Next Gov May Have Easy First Fiscal Year, According to Lembo Report, But Danger Lies AheadOctober 3, 2018
Dan Malloy's eight years were marked by budget crisis after budget crisis, but his successor may have a breezy first year – if current projections hold.
The next governor of the state of Connecticut – either Republican Bob Stefanowski or Democrat Ned Lamont – may not face an immediate, current fiscal year budget crisis when he takes office in January 2019, according to new projections from Comptroller Kevin Lembo (D-Conn.).
Lembo, in a report published Monday, wrote that the fiscal year (FY) 2019 budget is on pace to be $164 million in the black.
Comptroller Kevin Lembo today said that there are reasons for cautious optimism that the state could end Fiscal Year 2019 with a modest surplus of approximately $164.2 million if some early positive indicators continue throughout the year.
…“It is still very early in the fiscal year and so the state should only rely cautiously on these positive early indicators, but there are a number of revenue categories performing above expectations, including the estimated and final payment portion of the income tax (by $284.9 million), as well as the sales and use and corporations taxes,” Lembo said. “My office will continue to closely monitor these economic and revenue trends in the interest of fiscal responsibility.”
While a FY 2019 surplus would mean the next governor and legislature would not need to make emergency cuts – or tax hikes – to balance the FY 2019 budget, nor dip into the Rainy Day Fund, neither branch of government is out of the woods in the long term.
The projected budget deficits for the out-years are as follows:
- FY 2020 (October 2019-September 2020): $1.9608 billion
- FY 2021 (October 2020-September 2021): $2.5009 billion
- FY 2022 (October 2021-September 2022): $3.1167 billion
- FY 2023 (October 2022-September 2023): $3.5699 billion
That’s more than $11 billion of deficits, just in the first four fiscal years the next governor is responsible for.
The immediate challenge for the next governor, and the legislature, will be closing a projected $4.46-billion deficit in the biennial, FYs 2020 and 2021 budget.
Closing that deficit through spending cuts alone would require slashing the budget by 10 percent. Neither gubernatorial candidate is campaigning on tax hikes – in fact, both are pledging some level of tax cuts – which makes the question of how they’d balance the two- and four-year budgets all the more important.
Malloy’s first year was marked by the tumult of closing a FY 2012 deficit of $3.2 billion. He passed a budget in May 2011 that featured a target of $1 billion in labor concessions – and included $1.4 billion in tax hikes.
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