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Connecticut Budget Deficit Projected at $27 Million

State Comptroller Kevin Lembo also says the state's economic recovery remains sluggish, Medicaid spending is on the rise and he's worried about sales tax revenues.

Escalating Medicaid spending and slow personal income growth is helping to fuel a projected $27 million state budget deficit, State Comptroller Kevin Lembo has reported.

In a letter Monday to Gov. Dannel Malloy, Lembo said that general spending by the state next year is on track to be $80 million in the red. The state’s budget deficit, Lembo said in his letter, is higher than expected in part because Medicaid spending by the state’s Social Services Department is on the rise. That department’s budget, Lembo said, currently has a $100 million deficit and  added 1,700 new Medicaid cases in August, he said.

Connecticut’s economy continues to make a sluggish recovery, Lembo said in his letter.

“In August, Connecticut lost 6,800 payroll jobs. For the full twelve-month period ending in August, the state has added a scant 1,100 jobs,” he wrote. “Since the recovery commenced at the beginning of 2010, Connecticut has regained about one quarter of the jobs lost to recession.”

In addition, the state’s unemployment rate rose to 9 percent in August, higher than the national rate of 8.1 percent, and Connecticut’s average hourly earnings were down 1.1 percent. Weekly private sector pay fell 1.4 percent, Lembo wrote.

While revenue from the state income tax has continued to show “positive movement,” the state’s earning losses, Lembo said, are worrisome.

“I am especially concerned with the sales tax trend in light of slower personal income growth in the state,” he wrote. “The state’s income growth ranking fell from thirteenth highest in the nation to thirty-fourth. Sales tax receipts have historically shown a correlation to personal income, so this trend is of concern.”

You can view a PDF of Lembo's letter above.

Ron Kadlecik October 02, 2012 at 06:00 PM
Sounds like the party in power plans to increase the per capita debt of each CT resident, AGAIN!! Our elected officials seem incapable of understanding that we can't continue to spend more than we take in. This ever increasing debt will eventually crush us. And the time of paying the pipe is not all that far off - sooner than most of us think!
Daniella Ruiz October 08, 2012 at 03:40 PM
it may be coming, to surround the state capitol with rakes and hoes raised high above our heads, rattling the sense of entitlement those we have 'chosen' to spend our money so freely. although we may be perceived as 'such good citizens' there merely to spiffy up their campus of earthly delights, fallen leaves and dead grasses. so callous is the regard for the trust we have placed with them, they may give their union maintenance crew a few extra days off at taxpayer expense! while we are forced to default on our own life agreements, sacrifice for the 'good' of the welfare folks and stand mute as roberts rules denies many their voice heard, it perhaps may come to a lesser struggle of money than of guerrilla politics, waged with little care of the democracy they seem to hold dear.

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