New Report Highlights Pandemic’s Impact on State Budget
A new report from the legislature’s nonpartisan Office of Fiscal Analysis highlights the economic impact the COVID-19 pandemic has already had on Connecticut’s budget outlook.
According to the March 25 report, OFA projects a $178.2 million deficit for the current fiscal year, up $88.1 million from previous estimates.
The state’s Special Transportation Fund, originally projected at a $5.1 million surplus, is now projected to run a $23.8 million deficit.
According to the report, revenue adjustments are partially a reflection of downgrades in growth assumptions and the impact of temporary policy decisions to shutter bars, restaurants, and casinos.
OFA also highlights a Moody’s Analytics report that the United States is in a recession that will get worse over the next few months.
A prior OFA report estimated that $3 billion would be needed to cover lost revenue over two fiscal years in a typical recession.
Forgone revenue growth in a typical recession would be $1.5 billion, meaning the state’s General Fund could face an additional structural deficit of $1.5 billion after a typical recession has run its course.
While the pandemic’s economic impact on the state is starting to add up, the next scheduled consensus revenue estimate may not provide a clear picture.
The extension of several tax deadlines will make data collection more difficult.
OFA anticipates “major downward revisions to state revenue projections” for the next fiscal year and beyond.
For more information, contact CBIA’s Eric Gjede (860.480.1784) | @egjede
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