State budget deficit inches higher

At least things haven’t gotten much worse.

State Comptroller Nancy Wyman reported Monday that the state budget deficit for this fiscal year has inched downward by $3.4 million over the past month, reaching $518.4 million.

The $18.64 billion budget, which has been plagued by monthly deficit forecasts close to $500 million since October, continues to struggle with projected shortfalls in all major tax categories, Wyman said. The state’s single-largest revenue engine, the income tax, is expected to fall about $200 million below the $6.6 billion target built into the budget as an unemployment rate close to 9 percent and weak personal income growth remain the chief obstacles.

The sales tax, the second-largest revenue source, is down about 8.5 percent from last year, and should yield about $90 million less than anticipated, according to the comptroller.

There is one bright sign, though, in the latest deficit forecast. Corporation tax collections are up about 18 percent over last year’s level, though still projected to fall $15 million below budgeted target.

“Corporations are doing somewhat better but that is still not translating into a lot of hiring,” Wyman said. “This indicates that businesses are increasing production and profitability by investing in technology, not new workers.”