The state budget is again out of balance for this fiscal year even after lawmakers closed a $220 million budget deficit just weeks ago.
The latest discouraging news is that there’s a $141 million gap for this year due to tax revenue that continues to under perform.
Just ahead, too, is a $930 million deficit for the next fiscal year that starts July 1.
As this new shortfall was announced--the fourth since the budget was first adopted last June--policymakers were also expecting results from state tax returns after the April 18 deadline that could improve, or worsen, the situation.
“The question is no longer whether we’re in a new economic reality,” said Gov. Malloy.
“It’s what we're going to do about it.”
According to the governor’s budget director, the state is facing shortfalls of:
- $85 million in corporation tax receipts
- $10 million in fee receipts
- $40 million in missed savings targets
The governor ruled out using the state’s Rainy Day Fund to close the latest gap, calling it a “Band-Aid” solution when the state needs long-term solutions.
Some lawmakers are said to be considering a package of tax and fee increases to alleviate some of the new gap.
Yet recent state tax and fee increases have had a negative impact on the state’s economy and fiscal condition.
In late March, the legislature adopted a plan to close the then-$220 million gap with a mix of spending cuts ($133 million) and one-time fund transfers ($87.2 million).
Now, policymakers will have to return to this year’s budget even as they grapple with bigger future deficits.
Now, policymakers will have to return to this year’s budget even as they grapple with the bigger deficits.
The budget is an economic issue, too.
Employers in Connecticut need to see greater sustainability, consistency, and predictability in state finances in order to make long-term investments in jobs, facilities and operations here.
With only a little more than a week remaining in the 2016 legislative session, it’s critically important that policymakers act now to create a fiscally sound future for the state.
CBIA continues to urge Connecticut state lawmakers to get started as soon as possible on long-term, sustainable spending reforms that can help reduce those mountainous deficits—and better serve the people of Connecticut.