Revenues Lag, State Budget Gap Widens

State revenues continue to decline, opening wider gaps in the current and upcoming state budgets.

The latest combined report from the Office of Fiscal Analysis and Office of Policy and Management says that revenues are down about $160 million this year—and the agencies project that tax dollars will continue to decline beyond this year.

The revised bottom line is a $70 million deficit for fiscal year 2013, after allowing for federal dollars that will offset some of the actual revenue decline, and despite the deficit mitigation session in December.

The report also confirms that the state will face $1 billion in deficits in each of the next two fiscal years.

While it’s obvious that policymakers will find no easy solutions to solving the budget problems, especially as the state’s economy continues to struggle, significant policy changes must be made in what state government costs and how efficiently it operates.

Setting appropriate state spending priorities and efficiently using state tax dollars will energize business investment and increase prospects for creating private-sector jobs.

And fixing the state’s fiscal issues must be accomplished without further increases in taxes and fees that would discourage business confidence.

CBIA will release recommendations next week on ways the state can reform state spending, improve how state government operates, and in the process, help drive economic recovery.

For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or bonnie.stewart@cbia.com.