Deficit Up To $60.1 million
The state is just four months into the fiscal year and it’s $60.1 million in the red, according to Office of Policy and Management Secretary Ben Barnes.
In his monthly letter to state Comptroller Kevin Lembo, Barnes predicted that the deficit increased $33.2 million from last month’s estimated $26.9 million deficit.
“This change is due to weaker revenue collections,“ Barnes wrote. “As noted last month, significant uncertainty exists with regard to the national and global economic picture and, by extension, to the assumptions used in our estimates.”
Indian gaming revenue estimates have been revised downward by $25 million and the corporation tax was revised downward by $15 million, reflecting weaker collections, Barnes wrote.
Barnes said when the budget was passed it assumed a modest national economic expansion, which has yet to materialize.
Sales tax collections appear to be weaker than expected too, but all other revenues are up $6.8 million.
Last week, the Office of Fiscal Analysis predicted state revenue was down $71.6 million. But consensus revenue estimates, which are released three times a year, won’t be out until mid-November.
On the spending side, the Medicaid account is expected to run a $100 million deficiency because of the increasing case load of those seeking coverage through the Low Income Adults program, as well as increased utilization of medical services, Barnes said.
The state is seeking a federal waiver to impose a first of its kind asset test and kick up to 13,000 individuals off the Low Income Adults program. The Centers for Medicare and Medicaid Services could rule on the waiver as soon as Nov. 3, but a New Haven Legal Aide attorney has gone to court to ask the state to withdraw the waiver.
If the state fails to get the waiver from the feds it could blow an additional $50 million hole into the 2013 state budget.
Aside from Medicaid, the state is keeping a close eye on other state agencies, which have tendencies to overspend their appropriations, including the Corrections Department and Emergency Services and Public Protection.
“Recent expenditure and caseload trends, however, suggest the potential for an increase in this deficiency as the year progresses,“ Barnes wrote.
While it doesn’t completely off-set the deficit spending the Treasurer’s debt service account will bring in $20 million more than anticipated.
Lembo will certify his budget numbers on Nov. 1.