Connecticut has recovered 40% of the revenue it expected to lose in April’s economic forecasts, although the state budget is still in something of a shambles thanks to Covid-19. And while state Democrats plan to address the budget next April, Republican leaders are insisting that action be taken now.
Office of Policy and Management Secretary Melissa McCaw said the state”™s latest revenue forecast “demonstrates the delicate balance we are currently facing, as our revenue collections and economic indicators are exceeding the estimates we set forth near the start of the pandemic in April, but there is uncertainty ahead as Covid-19 cases are rising.”
Revenue estimates in the current fiscal year have improved by $326 million from October”™s estimate, and by $875 million and $704 million in each year of the next biennium from the April forecast, McCaw said.
“The revenue improvement represents recoveries of less than 40% of the revenue we projected to lose in April with projected shortfalls of more than $900 million this year and nearly $3 billion per year in the next two fiscal years,” she continued. “As we manage the rise of Covid cases in Connecticut, any necessary actions to mitigate spread and the resulting impact on Connecticut”™s economy, we must grapple with a Coronavirus Relief Fund that is nearly exhausted and projected shortfalls that would erase our record-level savings.”
While the Lamont administration and other Democratic leaders are counseling a “wait and see” attitude, based around the annual state and federal tax payments on April 15, Republicans are less complacent. Senate Republican Leader Kevin Kelly (R-Stratford), House Republican Leader Vincent Candelora (R-North Branford) and Senate Republican Leader Pro Tempore Paul Formica (R-East Lyme) have written to Lamont asking that he immediately call a meeting of all state legislative leaders to begin addressing state budget issues.
“Today we heard House Democrats say that nothing regarding the budget can be decided until April 2021,” Kelly, Candelora and Formica wrote. “At the same time, they called for increasing borrowing, ignoring your promised ‘debt diet.’ It is important to invest in our state, but putting more expenses on the state’s credit card, and therefore on the backs of our children, has not been a successful strategy for our state in the past.
“We need to meet to address the budget and also to discuss the reality of how close we are to the bonding limit already,” they continued. “Because the Finance Committee has yet to adopt updated revenue estimates in over a year, well before the pandemic, the state is ignoring what we know to be the reality of the current situation and putting us dangerously close to the bond limit. This must be discussed.”
Waiting until April “allows problems to worsen to the point where we will be left with few choices when it comes to balancing the budget,” the trio wrote. “Not doing anything, and instead counting on the rainy day fund or borrowing to fill budget holes, creates a self-fulfilling prophesy that we will have no other options or tools available to us to stop the pain and keep our state finances afloat.”
The General Assembly”™s regular session is scheduled to begin on Jan. 6.
