Fasano Renews Call for Special Session to Address Budget Deficit [JI]

December 3, 2014

Journal Inquirer
Comptroller Kevin Lembo on Monday criticized the state’s delayed reporting of more than $60 million in lost federal revenue, and said emergency cuts only reduce a projected budget shortfall by roughly half.

Lembo told Gov. Dannel P. Malloy in a letter that the state is on pace for a $44.8 million deficit, or slightly less than half of the $99.5 million shortfall that Malloy’s budget office, the Office of Policy and Management, projected Nov. 14.

Lembo said the largest reason for the deficit is a reduction of $61.2 million in expected federal grants, and he is “deeply concerned that this significant decline in federal revenue was not identified earlier in the fiscal year,” which began July 1.

He also said in his letter that OPM has since developed an automated grant process that creates a centralized database of federal grants for all state agencies within specific program areas.

“It is critical that we have timely and accurate reporting of all planned and realized federal claims during a fiscal year,” Lembo said. “A recurrence of last month’s shortfall projection is unacceptable and prevents me from accurately reporting on the state’s financial condition.”
Even though OPM’s $54.7 million in rescission cuts failed to cover the entire projected deficit, Lembo expressed confidence in his letter that the state would end the year with a balanced budget.

He said state and nationwide employment numbers have been improving, indicating growth for both the economy and state revenues.

“Major economic indicators have been strengthening in recent months,” he said. “I am hopeful that the upward trend continues and provides some additional budget relief.”

Lembo said the state has recovered 73.8 percent of the 119,100 jobs lost as a result of the 2008 recession, and that recent Department of Labor statistics also show that wages and salaries are on the rise.

Malloy has characterized the deficit as mainly being the result of slow income into the state early in the fiscal year.

OPM and the legislature’s nonpartisan Office of Fiscal Analysis released a joint statement on consensus revenues in November saying state income would be $59.1 million less than budgeted this year.

OPM has said that a hiring freeze and other efforts to limit spending by state agencies, coupled with the rescissions, would get the state’s budget in balance.

But incoming Senate Minority Leader Leonard Fasano, R-North Haven, repeated his call Tuesday for the legislature to hold a special session and address the budget deficit.

Fasano also said he still believes OPM is ignoring deficiencies, or budget shortfalls, cited by OFA, which has projected the deficit at $89.1 million.

Fasano and incoming House Minority Leader Themis Klarides, R-Derby, have previously expressed concerns that the budget deficit could approach $200 million, exceeding a 1 percent threshold that would require Malloy to get legislative approval on a formal budget reduction plan.

Fasano said Tuesday that the legislature should meet regardless of the deficit figure, because such a move would allow the legislature to reopen the budget. State law allows Malloy to cut up to 5 percent of any single fund.

“It really doesn’t really matter to me what the number is,” Fasano said. “What matters in my book is that we have a shortfall.”