STATE OF CONNECTICUT
THE STATE COMPTROLLER
|WYMAN SAYS SHARP DROP IN INCOME TAX RECEIPTS CREATES $67.7 MILLION DEFICIT|
|Contact: Steve Jensen|
State Comptroller Nancy Wyman said today that sharply declining tax revenues will leave the state with a projected budget deficit of $67.7 million when the 2008 fiscal year ends on June 30.
Wyman, who last month had estimated a year-end surplus of $152.2 million, attributed the drop mainly to reduced collections of the payroll-withholding portion of the income tax related to job losses, and a delay in collecting $82.5 million in federal Medicaid revenue.
Wyman's projection is $83.4 million lower than the last official estimate from the Governor's budget office of a $15.7 million surplus, and $48.7 million less than the Governor's statement this week that the state will see a $19 million deficit. The Comptroller's estimate is based mainly on lower projections of payroll tax and sales tax receipts.
"Collections of the payroll tax have been in decline since February," Wyman said. "Based on current employment reports, I expect this trend to continue for the rest of the fiscal year, resulting in this significant drop in tax revenue."
The state has seen three consecutive months of job losses totaling 7,200 jobs, and has posted no net job gains this fiscal year. At this point last year, the state had added 10,800 payroll jobs. The state's unemployment rate is 5.3 percent - the highest level in nearly five years and slightly above the national average.
Consequently, the amount the state pays out in taxpayer refunds has increased - from $751 million last year to $847 million so far this year. Adding to the deficit are weak receipts of the sales tax, which have dropped five consecutive months as consumer confidence sinks.
Taxes that corporations pay on profits and the tax on real-estate transactions are also in decline. Wyman noted that one bright spot in the national economic outlook is that after five months of decline, the index of leading economic indicators rose slightly in March, indicating that the current downturn may be easing somewhat.
The State Comptroller appreciates input on this and other issues from residents of the state. Please feel free to contact her office by phone - (860) 702-3300; mail - OSC, 55 Elm Street, Hartford, CT 06106; or, via E-mail - email@example.com
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For Immediate Release
May 1, 2008
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