Significant Change In Connecticut Budget Deficit

HARTFORD, CT — Connecticut’s upcoming budget crunch just got a little breathing room. Current projections by the Office of Policy Management suggest that the budget hole will be nearly $600 million less in the next combined two year budget.

“These new consensus revenue estimates reflect the strong recent growth we have seen in our economy and demonstrate that policy changes- such as the changes made to the pass-through entity tax- are working and helping taxpayers,” said OPM Secretary Ben Barnes. “The improvements we are showing in the out-years help reduce the strain the state is facing in the next biennium by nearly $600 million, which is a step in the right direction.”

Much of the good news is thanks to increased projections for personal income tax withholding and the pass through entity tax.

The two-year budget deficit would shrink to around $3.8 billion with around $2.1 billion in reserves, according to CT News Junkie.

Lamont previously said he didn't want to use reserve funds to plug Connecticut's budget hole, according to the CT Mirror.

Lamont's options to close the budget without tapping reserves are limited. The most recent union concession agreement provides a no layoff guarantee until June 30, 2020.

While it’s certainly a challenge, Connecticut has fared with far worse in the recent past. During 2017 the biennial budget deficit swelled to more than $5 billion at one point. The deficit was eventually reduced thanks to the union concession deal and a mix of tax hikes, some cuts to local aid and other budget maneuvering.

Lamont said during his campaign that he would restore and expand the property tax credit that is a popular deduction for middle-class taxpayers in the second year of the budget. He wants to raise the existing tax credit for all beneficiaries by 50 percent and expand it to all households that earn up to $160,500 per year. The move would cost about one percent of the most recent budget.

The move would mean that those paying house or car taxes could get up to $300 in a tax credit. Currently only taxpayers who are either 65-years-old or older or who claim one or more dependents on a federal income tax return can qualify for up to a $200 credit.

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