Connecticut has officially closed its fiscal 2015-16 year with a $170.4 million deficit.
In a letter sent to Gov. Dannel Malloy, State Comptroller Kevin Lembo said the shortfall in the General Fund will be covered by the state”™s Budget Reserve Fund, which will leave about $235.6 million ”“ less than half of what the state had before posting figures for this year and for fiscal 2014-15, when it recorded a $113.2 million deficit.
The fiscal year ended on June 30, but deficit figures are not finalized until completion of the year”™s fiscal transactions.
“The disappointing revenue results for Fiscal Year 2016 were largely produced by an economy that has yet to reach past recovery growth levels, as well as considerable stock market volatility,” Lembo wrote to the governor.
Connecticut has recovered about 81 percent of the nonfarm jobs it lost during the March 2008-February 2010 recession.
In a separate letter to the governor on Oct. 3, Lembo said that the state so far is on track to end the current fiscal year “essentially” in balance.
The state’s current savings target for the fiscal year that began July 1 ”“ approximately $190.8 million ”“ will be a challenge for agencies that have managed several consecutive years of cost cutting, the comptroller said.
“While that savings target is not at a historically high level, it follows successive fiscal years of significant cost cutting with each year”™s target becoming more challenging to achieve,” Lembo wrote. “Current General Fund projections have Fiscal Year 2017 total spending growth flat against last fiscal year. To realize no growth in actual year-over-year outlays is a considerable management challenge that will require the skillful efforts of all agencies and branches of government.”
As economic growth remains moderate at both the state and national level ”“ and the capital markets remain volatile ”“ Lembo said he will continue to carefully monitor revenue.
“General Fund revenue estimates for Fiscal Year 2017 are consistent with a continuation of moderate economic growth,” Lembo said. “In Fiscal Year 2016, tax revenues fell more than a half a billion dollars short of initial budget projections. Volatility in capital markets and slower-than-expected growth in workers”™ wages were major contributing factors to sluggish revenue growth in Fiscal Year 2016. I will be carefully monitoring economic data that impacts state revenue and will adjust my estimates accordingly in future letters.”
