Pressure’s on State Budget
Rising government costs and struggling economy are straining Connecticut’s state budget for this fiscal year.
While the state continues to project a surplus of $78.9 million for the end of the fiscal year in June, it is a very narrow margin—especially with revenues squeezed by Hurricane Irene and the slow economy.
“I am concerned that current economic indicators and stock market activity may require adjustments to the current revenue projections,” wrote Comptroller Kevin Lembo to Governor Malloy this week.
The Office of Policy and Management issued a similar caution, adding that $75 million of the surplus must be applied toward the state's switch to General Accepted Accounting Principles.
Because of tax extensions granted by the state due to the hurricane, the comptroller won’t have complete data for August until later this month.
However, said Lembo, “Connecticut’s economy continues to show slow and erratic growth” And while the state has added 4,400 jobs in the 12-month period ending in August, those numbers “are well below the employment growth … expected during a normal recovery.”
The state’s General Fund is projected to end next June at only $1 million above Connecticut’s constitutional spending cap. That’s a number that in most years would be easily overwhelmed by the overspending of several state agencies in response to increased demands on programs and services.
Personal income in Connecticut has grown at an average rate of 4% during the first two quarters of 2011, and wage and salary income is 3.7% above last year’s level. Interest rates remain historically low, but “inflation is beginning to grow, constraining consumer purchases,” said Lembo.
For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or firstname.lastname@example.org.
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