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Connecticut Budget Deficit Projected at $27 Million

State Comptroller Kevin Lembo also says the state's economic recovery remains sluggish, Medicaid spending is on the rise and he's worried about sales tax revenues.

 

Escalating Medicaid spending and slow personal income growth is helping to fuel a projected $27 million state budget deficit, State Comptroller Kevin Lembo has reported.

In a letter Monday to Gov. Dannel Malloy, Lembo said that general spending by the state next year is on track to be $80 million in the red. The state’s budget deficit, Lembo said in his letter, is higher than expected in part because Medicaid spending by the state’s Social Services Department is on the rise. That department’s budget, Lembo said, currently has a $100 million deficit and  added 1,700 new Medicaid cases in August, he said.

The state ended the 2011-12 fiscal year with a deficit of $143.6 million. The deficit was paid down using the state's reserves.

Connecticut’s economy continues to make a sluggish recovery, Lembo said in his letter.

“In August, Connecticut lost 6,800 payroll jobs. For the full twelve-month period ending in August, the state has added a scant 1,100 jobs,” he wrote. “Since the recovery commenced at the beginning of 2010, Connecticut has regained about one quarter of the jobs lost to recession.”

In addition, the state’s unemployment rate rose to 9 percent in August, higher than the national rate of 8.1 percent, and Connecticut’s average hourly earnings were down 1.1 percent. Weekly private sector pay fell 1.4 percent, Lembo wrote.

While revenue from the state income tax has continued to show “positive movement,” the state’s earning losses, Lembo said, are worrisome.

“I am especially concerned with the sales tax trend in light of slower personal income growth in the state,” he wrote. “The state’s income growth ranking fell from thirteenth highest in the nation to thirty-fourth. Sales tax receipts have historically shown a correlation to personal income, so this trend is of concern.”

You can view a PDF of Lembo's letter above.

joe_m October 02, 2012 at 09:01 PM
No mention of the under funded state employees pension liability. Poor reporting or just being myopic? "The Pew Center on the States found 34 states failed to maintain safe levels of money in the pension funds, which most experts agree is about 80 percent of long-term obligations. Four states — Connecticut, Illinois, Kentucky and Rhode Island — didn't even have 55 percent of the money they'll need in the long run." You can't have a balanced budget if you purposely under fund state pensions. It's all a lie.
Bob October 03, 2012 at 02:26 PM
Clearly Malloy's model of raising taxes and increasing spending cant reduce the budget. I don't mind the tax increases if it will get us out of this budget mess. But you can't also increase spending at the same time and expect a different outcome. Thank you Malloy for hurting small business and taking money out of everyone's pocket, and not helping our budget at all.
Sean M October 03, 2012 at 02:36 PM
I do mind tax increases, which is not equated with an increase in revenue. Government cannot manage what it gets because it is too often involved in matters not appropriate for government to meddle in. The Left has overtaken the Democrat Party in America, and it is on show in CT what they do if left in power. The problem is the Republicans are not interested in really fixing the problems either.
joe_m October 03, 2012 at 02:56 PM
Republicans in CT? We don't have any. They are only Democrats using the other party to get elected. I do object to the blatant theft on my hard earned money by the so called government not elected by the people. They have proved time and again that the government cannot do anything right. It is corrupt to the core.

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