Christine Stuart file photo

(Updated 5:42 p.m.) Just one month after the General Assembly approved the $37.6 billion two-year budget—which ended the longest budget battle in the state’s history—Rell’s Budget Secretary Robert Genuario says there’s already a $388.5 million deficit. 

Republican Gov. M. Jodi Rell has started working on a budget mitigation plan, which she is required to do if the deficit is greater than one percent of the General Fund.

In this letter to state Comptroller Nancy Wyman, Genuario said revenue projections in 2010 will decrease $172.1 million. That’s $3.7 million lower than Rell expected just two days ago when her office sent out a press release claiming that a half-percent decrease in the state sales tax on Jan. 1 was realistic.

“The largest revenue change is a decrease in the sales tax revenue estimate of $89.8 million, as year to date collections have been weaker than previously projected” Genuario wrote in his Oct. 20 letter.

Jeffrey Beckham, spokesman for the Office of Policy and Management, said that all tax revenue, which has decreased by $96 million, is still below the one percent trigger. He said it’s still possible a half-percent cut in the sales tax could happen Jan. 1.

In addition to sales tax revenue, tribal gaming revenue, income tax revenue, estate tax revenue, and even cigarette tax revenue is down.

“I will immediately begin preparing a deficit mitigation package to cut spending and reduce the shortfall,” Rell said in an emailed statement Wednesday. “I will also need the commitment and cooperation of the Legislature to finally bring real and lasting reductions to state spending.”

However, while Rell is preparing a deficit mitigation plan and does have the power to reduce spending in some areas, she still has to wait for Wyman to certify the deficit before submitting it to the legislature.

And Wyman is far less optimistic than Rell’s budget office about the numbers she plans on releasing Nov. 1.

“The Governor’s estimate is very optimistic and assumes that the state will see an economic turnaround before the end of the fiscal year,” Wyman said in a statement Wednesday. “While I hope that we see a strong recovery as quickly as possible, there is no evidence right now that the negative revenue trends I pointed out earlier this month are reversing.”

Wyman stopped just short of certifying a $500 million budget deficit last month.

What’s worse than the decrease in revenues is that the state is spending $212 million more than it originally budgeted, according to Genuario’s letter.

“I am troubled by the fact that just three months into the new fiscal year, more than half of the projected state budget deficit – $212 million – is due to increased spending by the governor’s departments and agencies (the governor refers to this spending as “additional expenditure requirements”),” Sen President Donald Williams, D-Brooklyn, said.“I will be interested to hear from the governor as to why her departments cannot function within the budgetary allotments that they’ve been given.”

Speaker of the House Chris Donovan said in a phone interview Wednesday afternoon that Rell is “saying two different things, two different days.”

“I’m not sure if she’s optimistic or pessimistic,” he said. “Rather than play politics, we have to be concerned about it.”

Donovan believes the economy is in the early stages of recovery and the “projections are that things will get better.” He said he’ll exercise some patience when it comes to the budget and budget projections.

“We want to have good figures,” he said.