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Connecticut Budget Deficit Projected at $27 Million

State Comptroller Kevin Lembo also says the state's economic recovery remains sluggish, Medicaid spending is on the rise and he's worried about sales tax revenues.

 

Escalating Medicaid spending and slow personal income growth is helping to fuel a projected $27 million state budget deficit, State Comptroller Kevin Lembo has reported. 

In a letter Monday to Gov. Dannel Malloy, Lembo said that general spending by the state next year is on track to be $80 million in the red. The state’s budget deficit, Lembo said in his letter, is higher than expected in part because Medicaid spending by the state’s Social Services Department is on the rise. That department’s budget, Lembo said, currently has a $100 million deficit and  added 1,700 new Medicaid cases in August, he said.

The state ended the 2011-12 fiscal year with a deficit of $143.6 million. The deficit was paid down using the state's reserves.

Connecticut’s economy continues to make a sluggish recovery, Lembo said in his letter.

“In August, Connecticut lost 6,800 payroll jobs. For the full twelve-month period ending in August, the state has added a scant 1,100 jobs,” he wrote. “Since the recovery commenced at the beginning of 2010, Connecticut has regained about one quarter of the jobs lost to recession.”

In addition, the state’s unemployment rate rose to 9 percent in August, higher than the national rate of 8.1 percent, and Connecticut’s average hourly earnings were down 1.1 percent. Weekly private sector pay fell 1.4 percent, Lembo wrote.

While revenue from the state income tax has continued to show “positive movement,” the state’s earning losses, Lembo said, are worrisome.

“I am especially concerned with the sales tax trend in light of slower personal income growth in the state,” he wrote. “The state’s income growth ranking fell from thirteenth highest in the nation to thirty-fourth. Sales tax receipts have historically shown a correlation to personal income, so this trend is of concern.”

You can view a PDF of Lembo's letter above.

RONALD M GOLDWYN October 02, 2012 at 09:12 PM
With control of our state government in the hands of Democrats who is there to pass the buck on too. The deficit is entirely the fault of the Governor and his legislature. It is time to elect some Republicans that will take back the Assembly and Senate. Lets start here in Milford with the two Mike's.
Mike October 03, 2012 at 03:40 PM
All the government local, state and federal need to stop sending money that we don't have. I run my homes budget that way, just like most Americas do. My ten year old understands this so I hope the people we elect do?
Mike October 03, 2012 at 03:43 PM
Sorry typing on handheld is not that easy correction meant to say. I run my home on s budget we only spend what we have.
Concerned Parent October 03, 2012 at 03:52 PM
There must be a lot of state residents who do not possess any basic math skills...The only way to support this state's lack of fiscal responsibility is to raise taxes. When these idiots push more taxes on CT companies, they simply cut jobs which results into reduced tax revenue and additional financial burden onto an already broken state... And all thru this BS, the same moronic and myopic people continue to play schoolyard politics.. Basically, we are all _____
Mike October 03, 2012 at 04:26 PM
Yes Ed. You hit that one out of the park!!!! You right on the money. We pay a lot in taxes now, the state wants more! Stop the spending.

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