HARTFORD, CT — Not counting the one-time windfall the state appears to have received from changes to the federal tax law, Connecticut’s revenues are still in the red by $260.1 million this fiscal year and $282.8 million in the next fiscal year.
That’s according to the latest estimates from the nonpartisan Office of Fiscal Analysis and the Office of Policy and Management.
Connecticut received a $675 million windfall from residents making early payments on their personal income taxes and from the repatriation of off-shore hedge fund income. However, an estimated $665 million of that will be transferred to Connecticut’s Rainy Day Fund based on new budget language that requires it.
“We should all be encouraged by the substantial deposit to the Rainy Day Fund that we and OFA are projecting,” Office of Policy and Management Secretary Ben Barnes said. “I am especially pleased that the new Volatility Cap law requires that the recently disclosed, one-time windfall in tax collections will be set aside in reserve.”
The Rainy Day Fund is currently 1.3 percent of general fund spending, which is low, according to budget analysts.
The revenue report essentially doesn’t change much for legislative leaders who are struggling to come up with a bipartisan solution to the yawning budget deficit.
“These numbers are not unexpected, and coupled with last week’s positive revenue news it is a very manageable situation,” House Speaker Joe Aresimowicz said in a statement. “We still need to see where we stand on the spending side of the ledger to get a fuller picture, and we are scheduling a bipartisan leaders meeting soon to work on a mitigation plan to keep the budget in balance.”
Senate President Martin Looney, D-New Haven, and Senate Majority Leader Bob Duff, D-Norwalk, maintained their optimism for a bipartisan budget solution.
“When you consider that last year legislators from both parties worked together to wrestle a deficit 10 times larger than the one projected today, this is clearly a manageable and achievable task,” Looney said.
House Minority Leader Themis Klarides, R-Derby, said the latest data “confirms what we suspected” — that the deficit continued to grow and revenues are not performing as expected.
“Our deficit has continued to grow … absent fundamental changes in the way we run government,” Klarides said. “Huge tax hikes without significant reductions in spending are not the answer.”
Senate Republican President Len Fasano, R-North Haven, echoed Klarides’ concerns.
“It’s disappointing to see more of the same signs of a sluggish economy that continues to restrain growth in Connecticut,” Fasano said. “Our state remains well behind the progress of other states as a result of the failed policies of Governor Malloy and legislative Democrats.”
However, he also said he wants to find a bipartisan solution to the situation.
In a letter Looney sent last week to legislative leaders Looney asked to address not only the budget deficit, but the Medicare Savings Program, the motor vehicle tax issues being experienced in Bridgeport, Hamden, and Torrington, mitigating municipal aid reductions, and restoring Husky A eligibility.
Gov. Dannel P. Malloy said earlier in the day Tuesday that he’s still planning to veto legislation that lawmakers passed last week to restore funding to the Medicare Savings Program for this fiscal year.
The legislation was passed by a veto proof majority and will likely be added to lawmakers “to-do” list for next month when session convenes.