Connecticut is on target to end the current fiscal year with a $44.6 million deficit, according to data released by Comptroller Kevin Lembo, who cited slow income tax withholding revenue and concerns about final April payments as the source of his projections.
“The withholding portion of the income tax, which accounts for over 60 percent of total income tax receipts, has been weakening in recent months,” Lembo said. “In addition, estimated income tax payments through February were below last fiscal year’s receipts. The final income tax receipts will be available later in April. As in past fiscal years, it is likely that the final April payments will alter General Fund projections. I would be happy to be wrong.”
In a letter to Gov. Dannel P. Malloy, Lembo voiced agreement with Office of Fiscal Analysis’ recent income tax projection, which is $60 million below the January consensus forecast that the state has relied on in recent months. Lembo added that he forecasts the state’s spending will surpass the budget plan by $18.1 million – which is greater than the Office of Policy and Management’s forecast.
“However, it should be noted that total General Fund spending through February was trending below both of these spending projections,” Lembo said. “If this trend holds through the remainder of the fiscal year, expenditures should be at or below the budget target, thus reducing the deficit projection.”