The state is expected to end the 2017 fiscal year with a $107.2 million shortfall, according a monthly budget report from Office of Policy and Management Secretary Ben Barnes.
The $107.2 million deficit is an improvement over last month’s projections and will be closed with money from the Rainy Day Fund.
Connecticut is expected to balance its budget by the end of the fiscal year. Technically, if more revenue is realized before Sept. 1 then it could be used to lower the amount of money the state has to transfer from the Rainy Day Fund to cover the shortfall.
Meanwhile, things were much worse a month ago when the state expected to end the year with a $215.5 million deficit.
The legislature was able to take some action to reduce the size of the deficit by moving $93.4 million to the general fund from off-budget accounts.
At the same time, revenues improved by about $54.3 million and spending was cut an additional $67.9 million.
Since last month, revenues have improved in some areas, according to Barnes. The corporation tax increased $50.7 million and surpassed the May 1 consensus revenue total. Federal grants also increased about $35 million and inheritance and estate taxes improved by about $13 million. The income tax and sales tax continue to under perform. The sales tax estimates were reduced $34.1 million and tax refund estimates were increased by about $25 million.
After all the numbers are considered, the state will end the year with about $128.4 million in its Rainy Day Fund for any future contingencies.
State Comptroller Kevin Lembo will be asked to certify the numbers by the end of the month.
Gov. Dannel P. Malloy and legislative leaders have been unable to agree to a new two-year budget starting July 1. Without a budget, Malloy is expected to make an announcement Wednesday about how he plans to define what essential services will receive funding as negotiations on a final deal continue.
