Connecticut’s Budget Deficit Balloons to Nearly $5 Billion

The final numbers are in for Connecticut’s revenue forecast and things aren’t looking good. Last week was a rollercoaster ride of estimates after income tax receipts came in much lower than expected.

The budget for next fiscal year will be about $600 million worse and $864 million worse in the fiscal year after that, said Office of Policy Management Secretary Ben Barnes.

“We need to take immediate action to reduce spending between now and June 30 to reduce our current year deficit as much as possible to prevent the need to borrow to meet expenses,” he said. “We also need to develop new, additional approaches to further reduce spending in order to balance the budget for the years ahead.”

The massive drop in revenue will only further complicate the state’s budget woes. Before the drop in revenue Connecticut had a $3.6 billion budget deficit for the next two fiscal years. The latest numbers add more than $1.464 billion, which means the deficit is now around $5 billion for the next two years. (To sign up for free, local breaking news alerts from more than 100 Connecticut communities click here.)

Gov. Dannel Malloy’s proposed biennial budget released in February is about $36.3 billion, meaning the deficit is around 14 percent.

The income tax paid by the top 100 taxpayers fell by 45 percent from last year, according to the Department of Revenue Services.

Malloy said he has no intention of borrowing money to close the current fiscal year, but legislators are concerned because there are only two months left in the fiscal year, according to the Hartford Courant.

Revenue was about $413 million less than expected for the current fiscal year, which equates to a deficit of $380 million, according to the CT Mirror. There are only $236 million in emergency funds.

Milford State Rep. Pam Staneski said Connecticut has no choice but to live within its means going forward.

"The policies of the past have not worked," she said. "Both in 2011 and 2015 Connecticut passed the two largest tax increases and yet the budget deficits are higher now than ever. We are now facing a $5 billion deficit in the next two years. "

Already Malloy is seeking about $700 million in union concessions for the next fiscal year and even more the following year. More than 4,000 layoffs would become necessary if no concessions are reached.

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