Forget next year’s $726 million budget shortfall, and the billions in deficits projected for the years ahead. Right now, for this brief moment, the current state budget may actually be in the black.
Neglected in all the deficit angst, that short-term fiscal good news came in a report from the Office of Policy and Management, which increased its revenue expectations for the current fiscal year by a modest $29 million, or less than 1/5th of 1 percent of the total $18.64 billion budget.
The monthly report by the Rell administration’s budget office to Comptroller Nancy Wyman also projected a $12.3 million reduction in current year expenses and an extra $4.3 million in refunds state government must pay out.
When all the pluses and minuses are compiled, the result is another $36.7 million that can be whittled off this year’s deficit.
Watching the numbers: Reps. Vincent Candelora and Livvy Floren and the rest of the legislature’s finance committee await final budget numbers (Keith M. Phaneuf)
After that amount and the $323.2 million in savings produced by the bipartisan deficit-mitigation plan enacted April 14 are subtracted from the official, $371 million deficit Wyman certified on April 1, the shortfall is a mere $11.1 million.
But for most of the past year, the governor’s budget staff has been issuing slightly rosier projections than Wyman has, usually disagreeing over revenue estimates by about $14.5 million. And OPM says its math now shows state government on pace for a razor-thin, $3.4 million surplus with just over two months to go in the fiscal year.
“It should be noted that while these projections are the best that can be made at this time, estimates may have to be adjusted to reflect changes in the economy, expenditure patterns, and/or other factors,” OPM Secretary Robert L. Genuario wrote to Wyman.
One of those factors could be projected cost overruns in more than a dozen departments and other smaller state agencies. The administration has pegged these extra costs at $129.7 million, and Genuario said the Executive Branch still is working to reduce them.
But in a March 23 report to the Appropriations Committee, the legislature’s nonpartisan Office of Fiscal Analysis estimated those potential cost overruns at $285 million, a difference that has raised concerns with Wyman.
Whether the comptroller agrees with the administration that Connecticut’s current budget is balanced won’t be known until May 1, when her next official budget forecast is due.
Regardless, Wyman, like Genuario, has said she expects the state’s revenue outlook won’t change dramatically after the analysis of this year’s state income tax returns is completed at the end of April.
The Rell administration increased its revenue expectations last week for next fiscal year by $11.5 million.
The co-chairmen of the legislature’s tax-writing panel, the Finance, Revenue and Bonding Committee, said Friday that their researchers are following similar trends, though it’s too soon to draw any final conclusions.
That likely means state revenue forecasts for this fiscal year and next, they said, likely will shift up or down by tens – not hundreds – of millions of dollars. And despite this flicker of good news about the current budget, dealing with billions of dollars in deficits over the next several years still is a daunting proposition.
“We’re not seeing anything that would dramatically change what we have to do,” said Rep. Cameron C. Staples, D-New Haven, who added most legislators know Connecticut’s economic recovery will be slow. “I think people get that. There’s an understanding that we’re going to have to wrestle with these deficits.”
The deficits Staples was referring to involve the $725.7 million shortfall that the Office of Fiscal Analysis is projecting for next fiscal year, and the mammoth $3.88 billion fiscal hole it’s estimated for 2011-12.
“So far there’s been no ascent into heaven, no falling off of a cliff,” Sen. Eileen M. Daily, D-Westbrook said. “But the numbers are still preliminary.”