Late last week the Hartford Courant headline read, State Projects Surplus For Current Fiscal Year. Governor Dannel Malloy’s administration bragged that they state budget would end up with a $19.7 million surplus this year.
As with previous year, Governor Malloy has falsely claimed the state budget is in much better condition than it really is.
The dark clouds were already evident.
Already last month, the non-partisan Office of Fiscal Analysis projected that the current fiscal year deficit would be at least $45 million and Comptroller Kevin Lembo pegged the shortfall on April 3 at $44.6 million.
But last week, according to the monthly letter sent by Malloy’s administration to Comptroller Kevin Lembo, “Personal income tax collections are currently running within acceptable ranges relative to our target…”
Now, just days later, we learn that Malloy’s claim about income tax receipts are false.
In a stunning report in the CT Mirror;
New reports show dramatically eroding state income tax receipts that could expand the deficit in the next two-year budget by more than $500 million while depleting existing reserves.
Although six more days remain before analysts complete their review of April income tax receipts, the new numbers also raise the prospect state government may have to borrow to balance the current budget — the first time Connecticut has had to do so in eight years.
The CT Mirror adds;
The legislature’s nonpartisan Office of Fiscal Analysis notified the Finance, Revenue and Bonding Committee on Monday that April receipts are running $267 million below the level anticipated in this fiscal year’s adopted budget.
In other words, if the early returns hold, and if April receipts are down 20 percent or $267 million, that probably would prompt analysts to reduce expected revenues for each of the next two fiscal years by a similar amount, or more than $500 million for the upcoming biennium.
In a rare commentary included with Monday’s report, nonpartisan analysts said it appears that a “pessimistic scenario” that is related to the last state budget is playing out.
Finances, unless adjusted, are on pace to run $1.7 billion in deficit in 2017-18, and $1.9 billion in the red in 2018-19, according to Malloy’s administration, for a combined biennial shortfall of $3.6 billion.
If the April income tax estimates hold, the worst-case deficit forecast from the Malloy administration would approach $2 billion in 2017-18 and $2.2 billion in 2018-19.
To restate the seriousness of the situation, while the Malloy administration is claiming that April tax receipts are within “acceptable ranges,” they are actually far off what was projected in the budget.
If the actual situation holds true, Connecticut will be facing a major budget deficit this year and a biannual budget shortfall that could reach or even exceed $4.4 billion over the next two years.
The reality is that tax increases will be necessary.
The question is whether Connecticut’s elected officials will continue to overtax middle and lower income Connecticut residents or whether state government will finally start to require that the state’s wealthy pay their fair share in taxes.