State budget shortfall grows to estimated $150 million; governor orders cuts

(July 11, 2008) With an anticipated budget shortfall of about $150 million in the new fiscal year (beginning July 1), Gov. Jodi Rell ordered budget cuts of 3% to 5% at state agencies and commissions.

The economic environment has changed, she explained, since the two-year budget plan was adopted in June 2007. “The economic slippage that began last summer with the national mortgage credit crunch has continued. Personal income — which increased in our state by 6 percent in Fiscal 2007 – is expected to grow by just 2.9 percent in Fiscal 2009.”

The governor has already ordered a state hiring freeze, banned out-of-state travel paid for with state funds and ordered cuts in state gasoline usage. Even so, she expects the state “will need to find additional savings.”
State lawmakers in 2007 approved a $36 billion, two-year budget, which included a budget of $18.4 billion in 2009, a 4% increase over fiscal year 2008. This year, the slowing economy and yawning state budget deficit convinced majority legislative leaders and Gov. Rell not to make any adjustments to the fiscal year 2009 budget.

The governor, however, can make cuts of up to 5% without having to get legislative approval.

Connecticut is far from alone on the budget situation. According to a fiscal survey of states by the National Governors Association and National Association of State Budget Officers, the budget year that begins July 1 will be one of the bleakest for state governments in the last three decades.

“Most states are concerned about a continued weakening of the national economy and the impact on their individual state fiscal situations. While state fiscal situations vary now, fiscal 2009 could prove to be more troublesome than fiscal 2008,” said the groups’ “Fiscal Survey of the States Report.”