Connecticut lawmakers warned of 2012 budget deficit, may reach $3.4 billion

By Susan Haigh, AP
Thursday, November 19, 2009

Conn. lawmakers warned of bigger deficit in 2012

HARTFORD, Conn. — Connecticut lawmakers learned that the state’s budget woes may get much worse in 2012, possibly growing to $3.4 billion from the current $385 million.

Both the governor’s budget office and the General Assembly’s Office of Fiscal Analysis on Wednesday told legislative budget committees they expect the deficit will reach $3.2 billion to $3.4 billion.

“We’re in a world of hurt,” Robert Genuario, Gov. M. Jodi Rell’s budget chief and head of the Office of Policy and Management, said.

By 2012, the budget experts said, the state will have spent all of its budget reserves and federal stimulus funds. In addition, payments will begin coming due on money the state has borrowed to balance the current, two-year, $37.6 billion budget.

Geary Maher, the OFA director, said lawmakers face the prospect of having to cut state spending by more than 18 percent or raise taxes by about the same amount if steps are not taken before 2012.

“There’s quite a challenge there,” he said.

Genuario said lawmakers and the governor need to find savings in the coming months that will continue into 2012.

“I think that as we move forward to solve the current projected deficit for ‘10 and ‘11, it is essential that we do so in a manner that is not one-time, that rolls out,” he said. “That will put us in a better position for 2012.”

OFA estimates the current fiscal year, which began on July 1, to be $385 million in the red.

Genuario said Rell will present a deficit mitigation plan to the General Assembly before Dec. 1. In the meantime, Rell has been using her limited executive authority to make some spending reductions.

Various state revenues, including the personal income tax, have continued to drop. Genuario noted they have fallen so much that the state cannot follow through with a planned reduction in the state sales tax as of January.

Sen. Andrea Stillman, D-Waterford, a member of the legislature’s tax-writing committee, called the 2012 deficit projections “alarming.” While there has been news of the stock market improving, Stillman said, Connecticut still faces significant job losses and has to find a way to reverse the trend.

She suggested the state put forth its own stimulus package and approve bond funding for various state and local construction projects that are ready to go.

“The only way that we’re going to make a difference as we approach the next year or two or three is to grow jobs,” she said. “It’s all about growing jobs and we don’t seem to know how to do that in Connecticut, and I’m very concerned about that.”

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