Though state government will still likely need to raid debt repayment funds to balance the books for the just-finished 2011-12 fiscal year, State Comptroller Kevin P. Lembo reported some modest positive economic signs Monday.
The comptroller also reported a $192.3 million general fund deficit for the fiscal year that ended Saturday.
“Economic growth has not reached normal recovery levels, but there are some positive economic indicators going forward,” Lembo said, “particularly in new homes sales in the Northeast housing market.”
Gov. Dannel P. Malloy and the General Assembly set aside two pots of money in May to cover the budget shortfall: $76.8 million in unused funds from a reserve account to cover state employee raises; and up to $222.4 million originally designated to begin paying down $1 billion borrowed to cover operating costs in June 2009.
The legislature’s nonpartisan Office of Fiscal Analysis pegged the deficit slightly higher, at $218 million, in its June 25 report, though that shortfall can also easily be covered by the contingencies set up by the governor and legislature.
Though the 2011-12 fiscal year is over, certain revenues continue to accrue over the summer to the prior year, and the comptroller won’t officially wrap up the books on that fiscal year until September.
The comptroller also cited state and federal labor statistics that show:
- 6,100 new payroll jobs have been created in Connecticut this calendar year, including 1,400 in May alone. The state has recovered about one-third of all jobs lost in the recent recession.
- The state unemployment rate edged up to 7.8 percent in May, compared with the national average of 8.2 percent.
- Weekly unemployment claims edged up in May, but they remained below the 5,000-claim level for the fourth consecutive month.
- Connecticut housing permits in February had reached their highest level since January 2008, and by April of this year still remained 6.4 percent above where they stood one year ago.
- And new home sales increased 7.6 percent nationally in May compared with April numbers, with sales in the Northeast up 36.7 percent.
Malloy’s budget director, Office of Policy and Management Secretary Benjamin Barnes, wrote in his monthly budget assessment June 20 that inheritance tax projections were revised upward by $11.5 million just before the fiscal year’s close.
“We’re not yet where we want to be, but it shows Governor Malloy’s balanced approach to fixing the state’s budget problems is working and that our efforts to improve the economic climate are starting to take hold,” OPM spokesman Gian-Carl Casa said Monday.
Across the entire general fund though, Lembo reported that all revenues are expected to finish about $250.7 million below original projections for 2011-12.
“The economy is the largest single influence on the state budget, dwarfing any other budget drivers,” the comptroller added. “Wall Street’s erratic equity markets and challenges in the financial sector — which had the largest private-sector job loss in the state — is the driving force behind” the 2011-12 deficit.
The legislature adopted a $20.5 billion budget for the 2012-13 fiscal year, cutting about $190 million off the spending level Malloy had proposed back in February, when revenue projections were more optimistic.
The new spending plan, which includes no new tax increases, still boosts spending nearly 2 percent over last year’s level.