HARTFORD–Low gas prices may be freeing up money in your pocket, but it’s burning a hole in the state’s wallet.
The governor’s Budget Office says tax revenues brought in by gasoline have dramatically declined.
The office reports the deficit this fiscal year has spiked to $120.9 million, compared to projections of $31.6 million last month. The budget office says it’s due to low gas prices and a Medicaid deficiency.
The state tax on petroleum providers fluctuates with gas use.
Gov. Malloy’s office says that means he will have to make budget cuts to close the gap and make sure we have a balanced budget before the fiscal year ends in June.
“Obviously we’re hard at work at developing a budget for next year as well as dealing with this,” said Malloy, “and were not the only state by the way, there’s tons of states that are exactly the same position.”
State Comptroller Kevin Lembo said, “The reduction in gas prices puts more money in consumer’s pockets and that’s a good thing. Does it create a short term shortfall? Yes. But putting money back in people’s pockets also helps to build confidence and increase consumer spending. That’s actually the biggest piece of gross domestic product.”
Malloy’s office said he will have to announce additional cuts in the near future.