Connecticut budget deficit triggers mid-year cuts - WFSB 3 Connecticut

Connecticut budget deficit triggers mid-year cuts

Posted: Updated:
(WFSB file) (WFSB file)

Connecticut's current budget deficit is now large enough to require the governor to submit a deficit-cutting plan to the General Assembly.

On Friday, Connecticut's comptroller Kevin Lembo stated that the state is projected to end the 2017-2018 fiscal year more than $200 million in the hole. Lembo released a budget deficit projection of $207.8 million, which is more than 1 percent of net appropriations in the state's main spending account. 

Lembo said since it's more than 1 percent of net appropriations in the state's main spending account that's the threshold requiring Democratic Gov. Dannel P. Malloy to issue his mid-year plan.

“In recent years, Connecticut has not fully participated in the nation’s economic recovery. The national economy continues to exhibit growing signs of strength and resilience. However, Connecticut’s economy has experienced much more mixed results across a variety of key economic indicators," Lembo said in a statement on Friday.

Lembo says the deficit includes a projected $20 million shortfall in the account used to pay claims and attorney fees for a legal settlement with state employees laid off by former Gov. John G. Rowland in 2003.

“Another area of concern that will require close scrutiny is the aggressive level of savings included in the adopted budget. Achieving these lapse – or savings – targets will be a significant budgetary challenge, especially in light of the high levels of fixed costs for FY 2018, such as debt service payments, pension contributions and other costs,” Lembo said. 

Lembo also "pointed to great uncertainty related to the future of federal tax reform."

“Congress is considering significant modifications to federal tax law that could have profound implications for Connecticut, depending on what specific provisions, if any, are enacted. Future revenue forecasts will need to evaluate the consequences of any tax changes on the federal level,” Lembo said.

Democratic Senate President Martin Looney says legislative leaders plan to meet Wednesday with Malloy to "discuss potential next steps."

Republican senate president pro tempore Len Fasano released a statement in response to Lembo's projection.

“I want to thank Comptroller Lembo for his work to provide these projections. While we may disagree about the size of the shortfall, it’s clear that any budget, including the one Gov. Malloy negotiated, would be in deficit today. Since Gov. Malloy’s budget also did not include adjudicated claims, his plans would also be facing the same issues he is saying impact the legislature’s budget. For years we have seen damaging financial policies destroy our state’s economy. As we expected, even the passage of a historic bipartisan budget with significant structural changes is not yet enough to immediately right the ship. As Gov. Malloy now begins to build his own deficit mitigation plan, I caution him to remember how his past policies have failed our state. I also hope that he remembers the importance of protecting the core functions of government, and that he avoids making decisions out of spite if he wants to gain support for his proposals in the legislature. It is my hope that lawmakers remain committed to working together to address the continuing challenges our state faces. While our bipartisan budget remains an important first step to change the direction of our state, it is sad that the policies of the last seven years continue to pull our state down.”

Malloy’s Director of Communications Kelly Donnelly responded to Fasano's comments.

“Senator Fasano’s statement about the Comptroller’s projected deficit in the bipartisan budget mentions the Governor no less than three times," Donnelly said in a statement on Friday. "So our question to the Senator is simple: When are you going to take responsibility for your own actions, and your own budget?”

Copyright 2016 WFSB (Meredith Corporation). The Associated Press contributed to this report. All rights reserved.