Monday, April 2, 2012

Lembo: State deficit grows to $45.8 mil, but 'all eyes are on April' (release)

Comptroller Kevin Lembo today announced that his Fiscal Year 2012 deficit projection has grown to $45.8 million, but said that number could shift dramatically following April income tax payments.
In a letter to Gov. Dannel P. Malloy, Lembo cited two reasons for the $52.8-million variance in his projection from that of the Office of Policy and Management (OPM).
 Lembo said there has been continued strong growth in tax refunds, putting his analysis about $22 million higher than OPM’s analysis. Lembo also said that he did not incorporate OPM’s $36.2 million lapses in his spending projections because, based on a four-year average of spending trends, those additional lapses will be difficult to realize.
These deficit projections are well below 1 percent of total fund appropriations, and could be erased after the state receives final and estimated tax payments in April, Lembo said.
“All eyes are on April,” Lembo said. “The complex 2011 income tax withholding changes may have distorted the trend analysis used for projections. As a result, final and estimated income tax payments received in April could differ significantly from those projections.”
General Fund revenue for Fiscal Year 2012 is falling $118.2 million short of original budget projections and net state spending is $49.7 million below the original budget plan. Lembo said his spending projection reflects caution with respect to the lapse due to the large increase in spending posted in January. Below are the annual month-by-month spending trends:


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