Lower gas prices widen state budget deficit [WTNH]

January 20, 2015


HARTFORD, Conn. (WTNH)– While low gas prices are a blessing to most of us, they’re giving Governor Malloy a budget deficit headache. Republicans are roaring that the Governor’s rosy budget outlook was all false.

The Governor decided to take a long weekend out of state with his family just as the number-crunchers at the state capitol released their latest projections, and the red ink got worse.

“We’re still facing a $3 billion deficit in the next two years, we’re at a $70 million deficit for this fiscal year, which is almost twice what it was in December when they claimed it was going to be lower,” said Rep. Themis Klarides, R-Derby, the newly elected Republican leader in the House.

“With the largest tax increase in Connecticut’s history, we’re back to where we started four years ago,” said the new Republican leader in the Senate, Len Fasano, R-North Haven.

With the Governor out of town, the administration had to respond through a spokesman at the Governor’s budget office. Gian-Carl Casa, the Undersecretary for Legislative Affairs at the Office of Policy and Management, sent an e-mail saying that the lower revenue was “largely due to lower oil prices. We are confident we can balance the budget through reduced spending between now and June 30th,” the end of this budget year.

He’s talking about that tax on gasoline we reported to you about earlier this week. As the price of gas sinks like a rock so does the 8.1-percent Gross Receipts Tax on the wholesale price. It’s estimated that it will sink even more in the next budget year.

“Clearly we can’t depend on the Gross Receipts Tax and clearly this state has very little appetite for tolls,” said Fasano.

While both Republicans and Democrats applaud the Governor’s plans to rebuild the state’s transportation system, paying for it is becoming more and more of a challenge every day.

“That was always the problem with the Gross Receipts Tax, it’s very volatile because it’s completely tied to the wholesale price of gas,” said Klarides.

There was some good news for the Governor. In addition to all the money that’s being saved with low gas prices for state vehicles, receipts from the state income tax are up and projected to keep going up, but not enough to wipe out those big deficits in the next two years.