Connecticut Comptroller Kevin Lembo is now projecting a state deficit of $1.26 billion for Fiscal Year 2021 and predicting a so-called K-shaped recovery that will benefit higher-income residents while lower-income households will face continued financial problems.
In a letter to Gov. Ned Lamont, Lembo warned that the upcoming consensus revenue forecast scheduled for Nov. 10 could add more bad news to current projections.
“Since the pandemic began, state government and its finances have been exposed to rapidly changing circumstances,” Lembo wrote. “It”™s critical to maintain a steady hand, adapt when new information becomes available and maintain a laser-like focus on helping Connecticut residents and businesses weather this ongoing crisis.”
Lembo noted Connecticut has recovered 60% of the jobs that it lost since the Covid-19 pandemic began while several revenue categories ”“ particularly estimated and final income tax payments, along with single-family home sales ”“ have displayed stronger-than-expected returns.
But he also cautioned that the lack of a new federal stimulus package will exacerbate current problems facing low-wage sectors that are already struggling with employment concerns and the costs of food, healthcare and housing.
“This K-shaped recovery is worsening existing inequities both in Connecticut and across the country,” said Lembo.
“Over 114,000 jobs in our state have yet to be recovered with a concentration in lower-wage industries like leisure and hospitality. Those families are turning to state and local governments, as well as our nonprofits, to hang on. As the economy gets stronger, the effects must be felt universally. We can”™t leave anyone behind.”
