Dueling Deficit Projections and a Hiring Freeze
It isn’t the first and it’s not likely to be the last time the legislature’s Office of Fiscal Analysis disagrees with Gov. Dannel P. Malloy’s administration on the size of the state’s budget deficit.
However, as disagreements go this one is big. The legislature’s nonpartisan Office of Fiscal Analysis reported on Friday that the size of the deficit is $138.6 million, about twice the size of the $64.4 million deficit reported on Jan. 22 by Office of Policy and Management Secretary Ben Barnes.
Lawmakers returned to the Capitol in December in an attempt to mitigate this year’s budget deficit by erasing $365 million in red ink, but it hasn’t stopped the hemorrhaging.
Since that time, the demand for Medicaid services has increased about $88 million, according to the OFA report. On the revenue side, the sales tax declined $116 million, or 2.9 percent, since the deficit mitigation in December.
The consensus revenue estimates the two budget agencies agreed to earlier this month show an overall decline in revenue projections of about $160 million. That’s not to say the state isn’t collecting more revenue than it was a year ago, it’s just not as much as it expected to receive based on rosier economic conditions.
Like state Comptroller Kevin Lembo, the Office of Fiscal Analysis isn’t as confident that the administration will be able to keep a lid on state agency spending. Shortly after the deficit mitigation plan was inked, Lembo predicted the state would still end the year in the red by about $40 million, mostly because of the potential for continued state agency spending.
Lembo’s latest numbers aren’t due out until Feb. 1.
Meanwhile, the Office of Fiscal Analysis said it calculated its numbers prior to Barnes’ Jan. 22 memo detailing a hiring freeze.
“Agencies should make every effort to organize work in a manner that obviates the need for hiring during the remainder of the fiscal year,” Barnes wrote to state agency commissioners. “Effective immediately, only requests to fill critical vacancies will be considered. In no case will hiring be approved which would result in an increase in the number of filled positions beyond the currently filled level; requests to fill positions will only be considered as new vacancies occur.”
In the end, neither deficit number triggers the need for another mitigation plan, since both are below 1 percent of the general fund which is about $19.1 billion this year.
Malloy will release his budget proposal for the next two fiscal years on Feb. 6.