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November 2, 2015

Lembo: Malloy has at least $118.4 million more to cut

SUBMITTED Gov. Dannel P. Malloy, left, has received less than encouraging deficit projections from Comptroller Kevin Lembo.

State Comptroller Kevin Lembo has released his latest deficit projection for the current fiscal year. It predicts, in spite of $102.8 million in recent cuts, that Connecticut is still running $118.4 million in the red.

Lembo said in a letter to Gov. Dannel P. Malloy that the state Office of Policy and Management’s latest projection is on target given several economic factors. He issued the caveat that his outlook could change further after the nonpartisan consensus revenue forecast is released Nov. 10.

General Fund revenue projections for the current fiscal year have been revised downward by $117.4 million from last month. Lembo said the largest adjustment is to the income tax, which is reduced by $109.3 million this month, reflecting lower than anticipated receipts from the payroll withholding portion of the tax. This brings the total income tax reduction for the fiscal year to $195.7 million.

Lembo said there has been job recovery in Connecticut since the recession — just not the right kind of jobs. “Part of the slow wage growth can be attributed to the distribution of job gains by employment sector. The financial services sector pays wages more than 50 percent above the statewide average for all sectors. However, the financial services sector remains 14,900 jobs (10.2 percent) below its pre-recession level,” he said.

It’s not helping state coffers that there has been an expansion in lower-paying leisure service industry jobs. “At the same time, the leisure and hospitality sector that pays wages 46 percent below the statewide average for all sectors has added 19,000 jobs (13.7 percent),” Lembo said.

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