New numbers out today from state officials show that the state is in deeper financial trouble that expected.
For the current 2016 fiscal year, which ends June 30, we have a $266.7 million deficit. However, according to numbers released from the state's Office of Fiscal Analysis, that number is going to see an enormous jump for fiscal year 2017, which begins July 1 of this year.
The predicted deficit for next year was initially $569.5 million, but the new numbers out today show a jump of $339.4 million. After adding those numbers, you get the full deficit prediction for the new fiscal year, which is $908.9 million.
"Projections are going to vary from one set of numbers to another," said a representative from the Office of Policy and Management, which is the governor's budget office. "But what we should all agree on is that this is a new economic reality that requires a different solution. We hope that solution will happen in a bipartisan manner."
The governor proposed his updated budget with a deficit of $569.5 in January when the new legislative session began. The additional deficit number is based on a reevaluation of where we're at now, a month later. State Republicans, who released the numbers early, say a major factor is the drop in revenue from income taxes, which was less than original projections showed.
State Sen. Martin Looney, a Democrat from New Haven, said, "We are prepared to do what is necessary to balance Connecticut’s budget. Today’s projections reinforce the need to find additional efficiencies and savings across government. That’s why we have already made structural changes to save half a billion dollars over the next two years."
In regards to the Republican's statements on income tax being a factor, they attribute it to local businesses, such as GE, leaving the state due to the rising cost of operation. Many of the state's wealthiest residents, who are not happy with taxes, have moved as well.
In turn, that reduces the revenue in state income taxes, which is largely made up of businesses paying taxes. In fact, there was about a $200 million shortfall because of this. Because state income tax revenue accounts for a large of the budget, that loss of income is significant and has a large impact on our revenue, and in turn the deficit.
The Democrats attributed the loss to similar reasons, also mentioning the volatile stock market.
"While we continue to increase jobs and see growth in the state’s economy, we are impacted by a slower international and national economy," said Sen. Bob Duff, a Democrat out of Norwalk. "One only needs to look at the stock market averages to see the challenges we face."