COMPTROLLER LEMBO PROJECTS

$89.4-MILLION DEFICIT FOR FISCAL YEAR 2015 AFTER LATEST REDUCTIONS

 

From   Tara Downes

Director of Communications

Office of the State Comptroller

(p) 860-702-3308

(c) 631-834-5234

 

Date    February 2, 2015

            11:38 AM

 

 

 

 

Comptroller Kevin Lembo today reported that – following the latest reductions announced in January – the state is on track to end Fiscal Year 2015 with an $89.4-million deficit.

 

In a letter to Gov. Dannel P. Malloy, Lembo said this month’s projection takes into account $31.5 million in reductions that the Office of Policy and Management (OPM) announced last month, and previous reductions of $54.7 million announced in November.

 

Lembo noted that OPM reported a $120.9-million deficit in January – a deficit increase of $89.3 million from the prior month due to a $50-million increase in the Medicaid shortfall and reduction in the consensus revenue forecast that both OPM and the non-partisan Office of Fiscal Analysis (OFA) agreed on.

 

“Based on current spending trends and with historical experience of realized lapses over the past five fiscal years, I believe that the OPM savings target is attainable,” Lembo said. “I am, therefore, in general agreement with OPM’s deficit projection for the General Fund.”

 

Lembo acknowledged OFA’s Jan. 26 report that projected a $170.9-million deficit. Both OPM and OFA agree on revenue – but depart on spending, Lembo said. On the spending side, OPM’s lapse target (money that was appropriated to agencies, but now expected to go unused) stands at $290.5 million. OFA’s projection uses a lapse figure $60.2 million below that.

 

“Over the past five fiscal years, annual realized lapses have averaged $511.2 million,” Lembo said. “Although (OPM’s) current lapse target is a significant challenge, it is not inconsistent with past performance in difficult budget circumstances.”

 

Lembo said the largest changes to revenues this month relates to a decline in oil company tax receipts due to lower oil prices. Meanwhile, the Department of Social Services (DSS) is continuing to work through retroactive settlement payments to hospitals – and has adopted a new payment system that will eventually eliminate the need for such settlements. Also, while enrollment on the state General Fund portion of the Medicaid program advanced at a stronger rate than expected during the early months of the fiscal year, enrollment has since leveled off over the past several months.

 

As far as economic indicators, Connecticut posted another month of job growth in December – which means the state has posted job gains in 10 of the past 11 months, reversing an earlier trend of inconsistent job additions, Lembo said.

 

State and national economic indicators from federal and state Departments of Labor and other sources show:

 

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