s history.

“Based on data through today, however, those collections are currently running at a pace insufficient to achieve our revenue target,” Barnes wrote. “Because April income tax collections have such a significant impact on year-end results, the weakness in collections to date suggested the possibility of ending the year with a significant budget deficit.”

Income tax collections were not adjusted in Barnes’ letter, but revenue was adjusted upward by about $10.9 million and tax refunds were revised downward by $70 million.

“The state is in the middle of the year’s busiest two weeks for tax collection,” Barnes said. “While early receipts are below targets, it is too soon to draw any firm conclusions about our income tax results for the year.”

Rep. Toni Walker, D-New Haven, said she personally knows a lot of people who filed extensions this year. She asked the state to figure out how many people filed for extensions and what impact that may have on final budget figures. She said there was a lot of uncertainty among her acquaintances regarding personal income this year.

At the moment, Barnes said there are no plans to offer any more executive agency recissions until after the April 30 consensus revenue estimates are compiled.

The $141.9 million deficit does not automatically require the governor to submit a deficit mitigation plan to the legislature because the deficit is still below 1 percent of the total budget.

Trying to find some positive news in the latest budget figures, Barnes said the Earned Income Tax Credit will cost about $5 million less than anticipated.

Last month, Barnes reported that the state issued $50 million more in personal income tax refunds than it had the previous fiscal year, but the accuracy of those numbers will come into sharper focus after the April collection period is tallied.

Lembo will release his budget estimated on May 1.

Earlier this month Lembo projected that the state will end the year with a $120.8 million deficit.

Lembo estimated that general fund revenue was falling $118.2 million short of original budget projections and net state spending was $49.7 million below the original budget plan.

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(5) Archived Comments

posted by: ALD | April 21, 2012  11:03am

Not to worry, once all the money saving ideas flooding in from the state worker suggestionn boxes get factored in, this well crafted budget will snap back into order like a Swiss watch. Yeah right

posted by: Noteworthy | April 21, 2012  7:45pm

I love saying “I told you so.” The stupidity of layering on the EITC is coming home to roost. Giving away free money to people who didn’t earn it just because they had a some sort of job is about as smart as handing out state bonuses, just for showing up at a desk with your name on it.

There really ought to be minimum standards of intelligence and skills to run for public office. To say we are poorly served by the current crop of non-representatives would be kind and generous.

posted by: SocialButterfly | April 21, 2012  8:09pm

It’s mind-boggling that Gov. Malley saddled taxpayers with a record $2 billion dollars in new taxes—and state is still mired in deficit spending.

Malloy “dug the state in a hole” when he didn’t make the budget cuts that were necessary, and did not get enough concessions from the unions—and kept on spending like he has an “
unlimited-cap credit card at his disposal.”

Malloy should try hire Tom Foley, as a successful businessman-consultant, to try to get the state out of financial hole he has administered, despite his massive taxation burden.

Malloy should give up on any bid to be reelected—and he should concentrate on clearing up our fiscal disorder.

posted by: state_employee | April 22, 2012  2:46pm

That state worker suggestion box is a load of crap.  I’m a state employee and early last year an email was sent out that asked for suggestions.  Since that time, there has been no communication about any suggestions, no further email, no meetings about savings, no follow up, nothing.  Malloy has been in a budget deficit since he took office, he increased the budget, spent like a drunken fool and lied lied lied.
He’s a disgrace.

posted by: soldoutbytheunion | April 28, 2012  10:50am

The budget shortfall is in large part due to the fdailure of the CT State Employee Health Enhancement Plan success!  That’s right….sucess.  This administration designed the program to fail, shooting for about 50% enrollment by employees, they recieved over 90% enrollment!  That’s $1700 per worker less than they projected for about 25,000 workers….for a total loss of $42.5 million dollars!  Ad to that the mismanagement of funds on the “Bus to nowhere” project that already been spent (a pittance to what will eventually be wasted) and the planned loss of revenue from the axing of the pheasant stocking program (a PROFITABLE state-run program….how may of those are there?) and it’s clear that the hopefully one-term MAlloy and his cronies lack the knowledge to run this state.  I won’t even get into the illegalities amok in the SEBAC issue…..can’t believe I voted for this guy!  I won’t make that mistake again!!!!

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