SIREN: 2017 Deficit Explodes. What Will Malloy and the Legislature Do?May 5, 2017
The projected fiscal year (FY) 2017 deficit was $45 million in late March. As of May 5, it's $380 million.
Connecticut’s deficit for the fiscal year ending on September 30, 2017 grew from $45 million to $380 million in six weeks, according to the nonpartisan Office of Fiscal Analysis (OFA).
OFA’s report, out Friday morning, projects the deficit for this fiscal year, which ends in less than five months, stands at $379.5 million. That’s more than eight times their March 27 projection of $45 million.
The reason? Income tax receipts are plummeting (emphases ours):
April collections of Estimated and Final payments fell short of April’s target by $300 million. In addition, projections of the June Estimated payments have been downgraded by $90 million. In total, FY 17 Estimated and Final payments are projected to decline $303.9 million or 8.9% from FY 16.
This adds to the problems for Gov. Dan Malloy (D-Conn.) and the Democrat-led legislature. In addition to closing a projected $4.7 billion combined deficit for 2018 and 2019, the government must now take measures to close the $390 million deficit for 2017. This could include spending cuts or layoffs.
If the state does not close the deficit with spending cuts, layoffs, or other measures, it will likely exhaust its Rainy Day Fund, which currently stands at around $235.6 million.
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