Fasano: State’s $70.9 Million Deficit is the Result of Democratic Policies [Courant]
August 4, 2015Connecticut will likely end the 2015 fiscal year with a deficit of close to $80 million.
That’s the assessment of state Comptroller Kevin Lembo, who added that tax money tied to fiscal 2015 will continue to flow into the state’s coffers through August and the final number won’t be known until an audit of the state’s finances is completed later this year.
In a letter sent to Gov. Dannel P. Malloy, Lembo lauded the administration’s effort to manage the budget and keep spending growth to under 3 percent.
The state saw a significant increase in the revenue generated by corporation taxes. The corporation tax is estimated to have grown 3.8 percent over last fiscal year, according to Lembo’s calculations. The growth is, in part, attributable to a state Department of Revenue Services’ initiative to settle outstanding corporation tax issues, which generated $31.6 million, he said.
“As I have been reporting, the state’s overall economic climate has been gradually improving,” Lembo said. He cited state Department of Labor statistics that show Connecticut has gained 27,000 jobs in the past 12 months. During the 2014 calendar year, the state added 25,100 payroll positions.
But Lembo, a Democrat like Malloy, suggested a warning sign looms on the horizon that could impact the state’s fiscal health in the future. “Despite significant job growth during [fiscal] 2015, the payroll-driven withholding portion of the income tax has failed to generate the anticipated gains,” he said.
“The state must seriously consider and explore the many possible policy remedies – because, while jobs continue to grow, so must wages,” Lembo added.
Lembo projected the state would close fiscal 2015 with a $70.9-million deficit.
Republicans said the projected deficit is the result of Democratic policies. “Gov. Malloy campaigned on a promise that the state wouldn’t have a deficit to end the fiscal year in June. It’s August, and we have a deficit,” Senate Republican Leader Len Fasano said. “Our state’s emergency money will soon be tapped to fix the problem. But, as the governor has said, he owns this budget. He also owns the tax hikes that he said we wouldn’t have.”
“No one is rooting for failure, but the failure of Democrat leadership is evident and cannot be swept under the rug,” Fasano said. Some Democrat leaders want the obvious to be ignored so the public remains uninformed. But there are others in Hartford who understand the significant reality of bad economic policies and what those policies mean for the people of Connecticut…It’s unfortunate that instead of listening to those warnings, Democrats repeatedly denied the existence of a deficit instead of taking action to address it.”
A spokesman for Malloy declined to comment.