Hartford — New revenue figures show the state budget plunging deeper in the red — now nearly $275 million — after an unanticipated drop in income-tax receipts this spring.
The latest consensus revenue figures, released Monday night by the Office of Policy and Management and the legislature’s nonpartisan Office of Fiscal Analysis, are the first snapshot of Connecticut’s finances since the April tax deadline.
Revenue from income tax receipts is running $147 million under state officials’ earlier projection.
This shortfall was largely responsible for opening a $274.8 million deficit in the budget for the current fiscal year ending June 30, provided the Malloy administration continues to convert to a stricter accounting methodology, known as Generally Accepted Accounting Principles.
Should the administration opt to halt the conversion, the budget deficit would be a more manageable $199.8 million.
Gov. Dannel P. Malloy’s budget chief, Ben Barnes, said the budget deficit is now equal to about 1 percent of general fund expenditures, triggering a requirement for the governor to submit a formal deficit-mitigation plan to the General Assembly.
Barnes said Malloy’s plan will call for transferring $222 million that was set aside in a reserve fund last year to “pre-pay” the economic recovery notes that Connecticut issued in 2009 when it borrowed money to close a budget deficit.
“This strategy will allow state government to use money saved to pay down debt early to cover the unexpected revenue shortfall, so that we won’t be forced to cut essential services for Connecticut’s most vulnerable residents,” Barnes said in a statement.
He said the fund transfer “is not ideal” but would avoid service cuts without violating the new accounting principles, known as GAAP.
But House Minority Leader Lawrence Cafero, R-Norwalk, called the proposed shifting of money “a gimmick.”
“Remember the whole story about transparency and no more gimmicks? That sure sounds like a gimmick to me,” Cafero said. “It sounds like we’re manipulating our books in order to reduce the deficit.”
Barnes said it was important to consider the new deficit figures in perspective; it was only a year ago that Connecticut faced a $3.6 billion deficit.
“Clearly, we have made real progress in tackling the immense problems left on our doorstep long before we moved in,” the budget chief said.
For Cafero, the deficit figures showed that Malloy and the Democratic-controlled legislature should have enacted more spending cuts last year and fewer tax increases when trying to balance the biennial budget. The budget involved a record $1.5 billion in new taxes this year.
“When you try to balance a budget on revenues alone, it doesn’t work — they’re too volatile,” Cafero said.
In his statement, Barnes took issue with “those who play politics with this news, claiming it represents broader budgetary problems.”
“This couldn’t be further from the truth,” Barnes said. “We aren’t borrowing to cover operating expenses, and we continue to move to GAAP. Connecticut has finally addressed its budget problems, but it’s not something that will be solved overnight.”