Contact: Steve Jensen: 860-702-3308/3301
E-mail: Steven.Jensen@po.state.ct.us
Cell: 860-539-9298
Wyman Projects Record-Setting Deficit of $1.1 Billion
State Comptroller Nancy Wyman today said the projected state budget deficit has ballooned to $1.1 billion, which will be Connecticut's largest ever if it holds until the end of the fiscal year June 30.
"The bottom has simply fallen out of every major tax category," Wyman said. "This is an enormous fiscal crisis that will take difficult and decisive government action on behalf of Connecticut's taxpayers."
The worst deficit on record came in 1991, when the shortfall reached $965 million on an overall budget of about $6 billion. The current projected deficit of $1.1 billion is based on a 2009 budget of $18.4 billion.
Since last month, projected income tax collections have dropped by $665 million, mainly due to a 20-percent drop in quarterly estimated-tax payments typically made by investors and those who receive yearly bonuses. That decline will also mean that the state will likely pay out about $74 million more in tax refunds than was anticipated.
The payroll withholding portion of the income tax is also in steep decline, due to the loss of more than 25,000 jobs in the last three months of calendar 2008. The state's unemployment rate climbed to 7.1 percent in December from 6.6 percent the previous month. Collections of the sales tax are down by $100 million from original estimates.
Wyman's estimate includes nearly $500 million in deficit-mitigation steps that have been approved by the General Assembly. As she has since last October, Wyman again called on the governor and the legislature to act decisively on the current revenue shortage and a "structural" budget imbalance of more than $500 million caused by using previous years' surplus funds to fund ongoing programs.
"As the end of the fiscal year draws closer, options to deal with this deficit become fewer and fewer," Wyman said. "Failure to act quickly will inevitably lead to the near-emptying of the state's $1.4 billion Rainy Fund."
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