Budget director Benjamin Barnes Claude Albert / CTMirror.org file photo
Budget director Benjamin Barnes Claude Albert / CTMirror.org file photo

Just over seven weeks into the new fiscal year without an approved budget, state finances — not surprisingly — are running in deficit, Gov. Dannel P. Malloy’s administration reported Monday.

In its first monthly report on the new fiscal year, the administration reported state finances are running $94 million in the red.

But if the budget standoff continues, more red ink is anticipated.

Even with the new concessions deal ratified recently by state employee unions and by the legislature, finances — unless adjusted — are expected to run $1.6 billion in deficit in 2017-18.

Malloy, who has been running the state by executive order, has used his limited authority to curtail spending, focusing most of his cutback on municipal aid and on social services provided by private, nonprofit agencies.

That’s because other segments of the budget, such as retirement benefits, debt service and Medicaid, are largely fixed, either by contract or by federal entitlement rules. And the retirement benefit and debt service costs are surging this fiscal year by hundreds of millions of dollars.

One of the municipal grant programs that is being cut dramatically involves a system established in 2015 to share state sales tax receipts with cities and towns.

Malloy’s budget director, Ben Barnes, wrote in his monthly report that the administration would ask the legislature — later this fiscal year if a new budget still has not been adopted — to redirect $94.5 million in a sales tax receipts holding account to mitigate state budget shortfalls.

The administration issues a budget update on or about the 20th of each month to the comptroller’s office. But while the fiscal year begins July 1, the July 20 update involves the outgoing year’s budget. That makes the August report the first one dealing with the new fiscal year’s finances.

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.

Leave a comment