Hartford – State government is on track to end its budget year on June 30 with a $197.5 million deficit, and that shortfall will promptly be wiped out with a legislature-approved budgetary maneuver, state Comptroller Kevin Lembo announced today.
Lembo called the deficit a "direct reflection" of the region's sluggish economic growth.
"This slow growth depressed revenues and accelerated demand for state services," the comptroller said in his latest financial update.
The deficit for the 2011-2012 budget year was on pace to be even higher -- $272.5 million. But Gov. Dannel P. Malloy's administration opted to delay Connecticut's conversion to Generally Accepted Accounting Principles by postponing a $75 million set-aside payment. That payment was technically not required unless the state ran a surplus.
The final deficit will be eliminated through a transfer of $222.4 million in General Fund reserves that were set aside for the pre-payment of 2009 economic recovery notes, used to eliminate that year's budget deficit. The General Assembly approved the transfer this spring.
Lembo said revenues came up short this year, largely as a result of lower-than-anticipated income tax returns and higher tax refunds.
Connecticut government will ultimately need to set aside $1.7 billion to complete its conversion to the new accounting principles.