Rell administration forecasts $45M budget deficit for this year

State government’s finances remain in modest deficit two-and-a-half months into the new fiscal year, according to Gov. M. Jodi Rell’s budget office, which reported a $45.3 million shortfall on Monday.

The new deficit, which is improved slightly from the $63.4 million gap reported one month ago, is due largely to the same problems being tracked in August: a shortfall in anticipated federal funding and increasing demand for state social services.

In its monthly report to Comptroller Nancy Wyman, the Office of Policy and Management continues to project cost overruns in the Department of Social Services and the Department of Mental Health and Addiction Services.

The Rell administration also continues to charge that a legislative panel created to find $50 million in new savings in the state budget has failed to meet its task.

The 21-member Commission on Enhancing Agency Outcomes technically has until Dec. 31 to complete the job assigned by statute. But administration officials have said that unless major new efficiencies are defined specifically and immediately, there won’t be enough time to achieve a savings that large before the fiscal year expires on June 30.

Leaders of the commission have said they already have identified millions of dollars in savings through ideas offered last spring and built into the current budget, and will continue to work between now and the Dec. 31 deadline.

Despite modest growth in income and sales tax revenue projections, the revenue side of the budget also has problems, since OPM estimates state government will receive $193.4 million less stimulus aid than anticipated when 2010-11 budget was adopted in early May.

State government faces a much larger deficit next fiscal year, projected by the legislature’s nonpartisan Office of Fiscal Analysis at $3.37 billion, which is equal to nearly one-fifth of current spending.