Christine Stuart photo

After a meeting with her economic advisers, Gov. M. Jodi Rell warned that the state’s budget forecast, which is already grim, was getting grimmer Tuesday.

Rell’s budget office predicted a $921.7 million shortfall for fiscal year 2009.

“Every economic indicator has deteriorated over the last two months,” Rell said during a press conference at the Learning Corridor in Hartford.

Estimated quarterly income tax payments fell 20 percent below projections, corporate tax payments are $100 million below projections, and sales tax collections are running $50 million behind projections.

“This economy stands to get worse before it gets better,” Don Klepper-Smith, one of Rell’s economic advisers, said. The state has already lost 13,000 jobs and he estimates by the end of the year it could increase to 60,000 to 80,000. “Some of those jobs on Wall Street are not coming back,” he said.

When asked how negotiations were going with the state’s unions, Rell’s Budget Secretary Robert Genuario said they’ve had a meeting and have another scheduled, but that talks have not progressed to a point where he has anything he can report.

There are an estimated 10 to 11 union contracts set to expire by the end of the fiscal year.

Genuario said the administration has instructed all state departments to review their Medicaid filings to see if it may be able to identify any additional money in that account.

Rell said there’s been some indication that there may be some additional Medicaid assistance from the Obama administration in fiscal year 2009.

Rell will give her budget address on Feb. 4 for fiscal years 2010 and 2011 and is expected to produce another budget mitigation plan to deal with the more than $900 million budget deficit in fiscal year 2009.

Sen. Majority Leader Martin Looney, D-New Haven, said “The new budget estimate is a new call for action. We must continue to work with Gov. Rell to tackle the deficit and it should be done without partisan finger-pointing and posturing.”

“Gov. Rell didn’t create this problem and neither did the General Assembly, but it is our responsibility to guide Connecticut through this difficult time,” Looney said in a press release.