The 2016 budget officially begins today, but the 2015 budget is still running a $115.7 million deficit, according to state Comptroller Kevin Lembo.
In his monthly letter to Gov. Dannel P. Malloy, Lembo said he is in general agreement with Malloy’s budget office with its latest deficit projections.
Last month, Malloy’s budget office announced that it would use money from the rainy day fund to close the 2015 budget deficit, if the state was still in the red when it closes the books.
“These projections will undoubtedly undergo further adjustment as accounting corrections continue to be posted after June 30 and revenue and expenditure accruals are processed,” Lembo reported. “Any remaining General Fund deficit for Fiscal Year 2015 will be eliminated through a transfer from the Budget Reserve Fund.”
The deficit has receded somewhat due to revenue improving upward by about $48.6 million this month, Lembo said. The corporation tax estimate has been increased by $44 million due to exceptionally strong June receipts.
“This tax category had been expected to record a decline in revenue from last fiscal year due to expanded tax credits; however, the corporation tax is now expected to show a slight gain over last fiscal year,” Lembo said.
The projection for escheated property is also up by $36 million this month due to above-average gains realized on the sale of securities – although these gains are all offset by a $35-million decrease to the income tax as a result of lower-than-anticipated June receipts. In total, General Fund revenue is expected to fall $141.7 million short of the original budget plan, Lembo said.
“While some revenue categories have exceeded expectations – such as the corporation tax – overall economic growth has remained relatively stagnant,” Lembo said. “The recovery from the last recession has been slower and more gradual than we need, and unlike any other we’ve experienced.”
As predicted, the state is on track to achieve its savings target through budget management. As a result, 2015 spending is falling $25.6 million below the original budget plan, Lembo said.
Republican Senate Leader Len Fasano, R-North Haven, is not impressed. He said just like there weren’t going to be any tax increases, Malloy also promised the state wouldn’t end the year with a budget deficit.
“In recent days Democrats have accused Republicans of acting irresponsibly, using harsh words to distract from today’s very real problems caused by the reckless approach of many Democrat leaders,” Fasano said. “But we cannot ignore the fact that we are in financial trouble. There is a deficit today. I predict there will be one a year from now. And even non-partisan analysts see a deficit two years into the future. To say otherwise is pure fantasy.”