Connecticut Comptroller Kevin Lembo has issued an updated forecast for a $31.6 million budget deficit in fiscal year 2020.
In a letter to Gov. Ned Lamont, Lembo said his updated forecast was based on the projected revenue reduction of $84.5 million by the state Office of Policy and Management and the Office of Fiscal Analysis coupled with a $24 million net deficit projected in the fringe benefit accounts, which he mostly attributed to fewer than anticipated retirements.
Lembo also noted his adjusted forecast encompasses a $100 million increase in tax refunds, mostly the result of larger than expected refunds for the income tax and pass-through entity tax, plus a $20.7 million reduction in revenue related to the new plastic bag surcharge.
Lembo noted that if current projections are realized, a $318.3 million volatility transfer would be made to the budget reserve fund ”“ more commonly known as the “rainy day fund” ”“ at the close of the fiscal year. The fund balance is now at $2.5 billion.
“In order to help protect against future economic downturns, Connecticut must maintain financial discipline and continue building the BRF balance to the statutory target of 15 percent,” Lembo said. “Connecticut”™s budget results are ultimately dependent upon the performance of the national and state economies.”
