Lembo Certifies $131.1M Budget Deficit
State Comptroller Kevin Lembo believes the state’s current budget deficit is bigger than both the legislature’s Office of Fiscal Analysis and the governor’s budget office.
On Friday, Lembo certified a $131.3 million deficit, which is about $9 million lower than the one he certified at the beginning of February.
Earlier this week the legislature’s Office of Fiscal Analysis pegged this year’s deficit at $128 million and the governor’s Office of Policy and Management estimated that it was $55.7 million.
In Friday’s letter to Gov. Dannel P. Malloy, Lembo said that he continues to agree with the revenue forecast, although the spending trend that he is using is about $75.6 million above estimates by the governor’s budget office. The primary difference falls within the Medicaid appropriations where caseloads continue to exceed expectations.
“The slow growth in the national economy has created increasing demand for state services while at the same time producing lower revenue collections,” Lembo wrote. “Traditionally, even after the national economy improves, there is a lag before the state budget realizes the full benefit of the general economic improvement.”
Lembo and Office of Policy and Management Secretary Ben Barnes may not agree on the size of the deficit, but they agree on the importance of April.
“April is a significant month for income tax collections, and recent federal tax changes combined with favorable market performance could result in a shift of capital gains revenue from future years to the current budget year,” Lembo said. “This would improve the present budget forecast, so my office will continue to modify these projections based on actual experience.
Barnes noted that only about half of the income tax for the year has been collected to date, which makes April the most significant month for income tax collections. Barnes anticipated that Connecticut could do well in April.
“Changes in taxpayer behavior due to the federal fiscal cliff may result in potential one-time gains in those April collections,” he said in his Feb. 20 letter to Lembo.
But at the moment the economy continues to recover at a slower pace than originally forecast, Lembo said.
The state lost 1,800 jobs in December and the unemployment rate remains at 8.6 percent.
“Just under one quarter of the jobs lost to recession have been recovered to date,” Lembo said. “Connecticut’s unemployment rate remains historically high at 8.6 percent; the national rate was also disappointing at 7.9 percent in January.”