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.

Paul Lambert October 02, 2012 at 06:13 PM
Wait! a 20% raise for UNION state employees. Let's not forget who got us in office right? And that can be a little 'thank you' for the 'assistance' in voting in Bridgeport back in 08. ;)
Happy Percy October 02, 2012 at 07:10 PM
And we thought Girl's Gone Wild was bad! But Government Gone Wild is FAR Worse!
Joseph Rider October 03, 2012 at 01:07 AM
Bring in more useless Buses and Trains, How about the proposed Toll Booths proposed for our highways in the future, who will end up paying for that too! lets keep borrowing money and raising taxes - gotta spend that money, they won't feel like they have achieved anything unless they can waste our tax payer dollars, lets continue to give away state grant money to large corporations and move them to Connecticut to conduct Business and set them up, only to turn everything over to them if they promise to hire and retain a few employee's - our state government can't keep spending money this way, we must live within our means - our elected officials should too!!
Happy Percy October 03, 2012 at 01:57 PM
They need to keep spending in order to keep their jobs. Just like Granby spending money onthe athletic fields and Evonsion's contaminated farm! With student enrollment declining, Granby missed the boat to have the facilities ready when it could be used. Why is the Town spending money on the pond in Salmon Brook too, it is a waste! Remember to VOTE Yes to an auto matic Town budget Refferendum VOTE on November's ballot!!!!
Happy Percy October 03, 2012 at 01:58 PM
This will remind Mr. Guarco, "Yes the process is Broken and NEEDS to CHANGE!!"


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