State Comptroller Kevin P. Lembo certified a $200 million deficit Tuesday afternoon for the current state budget, triggering a requirement that Gov. Dannel P. Malloy submit an emergency deficit-mitigation plan to the legislature.
And given that the administration needs to finish $75 million in the black to maintain the promised conversion of state finances to Generally Accepted Accounting Principles, Lembo said the governor has a $275 million problem to solve before the fiscal year ends June 30.
Malloy, who offered a matching deficit forecast Monday night, said he would submit a plan that would center on diverting $222 million dedicated last year to pay off bonded debt to solve the current crisis instead.
“This deficit number confirms that Connecticut did not experience the short-term growth anticipated,” Lembo said.
A new consensus report Monday from fiscal analysts for the executive and legislative branches reduced revenue projections for the current year by nearly $150 million, and for 2012-13 by $243 million.
State law requires the governor to submit a deficit-mitigation plan whenever the comptroller certifies a shortfall in excess of 1 percent of the general fund, which comprises the bulk of operating expenses within the state budget.
This fiscal year the general fund totals nearly $18.8 billion in a $20.1 billion overall budget, setting the 1 percent deficit threshold at $188 million.
Still, Lembo also noted Tuesday that “there are some positive economic indicators pointing forward.”
Connecticut’s unemployment rate continues to decline, reaching 7.7 percent this month, with the professional and business services sector leading in monthly job gains.
Lembo also said labor statistics show personal income is slowly growing in Connecticut, as are new home sales in the Northeast.
And the stock market has been trending upward after an early winter slump, the comptroller added.
The legislature’s nonpartisan Office of Fiscal Analysis, which also issued a new forecast late Monday, effectively confirmed the same deficit level pegged by Lembo and Malloy.
Though legislative analysts technically reported a $284.6 million deficit, they also noted that this doesn’t include $78 million in unused funds Malloy carried forward from an account for employee raises from the 2010-11 budget — the last spending plan adopted by his predecessor, M. Jodi Rell. Most state employees won’t receive raises this fiscal year or next under a concessions deal Malloy reached with unions last summer.
Lembo and Malloy’s deficit forecasts already assume these funds will be used to reduce the deficit.
After those funds are applied to the OFA forecast, the projected deficit shrinks to $206.8 million.