CT News Junkie | Lembo Spies $40M In Red Ink

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Lembo Spies $40M In Red Ink

by | Jan 2, 2013 2:21pm
() Comments | Commenting has expired
Posted to: State Budget, Taxes, State Capitol

Despite the legislature’s best bipartisan effort to reduce the state budget deficit, state Comptroller Kevin Lembo told Gov. Dannel P. Malloy on Wednesday that the state still has a little further to go.

In his monthly letter to Malloy, Lembo projected the state will end the fiscal year in June with a $40 million deficit.

In December, Malloy’s budget office disagreed with Lembo on the size of the projected deficit. Malloy and the legislature worked to close a $365-million shortfall. Meanwhile, Lembo predicted the deficit would be closer to $415 million.

The difference in the deficit numbers was attributed entirely to higher spending projections.

The governor used his rescission authority to cut about $123 million from the budget and the bipartisan deficit mitigation legislation passed by lawmakers reduced the deficit by another $252.3 million.

Even so, in a Wednesday letter to Malloy, Lembo predicted the state will end the fiscal year $40 million in the red. Lembo noted that the projected deficit is not currently large enough to force Malloy to propose more deficit mitigation plans.

Lembo said that new revenue figures scheduled to be released Jan. 15 will impact his projections.

“Revenues through November have continued to underperform budget expectations, and the economy continues to recover at a slower pace than originally forecasted,” he said in a statement.

But he also cited some positive signs.

The state added 300 payroll jobs in November. Just over one quarter of the jobs lost to recession have been recovered to date. However, at 8.8 percent Connecticut’s unemployment rate was one percent above the national rate of 7.8 percent in November.

Office of Policy and Management Secretary Ben Barnes, Malloy’s budget director, said his office still did not agree with how the comptroller was calculating his projections. At the moment, he said the actions taken by the governor and the legislature will be sufficient to keep the state ledger in the black.

“I stand by our numbers. I’m very comfortable we’ve taken the appropriate actions to keep our budget balanced,” he said.

Barnes said the target number was agreed upon in conjunction with the nonpartisan Office of Fiscal Analysis and should be enough to keep the state from running into deficit this year. However, Barnes said these are fiscally uncertain times and circumstances could change. Revenue could come in weaker than expected, he said.

Barnes was critical of the steps taken recently by Congress to avoid self-imposed austerity measures aimed at reducing the federal deficit. The bill that was approved late Tuesday evening preserved the Bush-era tax cuts for people making less than $400,000 and couples making less than $450,000 a year, but allowed them to expire for those making more than that.

The bill delayed some harder decisions about spending cuts for a few months. Barnes said that “kicking the can down the road” contributes to the state’s uncertain economic outlook.

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(2) Archived Comments

posted by: Noteworthy | January 2, 2013  5:48pm

Of course, Malloy’s office disagrees with new budget numbers showing a continuing deficit. When has Malloy ever agreed with any adverse number from unemployment to the budget? Never. And who has been wrong every single time? Who has never been right, not even once on any number or projection relative to spending since taking office? That’s correct and that’s why I’ll put my wager on Lembo’s numbers. Get ready to find another $40 million - Is it EITC’s turn yet?

posted by: GoatBoyPHD | January 3, 2013  12:39pm

GoatBoyPHD

I know they haven’t calculated the fiscal cliff deal into their CT AGI expectations or the .6% decline in economic growth predicted by Mark Zandi as a result of that deal.

The phase in of Obamacare will also impact AGI expectations as tax deductions and expenses go higher.

Mark Zandi is estimating the fiscal cliff deal will cost the US 600,000 jobs and .6% growth. CT’s share of those 600,000 lost jobs? At least 6,000 jobs which are more job than were created since Dan Malloy entered office (CTs added 3,000 non-farm jobs since February 2011s numbers).