The state is still technically running a more than $267 million deficit under Generally Accepted Accounting Principles, but the General Assembly took enough steps to balance it before it adjourned in May.
In his monthly letter to the state comptroller, Office of Policy and Management Secretary Ben Barnes said the state’s budget numbers have improved by about $5.2 million over last month‘s estimates. And the General Assembly’s decision to transfer about $222 million intended to pay down the 2009 Economic Recovery Notes to close this year’s budget gap means the state will end the year in the black.
Overall, state spending is still about $22.5 million more than initially estimated, but Barnes noted that it was an improvement of about $12.6 million over last month’s estimate.
On the revenue side, estimates are being revised downward by $7.4 million. Both income tax refunds and “non-income tax refunds” continue to exceed estimates, sales taxes are stagnant and being revised downward by $18 million. Federal grants are also being revised downward by about $12.4 million.
“On the positive side, inheritance taxes are being revised upward by $11.5 million,” Barnes wrote in his letter to state Comptroller Kevin Lembo.
The 2012 fiscal year ends on June 30 and Lembo will certify the numbers on July 1.
Since there is no surplus the state doesn’t plan on immediately paying down the cost of transitioning to GAAP. Republicans have been critical of Gov. Dannel Malloy for not beginning to fund the transition from one accounting method to another. Under GAAP the state will need to report more of its liabilities and immediately account for money it didn’t have to under the current modified cash basis of accounting.
“He held this up as the signature issue and now because he mishandled the budget it will not happen. So much for Executive Order 1?” House Minority Leader Lawrence Cafero, R-Norwalk, said during the budget debate in May.
Under Executive Order 1 the transition to GAAP isn’t supposed to occur until 2014. Malloy has previously said he believes this year’s budget comports with the promises he made on the campaign trail in 2010.