Fiscal analysts for Gov. Dannel P. Malloy’s administration and the legislature agreed Friday the General Fund revenue picture for the state’s budget remains largely unchanged 3 ½ months into fiscal year – though the biggest piece of the puzzle is missing.
The Executive Branch’s Office of Policy and Management and the legislature’s nonpartisan Office of Fiscal Analysis agreed to leave projections for the state income tax essentially unchanged, since key data tied to capital gains, dividends and other investment earnings won’t be available until Oct. 31.
The two fiscal agencies did agree that revenues in the special fund that pays for highway, bridge and other infrastructure repairs are running almost $19 million below budgeted levels, due largely to reduced motor fuel consumption.
The consensus revenue report issued late Friday estimated that the General Fund, which entails more than $18.7 billion of the spending in this year’s overall, $20.14 billion budget, can expect $18.79 billion from taxes, fees, federal aid, the state’s share of Indian casino revenues and other sources.
That’s down a marginal $2.5 million from original projections built into the state budget in June, or a drop of 1/76th of 1 percent.
Technically, analysts reduced expectations for gross receipts from the income tax – the single-largest revenue source in the state budget – from $8.55 billion to $8.46 billion, dropping specifically by $93.7 million.
But they negated that change by lowering expectations for tax refund payments by a matching $93.7 million.
Malloy’s budget chief, OPM Secretary Benjamin Barnes, said there were some technical adjustments made to income tax forecasts, but the net total remains the same because state government can’t fully predict right now what will happen.
‘We don’t know,” he said. “We do not have data on the most volatile portion of the income tax.”
Barnes was referring to payments from households that file quarterly earning information. Was this involves many self-employed individuals, it also is the chief source of income tax payments tied to major investment earnings. The administration granted a one-month delay to filers, pushing the first quarter payment deadline from Sept. 30 to Oct. 31, to accommodate households disrupted during Tropical Storm Irene, Barnes said.
The budget director added there were some disturbing signs in the consensus forecast, with projected reductions of $23 million in sales tax revenues, $21 million from Indian casinos and $19 million from Connecticut’s 25-cents-per-gallon retail levy on gasoline.
Even though those reductions largely were offset by projected increases in a wholesale fuel tax and levies on health care providers, Barnes said they are signs that consumers remain wary of the economy.
“The fact that they are down is disturbing to me,” he said. “People aren’t driving to the mall as much, or if they are, they aren’t spending as much money.”
Legislative analysts traditionally do not comment beyond their written reports.