Governor Rell: Current Year Deficit

Skyrockets to Nearly $922 Million

            Governor M. Jodi Rell today announced that her budget office now estimates the deficit for the current fiscal year at nearly $922 million – even after the latest round of budget cutting – because income tax, business tax and sales tax collections have fallen dramatically below expectations.

            The most recent deadline for quarterly estimated income tax payments was January 15. Those payments were 20 percent below projections, and if these trends continue income tax revenues for the entire year will likely fall $665 million – nearly two-thirds of a billion dollars – below projections, Governor Rell said.

            The latest deadline for corporation tax estimated payments was December 15, and those payments are trending $100 million below projections. Sales tax collections, meanwhile, are running $50 million behind projections.

            In all, the Office of Policy and Management – Governor Rell’s budget agency – projects a shortfall for Fiscal Year 2009 of $921.7 million.

            “Our state is challenged as never before – and we must rise to that challenge as never before,” Governor Rell said. “The economic tempest that has already ravaged so much of the nation has now made landfall in Connecticut with all of its fury. The last three months of 2008 – the job losses, the slump in sales, the concern in the eyes of Connecticut’s working men and women – have been an extraordinarily difficult time. Yet we are a resilient state – a place synonymous with innovation, a small state with the greatest work ethic and best-trained work force in the nation.

            “In the remaining five months of this fiscal year, I will work with the Legislature to ensure that we close this looming budget gap,” the Governor said. “But it is time – past time – for the Legislature to face this economic storm head on. Lawmakers can no longer cling to false optimism that we can squeak by for one more fiscal year before facing up to any truly difficult financial decisions.

            “As I said, we must rise to this challenge,” Governor Rell said. “Doing so, however, will require crafting a new understanding of what is essential in state government. It will require an understanding that state government cannot be all things to all people and cannot afford to do everything we might like. It will require an understanding that state government must be limited, especially in times such as these, by what the people who pay its bills can afford.”

            In its January 20 letter to the Office of the State Comptroller, the Governor’s budget office said it is recognizing a deficiency in the Department of Social Services of $56 million, stemming largely from costs associated with the expansion of eligibility for adults under HUSKY. Partially offsetting the shortfall is an expected lapse of $19.4 million, much of it from the Department of Children and Families.