Revenues Already Falling Short In Bipartisan Budget
HARTFORD, CT — The budget is only a few weeks old, but already revenues are falling short of where they were projected.
Part of the issue is related to the revenue the state expects to receive from the federal government for an increase in the hospital provider tax.
Gov. Dannel P. Malloy line-item vetoed the amount of money the state expected to give back to the hospitals as part of his decision to sign the two-year, $41.3 billion budget. However, lawmakers are expected to return Tuesday and Wednesday to make the changes necessary to correct the problem Malloy identified with his line-item veto.
The latest revenue estimates from the Office of Fiscal Analysis and the Office of Policy and Management show that if the legislature doesn’t make changes the state will be about $1.5 billion off in balancing each of the next two fiscal years. If the legislature does make the necessary changes, then the revenues will fall about $178.4 million shy of expectations in 2018 and $147.1 million in 2019.
“These numbers are disappointing but not unexpected,” Senate President Martin Looney, D-New Haven, and Senate Republican President Len Fasano, R-North Haven, said in a statement. “It’s clear that now is the time to give cooperation and collaboration a chance to build on the bipartisan budget passed into law last month, which makes important long-term systemic reforms. Many of these structural changes may not result in an instantaneous change, but rather will begin the process to improve financial management and eliminate this type of volatility and unpredictability in the future.”
House Minority Leader Themis Klarides, R-Derby, wasn’t as generous as her Republican colleague in the Senate.
She blamed Malloy, who is not seeking re-election, for any deficit the state experiences even though he did not negotiate the budget that’s currently experiencing the deficit.
“Gov Malloy has insisted, throughout his two terms in Hartford, that Connecticut would end each year of its two year-year biennial budgets in the black, and each year he has been wrong,” Klarides said. “He has racked up massive deficits and raised taxes, and the Democrats in the legislature complied. Now, when he is not facing re-election and Democrats in the House and Senate had no alternatives, we crafted a compromise budget.”
Aside from the money tied to the hospital tax arrangement, the state sales and use taxes are short about $70 million, the withholding portion of the income tax is off about $34.1 million, and all other federal grants are about $93.5 million less than what was projected.
“The Governor’s caution regarding our ability to get through FY18 in balance under the bipartisan budget passed by the General Assembly was well-warranted,” Office of Policy and Management Secretary Ben Barnes, said. “This consensus revenue projection will likely place us more than $178 million in deficit before we have even had an opportunity to effectuate the large lapses and spending cuts built into the budget.”
In a week, the Office of Policy and Management will report its projections to state Comptroller Kevin Lembo, who will issue his own report on Monday, Dec. 4.