Federal Shortfall Creates $63.4 Million Projected Deficit: Rell

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The governor plans to release a new plan to cut the budget to reduce a projected $63.4 million deficit.

Gov. M. Jodi Rell released the new projected shortage amount on Friday and blames a shortfall in federal funding and higher than expected demand for state social services.

Part of the problem, she said in a news release, is that Connecticut will receive $193.4 million less than expected in federal Medicaid and education funding.

Rell said one issue is $50 million in cost-cutting that is supposed to be achieved by the Legislature’s Enhancing Agency Outcomes panel has not materialized.

“I will be working with my budget officials to erase the shortfall through administrative actions,” Rell said. “The fiscal year has barely begun and we have an opportunity – one we cannot afford to miss – to control this deficit before it grows unmanageable. I will be announcing the details of my budget-cutting plans soon.”

The news comes despite an increase in projected state income tax and sales tax collections.

There is a net increase in projected state revenues of $390.5 million. The increase includes higher projections for income tax collections – up by $127.5 million – and sales tax collections, up by $153.8 million.

“I am encouraged by the improvements in the state revenue picture – but it would be a mistake to look at these projections and believe that our problems will resolve themselves,” Rell said. “The savings assumptions built into the budget must either be achieved as planned or obtained through other means.”

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