It’s official: $89-million deficit projected for CT this year [CT Mirror]

CT Mirror

The state budget received its first official deficit report Friday when the legislature’s non-partisan Office of Fiscal Analysis projected an $89.1 million shortfall in the general fund.

More than half of that deficit, about $59 million, stems from declining revenues, particularly involving receipts from Indian casinos and federal grants.

But analysts, who are tracking more than $85 million in “deficiencies” – potential cost overruns in various state departments, concluded they are offset by just under $55 million in projected departmental surpluses. That means overall spending is about $30 million over the $19 billion level approved by legislature last June.

The new forecast was included in the office’s Fiscal Accountability Report – an extensive analysis of a host of short- and long-term budget issues. Both OFA and Gov. Dannel P. Malloy’s budget office must submit this report to the legislature annually on Nov. 15 in preparation for the upcoming General Assembly session.

The administration was expected to file its report later this afternoon.

After spending months rejecting the likelihood of a deficit this year, Malloy conceded Thursday there was red ink to clean up when his budget office told agencies the governor would use his statutory authority to order emergency budget cuts later this month.

The governor also froze all-but-critical hiring across the Executive Branch, a move that raised concerns among state employee unions.

Malloy insisted repeatedly during the last campaign that “there’s not going to be a deficit” – a statement based on legal and fiscal semantics.

State law prohibits governors and legislatures from proposing or adopting unbalanced budgets. And if the comptroller anticipates a deficit after the fiscal year has begun, it must be resolved before the books are closed – even if it takes borrowing.

In other words, under the governor’s definition, a budget deficit is legally impossible in Connecticut. Only a deficit projection can occur.

In fact, one projected shortfall that Malloy frequently refers to as a “deficit” is the $3.7 billion gap built into the 2011-12 state budget by his predecessor – Gov. M. Jodi Rell – and by the 2010 legislature.

The Democratic governor’s Republican critics frequently have accused him of taking advantage of the public – and the media’s – misconceptions about state finances

Senator Len Fasano, R-North Haven, the new minority leader, charged the governor Friday with playing games in reporting Connecticut’s finances.

“Things were rosy before the election, and now all of a sudden we have a problem? The timing of these announcements raises serious questions. It doesn’t pass the smell test,” Fasano said.