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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.

Richard Poulton October 02, 2012 at 02:35 PM
This is a no-brainer. In the hole for 27 million. But we will spend 174.7 million in state funds for a rail line no one will use. Take that 27 million we are short from this 174.7 that must be tucked away someplace, pay off the debt, save the 147.7 million. But no, this makes too much sence.
Will Wilkin October 03, 2012 at 01:18 PM
The public sector will be overburdened and cannot be properly funded so long as the private sector continues bleeding manufacturing jobs and the other high-value-added jobs that accompany manufacturing. As for the "recovery" generating only 25% of the jobs lost in the "recession," this shows we are in a structural crisis, no ordinary recession but rather a deepening collapse of our industrial ecosystem, with frightening implications for our country if our politicians keep herding us over the "free trade" cliff. Here is a list of CT politicians who, by voting "yes" on the US-Korea "Free Trade Agreement," support the continued export of America's jobs, wages, GDP, tax base, the cancellation of the multiplier jobs mfg could have created, and indeed the export of our country's engines of wealth-creation and future opportunity and prosperity: Joseph Lieberman, Jim Himes, John Larson. http://www.arirang.co.kr/News/News_View.asp?code=Ne4&nseq=137964 EXCERPT: According to a report by the U.S. Congress' Joint Economic Committee the U.S.' trade deficit with Korea has grown by even a larger margin since the implementation of the FTA from just 600-million dollars in March to a staggering 2-billion dollars in May. END EXCERPT We can thank the following CT politicians who voted "NO" on the KORUS FTA: Joe Courtney, Rosa DeLauro, Chris Murphy, Richard Blumenthal.

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