Gov. Dannel P. Malloy will be forced to order a second round of budget rescissions because his budget office Tuesday projected a nearly $121 million deficit for fiscal year 2015.
Malloy ordered $54.6 million in rescissions in November, but declining revenues and a $120 million deficiency in the Medicaid account has increased the budget deficit by $89.3 million since last month.
“We will announce additional rescissions in the very near future, and additional actions may be required to address the projected change in operating balance,” Office of Policy and Management Secretary Ben Barnes said Tuesday in his monthly letter to state Comptroller Kevin Lembo.
Revenues have declined $39.3 million since last month and spending is running $22.8 million above the budget. The biggest deficiency on the spending side is in the Medicaid account.
“A net Medicaid shortfall of $120 million is projected due to increased enrollment, difficulties in achieving the full savings levels incorporated in the budget for the medication administration and step therapy initiatives, additional hospital cost settlements, and revisions to the federal cost share for a small percentage of Medicaid clients who will be reimbursed at 50 percent as opposed to the originally anticipated 100 percent level,” Barnes wrote.
The $121 million budget deficit doesn’t reach the threshold required for Malloy to submit a deficit mitigation plan to the General Assembly. However, that possibility is getting closer.
Sen. Republican leader Len Fasano has been calling on Malloy to meet with Republican lawmakers to allow them to help cut the budget.
Malloy can rescind up to 5 percent of any line item and 3 percent of any fund on his own without seeking legislative approval.
“This was a problem yesterday, and it is an even bigger problem today,” Fasano said Tuesday. “I just don’t get it. Is there simply an inability to talk to Republicans? Every day that goes by without bipartisan action is a step in the wrong direction.”
Fasano said he’s frustrated by the governor’s decision to act unilaterally as the budget situation deteriorates.
“When it comes to state finances, everyone is disheartened by the perpetual bad news. So let’s work together to fix the problem here and now,” Fasano said Tuesday.
But even after finding a way to resolve the new $121 million deficit, Malloy still faces a $1.3 billion deficit in 2016 and a $1.5 billion in 2017. He plans on releasing a two-year budget that will close both of those deficits on Feb. 18.