Revenue Continues to Fall As State Looks To Rainy Day Fund
Connecticut’s budget deficit has grown to $315.8 million and the state will have to use more of the Rainy Day Fund than expected to cover the shortfall in this year’s budget.
Office of Policy and Management Secretary Ben Barnes said Monday that the deficit has increased by about $56.7 million from last month’s estimates. It means the state will only have about $90.2 million left in its Rainy Day Fund because it will have to use $315.8 million of the $406 million Rainy Day Fund to close the deficit.
In his monthly letter to state Comptroller Kevin Lembo, Barnes said that revenues continue to decline. The personal income tax is down about $75 million and the sales tax is down about $28.2 million.
Overall, revenues are about $600 million lower than projected when the year started, Barnes said.
“We’re facing a sustained period of slower-than-normal growth as we adjust to this new economic reality,” Barnes said. “OPM projects that the State will need to use the Rainy Day Fund to offset the revenue shortfall, leaving less than $100 million remaining. We are committed to making difficult choices to reduce spending throughout the end of this fiscal year and into the next.”
The new fiscal year starts on July 1.
Senate Minority Leader Len Fasano, R-North Haven, said the drop in income tax receipts shows that people or jobs are leaving the state.
“The drop in sales tax, the second largest revenue source for the state which usually meets its targets, is also extremely concerning,” Fasano said. “Had the majority heeded Republican calls years ago, our families wouldn’t be facing the severe problems before us today. Instead Democrats dismissed Republicans, saying we were simply rooting for failure.”
House Minority Leader Themis Klarides, R-Derby, said if the Democrats would consider alternatives put forth by Republicans they might be able to balance the budget in the future.
“The state’s finances, of course, will continue to decay because we have failed to institute any significant changes to stabilize our finances,” Klarides said. “These new deficit numbers were foreshadowed by last month’s job loss report.”