State Comptroller Kevin Lembo has more confidence than nonpartisan legislative budget analysts that Gov. Dannel P. Malloy’s administration can achieve the savings it needs to balance the 2016 budget.
“The disparity between OPM’s and OFA’s projections rest entirely on spending,” Lembo said. “With respect to budget risk factors for Fiscal Year 2016, my greatest concern is the potential for continued erosion in the General Fund revenue forecast.”
Lembo believes the Malloy administration will be able to achieve $346.7 million in savings based on its success in hitting its savings targets in the past.
However, the continuing decline in revenues has Lembo concerned.
“While the state has experienced a consistent pattern of job growth since the close of Fiscal Year 2014 and wages have accelerated slightly in recent months, stock market declines have had a large negative impact on estimated income tax collections,” Lembo said. “Some factors leading to the market decline and other secondary downward pressures on state revenue include a slowdown in the global economy, a strengthening dollar that has increased the price of exports, falling commodity prices and Federal Reserve policies to gradually raise interest rates.”
Lembo said General Fund revenue to date for the current fiscal year is projected to fall $108.5 million short of initial budget projections – the largest reduction related to the income tax. The income tax is estimated to fall $264.4 million under budget, while the sales tax is projected to be $109.2 million over original budget projections.