Revenues Continue to Lag [CT News Junkie]

CT News Junkie
Budget analysts were unable to offer Democratic Gov. Dannel P. Malloy any good news as he planned to leave today for his first vacation in years.

Revenues haven’t improved as much as he had hoped leaving him with the responsibility of closing a $36 million deficit this year and billion dollar deficits in each of the next two years, according to a new report from budget analysts.

Shortly after winning a second term, budget analysts at the Office of Policy and Management and the legislature’s nonpartisan Office of Fiscal Analysis determined that revenues were lagging projections by about $65 million. On Thursday analysts projected that the state would fall an additional $4 million short of projections, increasing the current year’s budget deficit to about $36 million.

“While the Consensus Revenue estimates show some deterioration in the current fiscal year – largely due to lower oil prices – we are confident we can balance the budget through reduced spending between now and June 30,” Office of Policy and Management Secretary Ben Barnes said in an email.

As far as the future budget deficits are concerned, “the revenue estimates for the biennium will be the basis for the governor’s budget proposal.”

On the campaign trail in June, Malloy called the prospect that the state would be facing a nearly $1.3 billion deficit in fiscal year 2016 “ridiculous.” He expected that the economy would begin to bounce back at the same time as his administration wouldn’t spend at the rate fiscal analysts were using in order to make their predictions.

Malloy’s Republican opponent Tom Foley had an even rosier view of Connecticut’s economy and believed that he would be able to maintain current spending levels and lower the sales tax by a half a percent.

Republican Senate Leader Len Fasano and House Republican Leader Themis Klarides said Thursday in a joint statement that the growing revenue hole can be blamed on a lot of things.

“We can argue that we don’t have control of many factors at play. But that gets us nowhere,” Fasano and Klarides said. “As we’ve said before, we have to be proactive about addressing our state’s fiscal crisis. It’s time the governor and legislative leaders sit down together and hold a bipartisan meeting to identify long term solutions.”

The budget deficit this year isn’t big enough to require legislative action and its been four years since Republican lawmakers have been invited to participate in budget discussions with the Democratic administration and Democrat-controlled General Assembly.

Malloy has been handling the deficit unilaterally. He made about $54 million in rescissions in November and his budget office continues to maintain the state will end the year in balance. State Comptroller Kevin Lembo pegged this year’s deficit at about $32 million on Jan. 1.

Malloy will give his budget address for the 2016 and 2017 fiscal year on Feb. 18. Whatever he presents to the General Assembly will have to erase about a $1.3 billion deficit in 2016 and a $1.4 billion deficit in 2017.

Malloy’s budget office and nonpartisan fiscal analysts will come up with a consensus on revenues one more time in April before the General Assembly adopts the 2016-2017 budget.