Despite cuts, state deficit grows

In his monthly report to Gov. Dannel Malloy on Monday, Comptroller Kevin Lembo certified a $415 million budget deficit — $50 million higher than the figure projected in mid November.

Lembo’s heightened budget projections follow on the heels of recent spending cuts. Last week, the governor announced $170 million in budgetary reductions, which will affect a wide array of state agencies. The legislature will now be forced to convene in a special pre-Christmas session to find nearly $250 million in other cuts to slash from the state’s budget. The dates for this session has not yet been set.

“Projected state spending above budgeted levels, and the slow pace of national economic recovery are impeding the state’s ability to bring the budget into balance,” Lembo wrote in the monthly report.

In his last monthly letter, issued Nov. 1, Lembo estimated that the state was short $60 million. By mid November, Malloy’s budget director, Ben Barnes, increased that estimate to $365 million, setting off a round of mandatory cost-cutting procedures in the governor’s office and the legislature.

On Nov. 29, Malloy announced a series of 5 percent cuts in the budget that hit social welfare agencies particularly hard, such as the Department of Children and Families. Due to a technicality in state law, these cuts could not be figured into Lembo’s deficit estimate; they will be counted in his January budget projection.

Within the next two weeks the governor legally must submit a deficit mitigation plan to the state legislature that will suggest $250 million in additional cuts. In a pre-Christmas session, elected officials will negotiate on a final deficit-reduction package. Roy Occhiogrosso, Malloy’s senior advisor, said Lembo’s new deficit estimate will not delay Malloy’s plan.

Lembo attributed the additional $50 million shortfall to higher-than-expected levels of spending on the state’s social programs, particularly on a new Medicaid program for low-income adults. He said the current budget relied on nearly $100 million in Medicaid savings initiatives, but the program has seen over 4,000 new cases this fiscal year, pushing costs ever higher.

Though Malloy and Lembo are both Democrats, Lembo is an independently elected official, and therefore his calculations are issued indepentently of the governor’s office. On Monday, top Malloy aids pushed back against Lembo’s latest estimate, saying it was higher than the true deficit.

“He’s using the $415 million figure because he believes we’ll spend more on Medicaid and in some other areas than we believe we will,” Ochiogrosso said in an e-mail to the News.

But Lembo said in his report that he only expects the deficit to grow in coming months.

Lembo could not be reached for comment.

Steve Lanza, a labor economist at the University of Connecticut, said that despite the infighting over budget projections, the current deficit is “modest” compared to what the state has seen in recent years. When Malloy entered office in 2010, the yearly budget shortfall topped $1 billion.

During that round of negotiations, Malloy included an increase in the state’s income tax as one of several tools to raise new revenues. The governor has said repeatedly that he will not raise any taxes in this round of budget talks.

Lanza added that athough projections for this year’s budget deficit have fallen short of the true cost, it is unfair to blame any particular office since both the executive and legislative branches approved the budget.

“Budgeting is a precarious process even in good times — we know that from balancing our own household budgets,” Lanza said. “Sometimes you come up short, and sometimes things come out better than you expected. And this year, the economy is not performing as anyone imagined or hoped.”

The state legislature will begin negotiating the state’s next two-year budget in January.

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