The state's slow economic recovery will mean Connecticut ends its current fiscal year nearly $200 million in the red, officials said Monday.
Comptroller Kevin Lembo announced today the state's deficit for the 2012 fiscal year, which ended June 30, totaled $192.3 million.
The budget shortfall is largely a result of a poor economic recovery in the state and the deficit will ultimately be eliminated by using General Fund reserves from prior years.
The withholding portion of the state income tax – related to job and wage growth – is performing as expected, up 18.3 percent from last year, Lembo said.
However, the estimated payment portion of the tax – related to capital gains and bonus payments – was up only 5.9 percent, which is lower than historical post-recession patterns.
"The economy is the largest single influence on the state budget – dwarfing any other budget drivers," Lembo said. "Wall Street's erratic equity markets and challenges in the financial sector – which had the largest private-sector job loss in the state – is the driving force behind this deficit."
In a letter to Gov. Dannel P. Malloy, Lembo reported that General Fund revenue for Fiscal Year 2012 is expected to fall $250.7 million short of original budget projections and total state spending is expected to exceed appropriated levels by $22.5 million.