We’re in more financial trouble than we thought we were, according to the latest budget estimates from Gov. M. Jodi Rell.
Rell said Tuesday that her budget office now estimates the deficit for the current fiscal year at nearly $922 million, even after the latest round of budget cutting.
The reason for the even higher number is because income tax, business tax and sales tax collections have fallen dramatically below expectations, Rell said.
Quarterly estimated income tax payments, which were due Jan. 15., fell 20 percent below projections, Rell said.
If this becomes a trend, she said, tax revenues for the entire year will likely fall $665 million below projections.
Corporation tax estimated payments, due Dec. 15, are trending $100 million below projections.
Sales tax collections are running $50 million behind projections.
The Office of Policy and Management projects a shortfall for Fiscal Year 2009 of $921.7 million.
“The economic tempest that has already ravaged so much of the nation has now made landfall in Connecticut with all of its fury,” Rell said. “The last three months of 2008 – the job losses, the slump in sales, the concern in the eyes of Connecticut’s working men and women – have been an extraordinarily difficult time. Yet we are a resilient state – a place synonymous with innovation, a small state with the greatest work ethic and best-trained work force in the nation.”
“In the remaining five months of this fiscal year, I will work with the Legislature to ensure that we close this looming budget gap,” Rell said. “But it is time – past time – for the Legislature to face this economic storm head on. Lawmakers can no longer cling to false optimism that we can squeak by for one more fiscal year before facing up to any truly difficult financial decisions.
Rell said it is time to rethink what is essential in state government.
“It will require an understanding that state government must be limited, especially in times such as these, by what the people who pay its bills can afford,” Rell said.
In a letter sent Jan. 20 letter to the Office of the State Comptroller, Rell’s budget office said it is recognizing a deficiency in the Department of Social Services of $56 million, stemming largely from costs associated with the expansion of eligibility for adults under HUSKY.