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Barnes Predicts Surplus

by | Apr 23, 2013 12:00pm () Comments | Commenting has expired | Share
Posted to: State Budget

While lawmakers and Gov. Dannel P. Malloy work on the $2.2 billion deficit over the next two years, things are beginning to look better for this year’s budget.

According to Office of Policy and Management Secretary Ben Barnes the state will end the year with $2.8 million surplus. That’s an improvement of more than $36.4 million over last month’s projections.

But that’s before April tax collection revenues have been calculated.

Barnes is estimating that revenues are up $52.3 million over last month. Most of that is due to the Inheritance Tax being revised upward by $90 million due to larger than normal collections. The sales tax has been revised downward by $15 million and continues to underperform.

“It should be noted that April is the most important month for Income Tax collections, and those receipts are still being tallied by the Department of Revenue Services,” Barnes wrote in his monthly letter to State Comptroller Kevin Lembo. “It would therefore be premature to modify our forecast for that revenue source at this time.”

On the spending side the $306 million in deficiencies are more than offset by the amount of money the administration has asked state agencies not to spend.

The most significant deficiency is the $247 million deficiency in the Department of Social Services’ Medicaid account, which is an improvement of $8 million over last month.

Lembo is expected to release his next monthly forecast on May 1.

On April 1, Lembo expressed optimism that the state would end the year in the black after months of deficits.

Even though Lembo predicted a $91.3 million deficit earlier this month, his projections were closer to Barnes’ than they have been over the past year. Last month Barnes projected the state would end the year with a $33.6 million deficit, a $57.7 million difference. The two have been further apart over the past fiscal year, but have gotten closer as the end of the year draws closer.

The legislature’s nonpartisan Office of Fiscal Analysis and the Office of Policy and Management are expected to release their revenue estimates later this month.

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(5) Archived Comments

posted by: JAM | April 23, 2013  1:44pm

According to his report he’s predicting a $45 Million deficit on a GAAP basis.
For an Administration that has continuously patted itself on the back over GAAP, it seems a little disingenous to be taking credit for a non-gaap surplus.
And $2.8 Million? That’s not even a rounding error on $20 Billion.

posted by: dano860 | April 24, 2013  7:29am

This will happen after they bond (borrow) their way to a surplus. Lets not forget that Dannel and Benny want to bond their GAAP plan.
That is like paying off one credit card with another, DUH!

posted by: Just another CT resident | April 24, 2013  8:06am

Great point JAM, that Barnes is still projecting our state will have a $45 million deficit this year under “generally accepted accounting principles” (AKA GAAP).

I will be extremely surprised if Barnes’ prediction of a surplus on a “budget basis” comes to fruition given his past track record.
However, I am surprised the fact of the deficit using GAAP did not make it into the headline or the article for that matter.

posted by: Christine Stuart | April 24, 2013  9:28am

Christine Stuart

Until they actually use GAAP I made a conscious decision not to include both the GAAP and the cash basis in my reports. If they borrow the money this year to pay for the GAAP differential that changes things. Even when Nancy Wyman was comptroller the state reported the GAAP deficit in its monthly numbers, but since no one was actually applying GAAP principles the number was fairly useless. At the same time, this is just another example of how well-informed CTNewsjunkie readers are to even pick up on that. There’s a valid argument to be made to report both numbers all the time, but I felt like readers might get confused. I guess I was wrong. Thanks for commenting.

posted by: JAM | April 25, 2013  9:06am

Christine,
Thanks for your comment.
Not to be argumentative, but the fact that the people in charge ignore(d) the GAAP numbers does not make them “useless” or meaningless. The now $1.5 Billion “GAAP” Deficit is proof enough.
It’s akin to paying the minimum on a credit card each month and thinking your “debt free.”

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