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Deficit Up To $60.1 million

by | Oct 22, 2012 8:17am () Comments | Commenting has expired | Share
Posted to: State Budget

The state is just four months into the fiscal year and it’s $60.1 million in the red, according to Office of Policy and Management Secretary Ben Barnes.

In his monthly letter to state Comptroller Kevin Lembo, Barnes predicted that the deficit increased $33.2 million from last month’s estimated $26.9 million deficit.

“This change is due to weaker revenue collections,“ Barnes wrote. “As noted last month, significant uncertainty exists with regard to the national and global economic picture and, by extension, to the assumptions used in our estimates.”

Indian gaming revenue estimates have been revised downward by $25 million and the corporation tax was revised downward by $15 million, reflecting weaker collections, Barnes wrote.

Barnes said when the budget was passed it assumed a modest national economic expansion, which has yet to materialize.

Sales tax collections appear to be weaker than expected too, but all other revenues are up $6.8 million.

Last week, the Office of Fiscal Analysis predicted state revenue was down $71.6 million. But consensus revenue estimates, which are released three times a year, won’t be out until mid-November.

On the spending side, the Medicaid account is expected to run a $100 million deficiency because of the increasing case load of those seeking coverage through the Low Income Adults program, as well as increased utilization of medical services, Barnes said.

The state is seeking a federal waiver to impose a first of its kind asset test and kick up to 13,000 individuals off the Low Income Adults program. The Centers for Medicare and Medicaid Services could rule on the waiver as soon as Nov. 3, but a New Haven Legal Aide attorney has gone to court to ask the state to withdraw the waiver.

If the state fails to get the waiver from the feds it could blow an additional $50 million hole into the 2013 state budget.

Aside from Medicaid, the state is keeping a close eye on other state agencies, which have tendencies to overspend their appropriations, including the Corrections Department and Emergency Services and Public Protection.

“Recent expenditure and caseload trends, however, suggest the potential for an increase in this deficiency as the year progresses,“ Barnes wrote.

While it doesn’t completely off-set the deficit spending the Treasurer’s debt service account will bring in $20 million more than anticipated.

Lembo will certify his budget numbers on Nov. 1.

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(15) Archived Comments

posted by: UConnHoop | October 22, 2012  9:44am

Barnes said when the budget was passed it assumed a modest national economic expansion, which has yet to materialize.

Gov. Malloy’s own budget director makes the case to vote for Romney better than anyone else.

posted by: ConnVoter | October 22, 2012  9:46am

What a surprise:  raising taxes led to lower revenues.  #calledit

posted by: skyrocket27 | October 22, 2012  10:32am

Assumptions were made by Governor Malloy and his budget chief Ben Barnes.  Obviously they were incorrect (to the tune of $60 million +).

Seems that their failure to effectively and honestly deal with the State’s budget mess is a reflection on their ability to effectively and honestly govern.

They have failed. Unfortunately we have to pay the price.  We need and deserve better.

posted by: JamesBronsdon | October 22, 2012  10:48am

We long ago hit the point where raising tax rates and adding new taxes had the opposite of the intended effect. There is no new way to increase tax revenues at this point.  (Hey, maybe we can sell busway sponsorships.  “This mile brought to you by Jackson Labs.”) Too bad the Governor locked us in to deals with the unionized work force that provide little or no flexibility to address the other side of the equation - runaway government spending.

posted by: DrHunterSThompson | October 22, 2012  3:07pm

Without cuts to towns and municipalities this issue will never be resolved, no matter how good the economy.


posted by: BMS | October 22, 2012  3:08pm

Malloy can not lay anyone off because of the SEBAC agreement. Maybe the state will have to do an early retirement to balance the budget.

posted by: Friend of the First Amendment | October 22, 2012  4:30pm

Just curious: Was the budget submitted by the Malloy administration and SEBAC EVER in balance?

posted by: Dave from News Talk Tonight | October 22, 2012  5:13pm

The assumptions made by Mr. Barnes and Gov. Malloy did not include a $100 Million hit for Medicaid.  That hit is off-set by the $20 million in debt service budgeted for, but now not needed to be paid, and further off-set by a payment of $50 million from the federal government.  This was an “assumption” that could not be made, nor forecast.  It also is not an accurate reflection of either Mr. Barnes’ or Gov. Malloy’s honesty, or their ability to govern effectively.  To say otherwise ignores the point made above.  Query - how much of the additional projected deficit is additional medicaid payments made from September (is that the reason why the waiver would blow an additional $50 Million hole into the budget?) and how much is related to the down-ward revising of income?  We also need to remember that the state was facing a $1 billion deficit last year, which the additional taxation brought down to a more manageable level.  Is $60.1 million in the red good?  Nope, but it IS better than $1 billion!  Just a thought.

posted by: meridenite | October 22, 2012  5:21pm

HST you nailed it. The aid to cities and towns will be cut by millions raising the property taxes on homeowners and businessses only making the situation worse, but malloy and his minions either don’t realize this or don’t care.

posted by: Michael | October 22, 2012  6:03pm

To BMS: Mr. Malloy has the power to lay off non-union state employees (which are mostly $six-figure management) and not fill vacant positions. Many management positions are redundant. So, there’s plently of low hanging fruit here, if Malloy so chooses to exercise that power.

posted by: Linda12 | October 22, 2012  7:37pm

If he cut down on his sweetheart deals for his crony political hacks and stop buying SUV’s for people who make well over $300,000 and have an additional expense account of $100,000 we could also save some money. Danny is spending our money faster than we can earn it. Why aren’t the legislators, both parties, holding him responsible? A hot tub and shack in Bantam seems like peanuts compared to this robbery of the taxpayers. Out with Malloy ASAP!

posted by: dano860 | October 22, 2012  10:08pm

An early retirement doesn’t reduce anything.  It shifts the burden to the under funded retirement fund.  Their retirement plan gives them 100% free insurance…at our expense!

posted by: oliviahuxtable | October 23, 2012  6:11pm

An early retirement incentive sounds like a plausible option. It saves money now and shifts the cost to a.time in the future when, thanks to Obama, the economy will be growing and revenues flush.

posted by: Michael | October 23, 2012  11:51pm

To oliviahuxtable: You made jest over a ‘growing economy’ and ‘flush revenue’? Economist Robert Reich says that the 1 percenters are pocketing over three-quarters of the expansion. You remember the jobless recovery, under Bush II? This is much worse. The robber barons are back, and it’s now called the plutocratic class. As bad as it is under O’Bama, there will be greater wealth making oppurtunities, for the rich, under Romney.

posted by: ConnVoter | October 24, 2012  8:25am

When are we going to realize that we can’t afford all of the government we have?  No government employee has a right to a job, and every one of us has a right to decide how much government we need.  If we’re the third-most heavily taxed state in the nation and we still aren’t bringing in revenue, then maybe we ought to turn the ship around and stop taxing the living crap out of people?

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