EHGAZETTE

Gov. M. Jodi Rell announced late Monday that the most recent estimate by her budget office of the deficit for the current fiscal year – which ends June 30 – remains essentially unchanged from May.
However the budget numbers continue to worsen beyond both her and the state comptroller's original estimates. Now, according to the governor, despite a number of cutbacks and curtailed spending, Connecticut's state spending deficit is approaching the $1 billion mark.
Rell said she is "deeply troubled" by the effect that the continuing erosion of state revenues from income taxes, sales taxes and other sources will have on the budget for the next two fiscal years.
The governor based her dire fiscal report on the Office of Policy and Management (OPM)'s monthly letter to Comptroller Nancy Wyman. The OPM letter now estimates the deficit at $967.6 million, down from $968.2 million in May.
The letter also "reflected precipitous declines" in revenues from the state income tax, sales and use tax, inheritance and estate tax, real estate conveyance tax and cigarette tax.
“Nothing in this report bodes well for the next two fiscal years,” Gov. Rell said. “The current deficit is troubling enough – but what concerns me even more are the dismal figures we continue to see for state revenues. In May alone, income tax withholding fell $26 million below expectations – and for the current year, OPM expects income tax revenues to miss the target by a total of $60 million.
“Sales tax collections are now running $10 million below already lowered projections while estate taxes are an additional $10 million under previously reduced expectations,” Rell said. “Real estate conveyance taxes are down by $5 million and cigarette taxes are off by another $2 million. To put it bluntly, the revenue picture is getting worse instead of better.
“The national economic downturn has dealt a devastating blow to Connecticut’s economy. It is painfully clear that the taxes already on the books are not generating the revenue we had anticipated. Families and employers are struggling mightily. Increased taxes will only deepen the misery,” said Gov. Rell who said she "has insisted that the state bureaucracy be diminished and state spending be sharply reduced."
The governor and General Assembly are at odds over the biennial state spending plan.
“The continued deterioration of the economy and our tax collections offer clear and convincing proof that we need to reduce spending, not impose additional burdens on our taxpayers,” Gov. Rell said.
Since December the governor has imposed five rounds of budget cuts on state agencies. The governor claims credit for negotiating $700 million in long-term savings with state unions, including about $75 million in the current fiscal year.
Some 3,500 state employees – about 500 more than originally projected – will take advantage of the state's offer of early retirement.
Previously the state banned all out-of-state travel, imposed a hiring freeze, and banned nonessential purchasing. Rell ordered all state agency heads to cancel state purchasing cards, known as “P-Cards.” State fleet vehicles were also taken off the roads for two days a week "except when absolutely essential to agency missions" or needed for public safety, the governaor's office noted.