Projected Deficit Shrinks By $2.3 Million
The state’s finances showed slight improvement over last month with the projected operating deficit decreasing by $2.3 million, according to Budget Secretary Ben Barnes’ monthly letter to the comptroller.
The Office of Policy and Management estimated Friday that the state will end the year with a $272.5 million operating deficit under Generally Accepted Accounting Principles. On a non-GAAP basis, OPM expects the deficit to be around $197.5 million.
Barnes said the estimates are based on expenditures through April 30 and the impact of budget adjustment legislation lawmakers passed earlier in the month. The bill, which awaits Malloy’s signature, includes a delay in paying $222 million in funds previously designated to pay off borrowing the state did in 2009.
Barnes said he expects the money that would have been spent on paying down the Economic Recovery Notes to resolve the operating deficit for the fiscal year. Though Republicans have criticized the delay as a budgetary gimmick, Barnes said last month the state could take its time making payments without hurting its finances.
“This strategy will allow state government to use money saved to pay down debt early to cover the unexpected revenue shortfall, so that we won’t be forced to cut essential services for Connecticut’s most vulnerable residents,” Barnes said. “We will continue to pay down the ERNs in accordance with the required repayment schedule.”
The $2.3 million improvement in this month’s projections come from a decline in spending, which is now estimated at $35.1 million above appropriated levels.
Revenues remained stable on a net basis from last month’s estimates.
Since there is no surplus the state doesn’t plan on paying down the GAAP differential of $1.7 billion. Republicans have been critical of Gov. Dannel Malloy for not funding the transition this year. House Minority Leader Lawrence Cafero said the lack of funding for the GAAP transition represented a broken promise by the governor.
“He held this up as the signature issue and now because he mishandled the budget it will not happen. So much for Executive Order 1?” he said during the budget debate on the floor of the House.
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