State Comptroller Kevin Lembo is siding with Gov. Dannel P. Malloy’s budget office when it comes to estimating the size of the 2015 budget deficit.
In his monthly letter to Malloy, Lembo agreed that the state is running an $89.4 million deficit after the second round of rescissions last week.
That’s far less than the $170.9 million deficit projected last week by the legislature’s nonpartisan Office of Fiscal Analysis.
The difference between the two estimates are on the spending side of the equation.
Lembo said OFA’s deficiency forecast exceeds Malloy’s by $7.8 million, but more significantly OFA is using a lapse figure that is $60.2 million below the governor’s target. This means legislative analysts expect the Malloy administration to spend more than it says it will spend.
Based on current trends, Lembo expressed confidence that the Malloy administration would be able to meet its savings target and not spend the money.
“Through December we have continued to note a general deceleration in spending across major appropriated line-items from the initial months of Fiscal Year 2015,” Lembo said. “Through December, planned General Fund spending that had not yet been disbursed totaled $9.2 billion dollars.”
He said the amount of money the governor’s budget office doesn’t plan to spend is about $290.5 million. Over the past five fiscal years, the annual lapse amount was about $511.2 million, which makes $290.5 million with just five months left in the fiscal year “attainable,” Lembo said.
“Although the current lapse target is a significant challenge, it is not inconsistent with past performance in difficult budget circumstances,” Lembo wrote.
On the revenue side, Lembo said the largest changes this month relate to a decline in oil company tax receipts because of lower oil prices. Meanwhile, the Department of Social Services is continuing to work through retroactive settlement payments to hospitals – and has adopted a new payment system that will eventually eliminate the need for such settlements. Also, while enrollment in the Medicaid program advanced at a stronger rate than expected during the early months of the fiscal year, it has leveled off over the past several months.
Finally, the Department of Social Services continues to work with the federal government on the portion of the Medicaid population that qualifies for a 100 percent federal reimbursement.
Since July, the state has been in discussions with the federal government regarding reimbursements for the expansion of the Medicaid population under the Affordable Care Act. In October, the federal government agreed to reimburse the state 50 percent for this population, while they worked out how many would receive 100 percent reimbursement.
Lembo said Monday that the portion of the population that will be reimbursed at 50 percent is “higher than initially anticipated.”