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Hartford – State Comptroller Kevin Lembo today released finalized numbers for the 2011-2012 fiscal year — Gov. Dannel P. Malloy’s first in office — that detail how the state addressed what would have been a $143 million deficit through a creative strategy that diverted $222 million that was once set aside to pay old debt.
In a letter to Malloy, Lembo said that state government spending increased 5.2 percent in the fiscal year, but revenues increased by only 4.8 percent, or $227 million short of the budget target.
The fiscal year began July 1, 2011 with $1.5 billion in new taxes, the largest dollar-for-dollar tax increase in Connecticut history, although second in size when adjusted for inflation to the increase that followed the 1991 state income tax.
The chief reason for the revenue shortfall, Lembo said, was lower-than-expected tax revenues from capital gains and financial industry bonuses. Lembo said the biggest component to the spending growth was a 52-percent increase in Medicaid caseloads, at a cost to Connecticut of $409 million.
The $222 million in diverted funds were originally set aside to pre-pay economic recovery notes issued in 2009 to close that year's budget deficit.
For the 2013 fiscal year that began July 1, revenues are projected to grow 3.1 percent and spending by a more modest 2.6 percent.
The Office of Policy and Management predicts a small $3.1 million surplus for the year under traditional accounting methods, or a $46.9 million deficit if the Malloy administration gets back on track with the planned conversion to Generally Accepted Accounting Principles. The administration this spring deferred setting aside $75 million for GAAP accounting for the 2011-2012 fiscal year.