Connecticut Budget on Shaky Ground Due to Bad Fiscal Policies & Job Market, Not Stock Market

June 27, 2016

Fasano Statement on State Deficit Increasing to $322.9 Million

Hartford – Senate Minority Leader Len Fasano (R-North Haven) released the following statement regarding the updated fiscal year 2016 deficit project released by the Office of Fiscal Analysis today. The increased deficit of approximately $322.9 million was caused in large part by a $100 million drop in projected personal income tax receipts and $25 million drop in sales tax revenue.

“George Washington once said ‘it is better to offer no excuse than a bad one.’ But over the last week we have heard the same bad excuse like a broken record from Democrats, blaming the state’s problems on the stock market. Their excuse is a poor attempt to distract from the real reasons why our state is struggling: bad fiscal policies that have resulted in jobs and people leaving our state. People are struggling to find work and employment is lagging behind the rest of the nation. When income tax receipts are down this significantly, at a time when sales tax receipts are also dropping, it’s not a good sign of things to come. It has nothing to do with the stock market, and everything to do with our state’s financial policies. When Democrats continue to ignore the real reasons why we are facing these problems, it only moves our state further away from solutions,” said Fasano.

Today a Moody’s Credit Outlook report also emphasized that the source of Connecticut’s underperformance is not caused by the stock market. Rather, Connecticut’s slow job growth has had an impact on state finances. According to Moody’s, “State income tax volatility is often caused by fluctuations in capital gains realizations related to stock market performance and reflected in estimated tax payments and final settlements. However, Connecticut’s weakness in PIT withheld from paychecks indicates that the source of the underperformance is more deep-seated than a shortfall in capital gains. In calendar 2015, the state’s job count grew by 0.7%, less than half the nation’s pace, and state job growth continued to lag the nation through May 2016.”