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CT’s Budget Picture Improves, But $3.8-Billion Two-Year Deficit Awaits Lamont

November 14, 2018 By Staff
CT’s Budget Picture Improves, But $3.8-Billion Two-Year Deficit Awaits Lamont

The state's consensus revenue projections improved this week, but Governor-Elect Ned Lamont will still have a two-year budget deficit of $3.8 billion to deal with come January.

Consensus revenue projections from the governor’s Office of Policy and Management (OPM) and the legislature’s Office of Fiscal Analysis (OFA) find Connecticut in a better budget shape than last projected, but Governor-Elect Ned Lamont will still need to deal with a $3.8-billion two-year deficit to deal with come January 2019.

OPM and OFA projected the state will bring in nearly $19.3 billion in General Fund revenue in fiscal year (FY) 2019, which ends September 30, 2019, $17.8 billion in revenue in FY 2020, and $18.0 billion in revenue in FY 2021.

Compare with General Fund appropriations in FYs 2019, 2020, and 2021, and the state is adding $271 million to its coffers in FY 2019 than the last OFA estimate, $286 million more in FY 2020, and $307 million more in FY 2021.

With a $271-million transfer to the state’s Budget Reserve Fund (BRF) on top of the state’s existing $648 million in transfers to the BRF, the state is projected to transfer $919 million into its rainy day fund over FY 2019, leaving the BRF with just over $2.1 billion for Lamont.

He may need it. Despite the improving budget picture, the state is still projected to run a $3.8-billion deficit over the first two-year budget Lamont is responsible for (FYs 2020 and 2021). Exhausting the rainy day fund, which no one will want to do, would cover just 55 percent of the existing two-year shortfall.

Here’s a breakdown of the numbers:

FY 2019

  • General Fund appropriations: $19.0B
  • New projected General Fund revenues: $19.3B
  • Projected surplus: $271.2M (on top of $648M already transferred to BRF)

FY 2020

  • General Fund appropriations: $19.5B
  • New projected General Fund revenues: $17.8B
  • Projected deficit: $1.7B

FY 2021

  • General Fund appropriations: $20.2B
  • New projected General Fund revenues: $18.0B
  • Projected deficit: $2.1B

FY 2022

  • General Fund appropriations: $20.6B
  • New projected General Fund revenues: $17.9B
  • Projected deficit: $2.7B

FY 2023

  • General Fund appropriations: $21.4B
  • Projected General Fund revenues: $18.0B
  • Projected deficit: $3.3B

Lamont and the legislature still need to address nearly $10 billion in four-year deficits over the next two budgets.