Failure? CT Ends FY17 With $22M Deficit, $94M Deficit Projected for FY18October 10, 2017
Two recent reports from Comptroller Kevin Lembo shed light on just how bad Connecticut's budget situation is.
Comptroller Kevin Lembo (D-Conn.) recently released two reports on Connecticut’s deficit, one on the fiscal year (FY) 2017 that closed on June 30, and one on FY 2018 that started on July 1.
The first, released in a letter to Gov. Dan Malloy (D-Conn.) on September 29, found that Connecticut finished FY 2017 with a $22 million deficit. Connecticut will eliminate that deficit with a transfer from its reserve fund equal to about 10 percent of the reserve fund.
The General Fund ended Fiscal Year 2017 with a deficit of $22,696,231. A transfer from the Budget Reserve Fund will eliminate the shortfall returning the unappropriated balance of the fund to zero. The Transportation Fund had an operating deficit of $45,225,502, which left a positive fund balance of $97,615,054 at the close of Fiscal Year 2017.
In this letter, Lembo also disclosed that Connecticut’s debt service costs surged, from 3.1 percent (for the State Employee Retirement and Teachers’ Retirement Systems) to 9.4 percent (retirement health costs) depending on the service.
Lembo found that Connecticut has only recovered about 82 percent of the 119,000 jobs it lost during the recession.
The second report, released October 2, found that under Malloy’s executive order – and absent a two-year budget – Connecticut will finish FY 2018 with a $93.9 million deficit.
Comptroller Kevin Lembo today said the state, still absent a budget for Fiscal Year 2018, remains on track to end the year with a deficit of $93.9 million under the provisions of an executive order by the governor.
In a letter to Gov. Dannel P. Malloy, Lembo said the administration’s spending reduction authority under his executive order should allow him to meet current savings targets. However, spending trends so far – 7.2 percent higher than the same period last fiscal year – show that fixed costs (including debt, state employee and teachers retirement and retiree health care) continue to rise, while discretionary spending is forcibly decreasing.
The immediate deficits are just two small slices of a much larger problem: billions in unfunded liabilities in the state of Connecticut, most from obligations to state employees and retirees.
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