HARTFORD, CT — Department of Revenue Services Commissioner Kevin Sullivan is counting income tax receipts and “we’re still light.”
As of Monday, the Department of Revenue Services was reporting the state is about $267 million behind on revenues, or about 20 percent of what was estimated in the state budget.
The amount is enough to trigger a deficit mitigation plan for the current year and large enough to deplete the $235.6 million rainy day fund.
“We are tracking revenue very closely as we are in the middle of our highest collection period,” Chris McClure, a spokesman for Malloy, said. “We will hold off from drawing any conclusions until later this week when we will have a clearer picture.”
The counting will continue, but by the end of the week the legislature’s Office of Fiscal Analysis and Gov. Dannel P. Malloy’s Office of Policy and Management will have to work together to agree on revenue numbers. At the moment the two offices are not in agreement on where revenues are at, especially those from the state income tax.
The Office of Fiscal Analysis estimated on March 27 that the state would end fiscal year 2017 with a $45 million deficit. The Office of Policy and Management last week was still predicting the state would end the year with a $19.7 million surplus.
State Comptroller Kevin Lembo who predicted a $44.6 million deficit on April 3 said he warned about underperforming tax receipts.
“I would prefer to be wrong, but these latest income tax reports are unfortunately consistent with concerns I raised earlier this year about the performance of final April income tax payments,” Lembo said. “I will continue to monitor and analyze receipts on a daily basis.”
Lembo’s next report on the state’s finances will be on May 1.
Without commenting on where income tax collections would fall, the Office of Policy and Management estimated that sales and use taxes were down $21.8 million, and special revenue was down $17 million.
“Both sources have underperformed their targets,” OPM Secretary Ben Barnes wrote in his monthly letter to Lembo.
Complicating the budget picture even further is a public hearing Tuesday on several proposals to increase taxes and eliminate tax exemptions.
It’s unclear whether the Finance, Revenue, and Bonding Committee will be able to find consensus to approve any tax increases even though they are giving the public a chance to weigh in on the legislation.
Democrats, who have been in the majority for several years, only hold a one-vote majority over Republicans on that committee. Following the last election, Republicans were able to pick up enough seats to draw even with Democrats in the Senate and they picked up eight seats in the House.
There’s a special election in Hartford and Watertown Tuesday to fill two House seats, but neither is expected to change the margins.
The Appropriations Committee, which is supposed to have its spending package by Thursday, is also struggling. The Democrats only hold a two-vote majority over Republicans on that committee and information about where they stand on consensus was mixed.
At least one high-ranking Democrat on the Appropriations Committee expressed confidence they would have the votes for a spending package by Tuesday.
But some lawmakers worry there won’t be a revenue package to match it. The Finance, Revenue, and Bonding Committee has until Friday to report their plan.
If there’s no spending or finance package then there’s no fiscal scoring of the proposal by nonpartisan legislative analysts and there’s less information about the budget for the public to consume.
House Speaker Joe Aresimowicz, D-Berlin, said he was optimistic at the end of last week, but his optimism has eroded over the last few days.
He blamed his Republican colleagues for failing to reach a consensus with Democrats — something that hasn’t happened in at least a decade.
He said Republicans have lost a seat at the negotiating table if they’re unable to find consensus on the budget.
House Minority Leader Themis Klarides, R-Derby, said it’s like Democrats who have been in the majority for “the past four decades” are suddenly in a foreign land and don’t speak the language and don’t want to learn it.
She said it’s preposterous to ask the Republicans to negotiate in that way.
“They don’t know how to do a budget in a way that’s bipartisan,” Klarides said.
The legislative session ends June 7 and the fiscal year ends June 30. There’s still plenty of time to find consensus for a budget proposal, but for a legislative body that’s not used to finding consensus it’s not an easy task.
Malloy has the executive authority to keep government running without the approval of the legislature.
