Just days before lawmakers are scheduled to return to the Capitol, Comptroller Kevin Lembo said the state’s budget deficit has grown to $244.6 million.
Lembo’s projection, part of his monthly letter to Gov. DannelP. Malloy, is up $20.6 million from last month’s forecast. The General Assembly session starts Wednesday.
The budget shortfall is well above the 1-percent threshold requiring Malloy to submit a deficit mitigation plan to the legislature.
Lembo said Thursday that one reason for the increase in his projection is an expected $26.4-million deficiency in the state’s adjudicated claims account. That overrun is due to larger than expected payments related to the settlement in the State Employee Bargaining Agent Coalition lawsuit against the Rowland Administration.
The state did see a windfall of income tax revenues in December, but Lembo said those revenues must go into the state’s Rainy Day Fund. Connecticut saw an additional $900 million in income tax revenue because of wealthier residents looking to avoid higher tax rates in 2018 under the federal tax reform bill.
Lembo said that when those funds are removed from calculations, revenues have fallen another $16 million.
Lembo also said in his letter that Connecticut’s “economic recovery continues to lag the nation’s recovery,” but did point to GDP growth, a strong stock market, and the most recent jobs report as positive indicators.
“These are promising signs, but should be taken with cautious optimism as one month does not make a trend,” he said. “It’s also important to recognize that, while a strong stock market is important, nearly half of Americans do not participate in the stock market, and economic research indicates that nearly half of U.S. households report being unprepared for an emergency expense and nearly a quarter of adults report being unable to pay current monthly bills.”
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