Gov. Dannel P. Malloy file photo
Gov. Dannel P. Malloy file photo

Updated at 6:10 p.m. with legislators’ comments

Gov. Dannel P. Malloy asked legislative leaders Wednesday to meet with him next week to plan a bipartisan response to state income tax receipts declining by “hundreds of millions of dollars.”

The governor did not identify how severe the decline is likely to be before his budget staff and nonpartisan analysts complete their latest assessment, which is due Monday.

But the legislature’s nonpartisan Office of Fiscal Analysis — which prepares a daily update on income tax collections after the April 18 filing deadline — notified lawmakers Wednesday that receipts for April were running $293 million below originally anticipated levels.

That’s a revenue shortfall of 20.4 percent.

More importantly, that raises the specter of two other unpleasant fiscal problems:

  • That anticipated revenues for the each of the next two fiscal years also must be severely reduced;
  • And that state government not only may close its third successive budget in deficit, but that it may deplete its reserves and have to borrow to close its books for the first time in eight years.

“We have acknowledged our current revenue shortfall and OPM now projects that we could lose hundreds of millions of dollars toward next year’s budget once the consensus revenue process is complete next week,” Malloy wrote to top Democrats and Republicans in the House and Senate.

Senate President Pro Tem Martin Looney, left, and House Speaker Joe Aresimowicz. File Photo

OPM or the Office of Policy and Management is the administration’s chief budget and policy planning agency.

“I stand ready to work with each of you and with your members toward that goal,” the governor added.

“I’m always available to meet with the governor, and as I said yesterday I’m available 24/7 for as long as it takes to get a budget done that meets the needs of the people of Connecticut,” House Speaker Joe Aresimowicz, D-Berlin, said. “It’s important that all parties are involved, including the chairs and ranking members of the budget committees in order to move us forward.”

“We are glad that the governor has acknowledged the deteriorating state of Connecticut’s revenue and has called upon legislative leaders to meet,” House Minority Leader Themis Klarides, R-Derby, said. “Our position has not changed; Republicans have stated publicly that we are prepared to sit in negotiations over budget issues at any juncture to come up with the best solutions.”

“We welcome the governor’s invitation,” Senate President Pro Tem Martin M. Looney, D-New Haven, said. “We are in uncharted territory, and it is imperative that the leaders come to the negotiating table with the goal of producing a budget that creates opportunities for economic growth and predictability for businesses, while protecting critical programs and services for property taxpayers, middle-income families, children, students and the working poor.”

Senate Republican President Pro Tem Len Fasano said, “We have requested that our budget be allowed to run in the Appropriations Committee for a vote so lawmakers can rally together in the hopes of getting a budget out of the committee that relies on no tax increases, that enhances education funding and that protects towns and cities.”

Fasano thanked Malloy for calling all legislative leaders together.

“Clearly, the projections we see … speak to the fact that actions of the legislature over the last decade have driven our state into financial disaster,” Fasano said. “We cannot continue going down the same path, and we hope that the severity of the problems we all know are coming down the line can be tackled with a solid base and with a united desire to change course.”

State finances are expected to be in dire straits over the next two fiscal years unless significant changes are made.

GOP Senate leader Len Fasano and House Republican leader Themis Klarides Mark Pazniokas /

Finances, unless adjusted, are on pace to run $1.7 billion in deficit in 2017-18, and $1.9 billion in the red in 2018-19, according to Malloy’s administration, for a combined biennial shortfall of $3.6 billion.

If the latest April income tax estimates hold, the deficit forecast would approach $2 billion in 2017-18 and $2.2 billion in 2018-19.

These represent potential gaps of 10 percent and 11 percent, respectively.

The $293 million potential income tax shortfall already exceeds the state’s modest $235.6 million emergency reserve, commonly known as the Rainy Day Fund.

Further compounding matters, nonpartisan analysts and Comptroller Kevin P. Lembo both said the current budget already is in deficit — before the latest income tax trends were reported.

The Office of Fiscal Analysis projected back on March 27 that Connecticut would finish the current fiscal year $45 million in deficit.

Lembo pegged the shortfall on April 3 at $44.6 million.

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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