By Keith M. Phaneuf
Connecticut today officially closed its second consecutive fiscal year in deficit, shrinking its budget reserve to a low level as threats of another shortfall loom.
Comptroller Kevin P. Lembo certified a $170.4 million deficit for the 2015-16 fiscal year, a gap equal to 1.5 percent of General Fund spending. (Though the last fiscal year ended June 30, the comptroller cannot close the books until late September, since certain tax receipts received over the summer are applied to the prior budget.)
Lembo must again cover the deficit by drawing from the rainy day fund, which will be left with just $235.6 million. The new reserve is less than half of what Connecticut had before the consecutive annual deficits. More importantly it leaves Connecticut with a fiscal cushion equal to just 1.3 percent of annual operating costs.
The comptroller recommends a rainy day fund of 15 percent, given the large fluctuations in state income tax receipts Connecticut traditionally faces in very good and very poor economic times.