Rell: Current Deficit is the Feds’ Fault (!!??!!)

Despite an uptick in tax collections, Gov. M. Jodi Rell – on her way to a vacation in North Carolina – announced via her media staff today that a dropoff in federal funding and higher costs for social services, the deficit in the current budget, which runs through next June 30, is $63.4 million.

           “Connecticut’s share of newly enacted federal Medicaid and education funding is $193.4 million less than state budget anticipated,” Rell said. “Offsetting the lower than expected federal funding is a net increase in projected state revenues of $390.5 million. That increase includes higher projections for income tax collections – up by $127.5 million – and sales tax collections, up by $153.8 million. Expenses are currently projected to exceed the budget by $171.7 million, in part because of continued high demand for social services and in part because planned savings – such as $50 million in cost-cutting that is supposed to be achieved by the Legislature’s Enhancing Agency Outcomes panel – have not materialized. I will be working with my budget officials to erase the shortfall through administrative actions. The fiscal year has barely begun and we have an opportunity – one we cannot afford to miss – to control this deficit before it grows unmanageable. I will be announcing the details of my budget-cutting plans soon.”

            “I am encouraged by the improvements in the state revenue picture – but it would be a mistake to look at these projections and believe that our problems will resolve themselves,” the Governor said. “The savings assumptions built into the budget must either be achieved as planned or obtained through other means.”