State Comptroller Nancy Wyman certified a $371 million deficit today for the current fiscal year, down nearly $150 million from last month’s forecast.
But the state’s chief fiscal guardian also expressed concerns about potential cost overruns across state government that could reach $285 million before the fiscal year ends on June 30.
Wyman also declined to speculate whether the approaching April 15 income tax filing deadline would help or worsen Connecticut’s budget outlook.
“The weeks around the filing deadline are always a crucial time for revenues,” the comptroller said. “We normally take in about $1 billion during this time, but with the economic downturn it is very hard to predict what is going to happen this year.”
Mid-April filings traditionally have been a crucial indicator of income tax revenue trends, both for the rest of the fiscal year and for the remainder of the calendar year. Deficit and surplus projections in recent years have changed by $250 million to $300 million in the first two months after the tax deadline in two of the past three years.
The latest deficit projection is down significantly from the $518.4 million shortfall Wyman projected one month ago for this fiscal year’s $18.64 billion overall budget.
Gov. M. Jodi Rell’s budget agency, the Office of Policy and Management, reduced its deficit forecast 11 days ago by $157 million down to $356 million. Among the reasons the administration cited were a $100 million reduction in this year’s contribution to the state employee pension fund, an unexpected $45 million boost in federal aid tied to prescription drug benefits for low-income seniors, and about $12 million in new and other savings ordered by the governor.
The comptroller built most of those savings into her revised forecast, but added she remains less optimistic about income tax receipts than the administration does. Both the comptroller’s office and OPM are projected about $6.4 billion in income tax receipts for this fiscal year, but Wyman’s numbers fall about $14.5 million lower than the administration’s estimate.
The comptroller also expressed concern about projected cost overruns in state agencies, which the administration estimates at $143.5 million for this fiscal year, but the legislature’s nonpartisan Office of Fiscal Analysis reported at $285 million.
“This will require vigilant management of agency spending throughout the remaining months of the fiscal year,” Wyman wrote today to the governor.