Barnes Predicts $7.1M Deficit

CT News Junkie, January 21, 2016

by Christine Stuart

A little more than a month after trying to erase $350 million in spending to close a deficit, the state budget is again in the red. The Office of Policy and Management is projecting a $7.1 million deficit for fiscal year 2016.

Revenues are down $26.8 million, but Ben Barnes, secretary of the Office of Policy and Management, said they are offset by “net improvements of $19.7 million on the expenditure side of the budget.” In his monthly letter to state Comptroller Kevin Lembo, Barnes said that “heightened scrutiny of hiring and contract approvals are anticipated to address this minor projected shortfall.”

Here’s where the budget, according to Barnes, stands at the moment: On the revenue side, personal income tax is down $75 million as estimated payments are trending below target. Federal grants are down $46.1 million because of a revision in what the state can claim for medical services.

But it’s not all bad news — at least two revenue streams are projected to increase. The corporation tax revenue has been revised upward by $50 million and the estate tax has been revised upward by $24 million. The state also saw a $9 million increase in revenue from recent lottery sales. The state is still projected to spend $100.6 million less than it budgeted, but several accounts are still running deficiencies totaling $45 million.

The largest of those is a shortfall of about $35 million from lower-than-anticipated sales of bond premiums. The Office of Early Childhood is running a $6.2 million deficiency in the Birth-to-Three program based on caseload increases.

The Public Defender Services Commission is running a $3.85 million shortfall mostly because of an increase in the number of habeas corpus petitions — most of which are filed by inmates seeking to overturn their incarcerations. “We are also closely watching the Adjudicated Claims account administered by the Office of the State Comptroller because of recent announcements regarding several large settlements for wrongfully incarcerated persons,” Barnes wrote.

Four New Haven men were recently awarded $4.2 million each for being wrongfully convicted and serving nearly two decades behind prison walls. In two weeks, Barnes will present a new, two-year budget to lawmakers that erases this year’s $7.1 million deficit and next fiscal year’s $502 million deficit.

The General Assembly is scheduled to reconvene Feb. 3 for a short budget adjustment session. Only legislation related to the budget is expected to be considered. Lembo will certify the budget numbers Feb. 1.

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