STATE OF CONNECTICUT
THE STATE COMPTROLLER
WYMAN SAYS BUDGET IMBALANCE COULD EXCEED $800 MILLION
Advises Governor, General Assembly to Consider Tapping Rainy Day Fund
|Contact: Steve Jensen|
State Comptroller Nancy Wyman today said the state should consider using a portion of the $1.4 billion Rainy Day Fund as part of a plan to address a budget imbalance that could exceed $800 million by the end of the 2009 fiscal year.
The estimated $806.5 million imbalance is composed of a current-year deficit of $302.4 million, plus a $504.1 million "structural" deficit caused by repeated use of past years' surplus funds to pay for current expenses.
With no surplus funds remaining, Wyman said it would be appropriate to use the Rainy Day Fund to reduce about half of the $806.5 million shortfall. The other half would be addressed by measures created by the Governor and the General Assembly.
"The Rainy Day Fund was established to ensure that in periods of economic hardship the state is not forced to increase taxes or implement other policies that would delay economic recovery," Wyman said. "Using a portion of the fund will allow the state to avoid major changes in its long-term policy objectives due to short-term economic conditions."
Wyman noted that the current rate of overall revenue growth is about half the 4.5 percent annual average growth the state has experienced since the end of 2001 recession, and is expected to erode further. The state has lost 1,000 jobs in the first few months of the fiscal year, and unemployment is up sharply.
Regarding the structural deficit, Wyman has long questioned the practice of relying on prior years' surplus funds to pay for current expenses. That practice is a main reason that the independent Office of Fiscal Analysis has projected budget deficits of roughly $1 billion for 2010 and 2011.
"Addressing this structural deficit now will not only reduce the shortfalls we are looking at in the next few years," Wyman said, "but will put the state in a better position to react in the event of a steeper economic slide."
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 - firstname.lastname@example.org
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