Connecticut closed the 2012 fiscal year ending in June with a $192 million deficit, according to new estimates released Monday by Secretary of State Kevin Lembo.
According to Lembo, the withholding portion of Connecticut’s income tax ”“ related to job and wage growth ”“ has performed as expected, increasing 18.3 percent from last year. However, the estimated payment portion of the tax related to capital gains and bonus payments was up only 5.9 percent, which is lower than historical post-recession patterns.
“The economy is the largest single influence on the state budget ”“ dwarfing any other budget drivers,” Lembo said, in a written statement. “Wall Street”™s erratic equity markets and challenges in the financial sector ”“ which had the largest private-sector job loss in the state ”“ is the driving force behind this deficit.”
In a letter to Gov. Dannel P. Malloy, Lembo reported that state revenue for fiscal 2012 was expected to fall $251 million short of original budget projections, while total state spending was expected to exceed appropriated levels by $22.5 million.
“Economic growth has not reached normal recovery levels ”“ but there are some positive economic indicators going forward, particularly in new homes sales in the Northeast housing market,” Lembo stated.
