Connecticut’s economy continues to be in deep trouble. While unemployment is technically down, the way the economy is changing means lower income tax revenue for the state of Connecticut.
Some Connecticut residents have simply given up looking for work. Others have taken jobs that pay well below what they used to earn and still other are working in part-time consulting work as opposed to full-time jobs.
Together these changes mean Connecticut’s tax picture is in deep trouble.
As Keith Phaneuf of the CT Mirror explained today;
Plummeting state income tax collections are experiencing their worst decline since the last recession, falling $450 million below anticipated levels for April.
The impact of this decline in revenue not only means Connecticut will face a budget deficit this year, but the revenue shortfall for the next two years will be much more severe than previously estimated. The 3.6 billion deficit projected over the next biannual budget will grow by $500 million next year and $600 million the year after.
The state will now be facing a $4.5 billion gap between projected revenue and projected expenses.
As CT Mirror wrote, the new numbers mean that the state will probably
Close its third successive fiscal year in deficit;
And deplete its $235.6 million emergency budget reserve.
It increases the risk that state government might have to borrow to cover operating costs for the first time in eight years — even though it still hasn’t paid off nearly $1 billion in operating debt from the last recession.
Read more about this breaking story at: CT tax revenue in free fall, adding $1.1B in red ink for next 2 years