Lembo Confirms GAAP Deficit of $73.6M
by Christine Stuart | Feb 1, 2012 1:37pm
(4) Comments | Commenting has expired
Posted to: State Budget
State Comptroller Kevin Lembo said he’s anticipating the state will end the fiscal year with a $73.6 million deficit under Generally Accepted Accounting Principles. The estimate represents an erosion of about $82.3 million from last month’s projections.
“Despite the projected state shortfall, the economy continues to show slow and erratic growth – overall headed in a positive upward trajectory,” Lembo said.
Lembo expressed confidence Wednesday that Gov. Dannel P. Malloy will be able to correct the issue by taking the steps he’s already taken to rescind about $79 million in spending.
Office of Policy and Management Secretary Ben Barnes said last week that about $44 million of the $79 million have already been counted as lapses and about $34 million are in new spending cuts. Regardless, Lembo said he’s confident the Malloy administration will be able to balance the budget before the end of the fiscal year.
Lembo agreed with the Office of Policy and Management and the Office of Fiscal Analysis’s consensus revenue estimates which show revenues dropped by nearly $95 million largely due to low collections in estimated income tax payments.
State spending changed little from last month and is trending 2.3 percent more than last year, Lembo said. He said OPM’s projection of a 5.9 percent growth is dependent on $900.7 million in lapses or forced savings, which should be “attainable” even though they are higher than in previous years.
“In light of state spending trends – and the budget control mechanisms available to OPM – this estimated savings is reasonable,” Lembo said. “I must emphasize that my analysis is based on the total state spending trend for the year, and not on achieving savings in any individual areas within the budget plan. The potential need to shift funds in order to address a savings shortfall is ultimately a matter for the administration and legislature.”
The legislature’s Office of Fiscal Analysis believes the budget hole may be larger, but their estimates were completed last week before Malloy announced the $79 million in rescissions.
OFA pegged the deficit at $145 million, prior to the rescissions.
Neither Secretary Ben Barnes in his Jan. 20 letter to Lembo, or Lembo in his letter to Malloy Wednesday put a number on the potential projected deficiencies related to the changes made this summer to the state employees labor agreement.
Barnes acknowledged in his Jan. 20 letter that OPM is projecting two significant net deficiencies in the account that funds health care for retired state employees, and a shortfall is also expected in the account that funds pension payments to state employees. Some of those shortfalls are related to changes in the State Employees Bargaining Agent Coalition agreement and the 2,700 retirements that followed.
But no numbers were attached to those potential deficiencies.
Tags: Kevin Lembo, deficit, GAAP, lapse, Ben Barnes
(4) Comments
posted by: Disgruntled | February 1, 2012 1:45pm
QUICK DAN! Have Ben start polishing the mirrors and putting more wood on the fire,preferably green wood for LOTS of smoke!
posted by: Reasonable | February 1, 2012 2:53pm
Kevin Lembo can’t confirm a GAAP deficit of $76.6 million—as it’s only AN ESTIMATE.
A doctor told me that is should live to be one hundred years old, but I can’t count on it, as it’s only AN ESTIMATE.
Most politicians flower the truth—by giving us politically advantageous ESTIMATES.
Some call it—telling people what they want to hear!
posted by: Katydid | February 1, 2012 8:20pm
A few weeks ago I attended a conference in which Mr. Lembo explained the Healthcare Enhancement Plan (HEP). During questions and answers Senator Suzio said he could understand the long term savings from HEP, but in the short run, the first couple of years, it is likely to increase costs and not save the projected $105 million for each of the next two years. Comptroller Lembo responded by saying he “largely agreed” with Senator Suzio’s skepticism of the near term “savings”. This was stated in a public meeting and I believe was video taped. So how could the Comptroller be so confident about balancing the budget if the projected HEP savings are not likely to materialize, and in fact may end up adding costs to the near term state budget?
posted by: MPS | February 2, 2012 12:15pm
The dichotomy between spending and reductions will continue unless the governor’s office truly acknowledges the problem, which to this point he has not been willing accept. Numerous propositions have been submitted to OPM Secretary Ben Barnes and Malloy’s Office, but they have not received an honest evaluation. Quite the contrary, the recommendations were forwarded to our agency commissioner, who then engaged in a wild goose chase to determine who forwarded the proposal to those two respective entities instead of embracing the ideas suggested and the potential for multimillion dollar savings in redundant services and ovelapping employment. In the end, no commissioner will relinquish a penny unless forced to do so by the governor. They will justify all expenditures because they don’t want to eliminate any of their conceived programs, which are obsolete and those positions are filled by their favored employees.