Post-election CT budget outlook worsens, even as current finances improve
The state budget shortfall awaiting the winner of next year’s gubernatorial election appeared to worsen Friday, even as the outlook for the current budget improved.
The legislature’s nonpartisan Office of Fiscal Analysis and Gov. Dannel P. Malloy’s budget agency issued a joint report that lowered expected revenues for the 2015-16 fiscal year by $163 million.
OFA had estimated in June that the state faced a $712 million shortfall in its general fund — a gap equal to about 4 percent of annual operating expenses — in the first budget after the election.
Fiscal analysts for both branches of government must submit more detailed reports Nov. 15, analyzing spending and revenue trends and including revised deficit or surplus forecasts. The legislature’s Appropriations and Finance committees tentatively are scheduled to review those reports Nov. 25.
The consensus revenue report issued Friday reduced long-range assumptions for income and sales tax receipts, while predicting more growth in revenues from business and real estate conveyance taxes.
The picture was brighter for the current, two-year state budget.
The new report bumped revenue projections for this fiscal year by $56.5 million, and those for 2014-15 by $32 million.
Most of that growth was centered on sales, corporation and conveyance taxes.
“The new estimates show that Governor Malloy’s focus on jobs and the economy, coupled with his prudent fiscal management, are showing positive results in state revenues,” Benjamin Barnes, the governor’s budget chief, wrote in a statement.
But some of the improvement in the current budget isn’t likely to repeat itself.
Nonpartisan analysts estimated $30 million in growth in this year’s corporation tax receipts is due to a more-successful-than-anticipated amnesty program that the state offered tax delinquents.
That program ends Nov. 15.
Barnes added that it might be too soon for any of these numbers to be seen as definitive.
“These estimates are a snapshot of the situation four months into the fiscal year,” he said. “The federal shutdown seems to have hampered the economic recovery both nationally and in Connecticut but we are not yet sure of the extent of that damage to state revenues, which are a month or two behind. As always, we will closely monitor revenues and expenditures and manage state government to ensure this year’s budget will remain balanced and may even show a small surplus next summer.”
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