After three rounds of rescissions and promises that the 2015 budget would end in the black, the state ended the year with a $113.2 million deficit.
In a letter to Gov. Dannel P. Malloy, state Comptroller Kevin Lembo said they used money from the rainy day fund to cover the shortfall and balance the budget when they closed the books Wednesday. That means the state’s reserve fund will drop from $519.2 million to $406 million.
On the campaign trail and after winning a second term, Malloy insisted there wasn’t going to be a deficit and even as recently as this summer remained confident that the economy would recover enough to end the year in the black.
But it hasn’t happened.
“This represents less than 1 percent of the overall budget and this is exactly why we built up a rainy day fund when there was none previously,” Devon Puglia, Malloy’s spokesman, said.
Republican lawmakers made several public attempts to get a seat at the table to help deal with the deficit, but they were consistently dismissed by Malloy and Democratic lawmakers. At the same time as they were vying for a seat at the table, Republicans refused to publicly share how they would erase the deficit. They said they would make their suggestions known when they get in the room with Malloy and Democratic lawmakers.
“The governor said we would not have a deficit at the end of the year,” Senate Republican Leader Len Fasano said Wednesday. “People can make mistakes. However, there’s very little excuse to be wrong when you close your eyes to the warning signs. The governor owns this deficit.”
With news two weeks ago that Malloy rescinded $103 million from the 2016 budget due to an expected drop in income tax revenue, Republicans are again asking for a seat at the table to help cut the budget in a special session.
But again their request is being dismissed.
“The latest projections from Comptroller Lembo make clear that while fluctuations on Wall Street have made prudent budget reductions a useful tool, we are not in crisis and a special session is not necessary and would be counter-productive,” House Speaker Brendan Sharkey said Thursday. “Moreover, what is cut is more important than how much is cut. I still plan to work with the leadership of the Senate to identify cuts that will help restore funding to local hospitals.”
Republican lawmakers are now petitioning their colleagues in order to convene a special session.
And even though Sharkey doesn’t believe a special session is necessary, there are plenty of Democrats in the House who are unhappy with the $103 million in emergency budget cuts Malloy announced two weeks ago.
On Thursday, Lembo certified a small $600,000 budget surplus and expressed confidence the 2016 budget would end the year in the black. He said the revenue shortfall of $96 million in income tax receipts identified by Malloy’s budget office is one-half of one percent in anticipated revenue.
“There is no question that current volatility in financial markets has complicated the budget outlook for Fiscal Year 2016,” Lembo said.
But he said that the information Malloy’s budget office is utilizing past historical trends to project the impact of the market decline on income tax receipts “is an accepted and reasonable approach.”
However. Lembo questioned the need to make such a large rescission so early in the fiscal year.
“Past practice has been to delay implementation of rescissions until late November when a clearer picture of revenue receipts emerges through the consensus forecast,” Lembo wrote Malloy. “All three mitigation plans submitted in Fiscal Year 2015 came after November19th and totaled a cumulative $100 million. I understand the desire to avoid reacting too late and ending the year in deficit. However, this must be weighed against implementing large cuts to critical programs serving state residents, which may also have an adverse impact on Connecticut’s economy as it finally begins to gain traction.”