Barnes Confirms $365M Deficit
by Christine Stuart | Nov 20, 2012 5:22pm
(6) Comments | Commenting has expired
Posted to: State Budget
(Updated 5:05 p.m.) Gov. Dannel P. Malloy’s budget director confirmed on Tuesday that the budget deficit has swelled to $365 million. That’s six times the size of the deficit state Comptroller Kevin Lembo certified on Nov. 1 .
In his monthly report to Lembo, Barnes said the increase in the deficit is due to a “combination of weaker revenue collections and an increase in estimated expenditure requirements, most notably for the Medicaid program.”
Revenues are down about $144.9 million from last month. Most of that is from tax refunds, which have been revised downward by $100 million.
“October was a particularly heavy refund month for both income taxes and corporation taxes,” Barnes said in his letter to Lembo. The tax refunds were made by filers who had received extensions.
The corporation tax has been revised downward by about $51.8 million to “reflect weak collections year-to-date,” Barnes said. And sales taxes are lagging about $43.7 million continuing their downward trajectory.
On the spending side, the state is spending $294.1 million over what it has budgeted, but that‘s partially offset by $54.1 million that the administration asked state agencies not to spend this year. The $240 million in overspending is a net increase of $160 million over last month’s forecast.
Most of the overspending is attributed to the increased enrollment in the Medicaid program for low-income adults.
The Correction Department is also spending about $20 million more than it budget for this year. Barnes attributed the shortfall to overly optimistic budget assumptions. The Department of Emergency Services and Public Protection is also spending about $13 million more than budgeted.
The Department of Children and Families will spend about $30 million less than anticipated as a result of caseload reductions and the Office of Legislative Management will spend about $4.5 million less than anticipated.
Barnes said he’s working on a budget mitigation plan to submit to the General Assembly next month, after Lembo certifies that the deficit is larger than 1 percent of this year’s $19.4 billion budget.
It’s likely that the $365 million is too big for Malloy to cut on his own, so he will need the legislature’s help.
Malloy has the authority to cut 5 percent of any appropriation and 3 percent of any fund in a financial crisis without legislative approval, but to make the $365 million in cuts it’s likely he will need legislative approval. Last year, the Democrat-controlled legislature rejected his request to increase his rescission authority to 10 percent of any appropriation and 5 percent of any fund.
Republican lawmakers are anxious to help their Democratic colleagues deal with the fiscal shortfall.
“A special session dedicated to dealing with the state’s deficit of $365 million for the current fiscal year can be efficient and organized if we get Democrats and Republicans and their respective staffs to work together ahead of time,’’ House Minority Leader Lawrence Cafero, R-Norwalk, said Monday. “It need not be a protracted session with hours of debate if there is a cooperative effort ahead of time.’‘
House and Senate Democrats have already told their members to prepare for a special session the week before Christmas. No date has been set and no plans for spending cuts have been presented.
Tags: deficit, Ben Barnes, budget, revenue, spending, lapses
(6) Comments
posted by: JAM | November 20, 2012 7:50pm
And we are supposed to believe that the increased enrollment in the Medicaid programs wasn’t known until after Election Day?
Clearly they knew it, knew the financial implications, and chose to keep it hidden.
posted by: perturbed | November 20, 2012 10:01pm
Why is there no mention of what was given away in corporate welfare? Didn’t that aggregate sum exceed the current deficit projection?
Seems like this administration is all mixed up when it comes to finances. When the Great Recession hit, immediate action was needed to address the immediate crisis. What did the Malloy administration do—with the full cooperation of SEBAC? They wrung long-term, structural concessions out of state workers. Remember? Raising the retirement age by three years; establishing a new retirement tier; doubling the early retirement penalty; slashing COLAs; taking 3% of all wages for 10 years to fund a health care trust fund. Not much in the way of short-term revenue raising to be had there. So the Malloy/SEBAC team had to fake the short-term savings in a suggestion box (and steal the health care trust fund contributions to fund operating expenses). Long term concessions to fix a short term budget crisis.
But wait, it gets worse.
Then, in a bizarre effort to compound their mistakes, they shoveled state money—money we now know the state didn’t have—into the coffers of insurance companies, hedge funds, etc., in pure speculation that someday, maybe within 10 years, the money they threw out would actually influence employment in CT and indirectly help the state economy. Short term deficit spending to help employment someday—maybe—in future years. This wasn’t stimulus spending.
What’s wrong with these people?
If Malloy was hoping to hold up unprecedented labor concessions like a trophy at the next election, and use the corporate welfare checks to buy campaign contributions, he’d better think again. There’s no way in hell he’ll ever get elected to a second term in this state. (Can you actually think of anyone you know that supports Malloy?)
—perturbed
posted by: christopherschaefer | November 21, 2012 8:15am
The federal government has admitted that it can’t pay for the health care ‘marketplace’ of ObamaCare, which would cost between $10 to $100 million per year in each state. Hence the necessity for each state to set up its own exchange, shouldering some of the costs. The problem with that notion is that nowhere in the 2,700 page Affordable Care Act is it written that the states will be REQUIRED to do so; the assumption is that the states would simply go along with the federal governments wishes. Because of this, the government cannot legally enforce the employer mandate ‘tax’ on employers in a state that has not set up an exchange. So here’s a question every taxpayer should be asking: If Conn. already has a projected deficit of over $300 Million, how does it plant to fund such an exchange?
posted by: Hoosier@CT | November 21, 2012 9:56am
Between our tax & spend Governor, and our spend & spend legislative representatives, it’s a wonder the deficit isn’t twice the projections. Who needed the New Britain Bus line? It would have been cheaper to give each of the riders a new car. Who needs the rail-line? Why are we paying companies to move their headquarters across the state? Why are we paying ransom to companies for assuring us they will be adding (at some point in the future) people to their pay roll? Why are we giving tax refunds to people who aren’t paying taxes?
While the Governor enacted the highest tax increase in recent memory after he stepped into office, we all can see the writing on the wall. When is a tax increase not a tax increase? That is when they remove some of the tax-breaks. I bet the first item on the agenda will be to get rid of the property tax refund that they already cut in half previously. There needs to be some serious belt tightening in Hartford, and some serious changes in leadership in the legislators. Look at each of these projects that Malloy is trying to push through and do a real “Cost Benefit Analysis”. If there is no return on the investment, DON’T DO IT!!! While UCONN would like a Learjet in order to teach the students how to maintain the mechanical workings of that jet, the taxpayers should not have to be paying for it.
We need representation of people who are actually fiscally conservative. Malloy promised us no more fiscal gimmickry in his administration, he is not walking the walk, it is all talk.
posted by: timelord | November 21, 2012 11:59am
Like I said before, eliminating the Earned Income Tax Credit would cover most of this deficit…
posted by: Reasonable | November 25, 2012 3:56pm
perturbed: You only address corporate welfare—but Connecticutis also the top, per-capita entitlement state in the country—and with unions evaporating state business and keeping towns and cities on the verge of bankruptcy, we are in bad shape. Unions also have a big impact on our continual escalating state budget deficit. Our Democratic leadership does not care however, as it helps them win state elections. The working people in Connecticut are screwed!