By Keith M.Phaneuf
Eroding state income tax receipts identified today by Gov. Dannel P. Malloy’s administration not only widened the deficit in the outgoing fiscal year, but threatened to punch a hole in the new state budget 12 days before it begins.
Malloy’s budget office announced the red ink in the 2015-16 finances worsened over the past month by $56.7 million — a problem driven largely by a $75 million drop in projected income tax receipts.
And since prior year’s income tax receipts are a crucial factor used to project likely revenues in the following year, the new forecast raises questions about the stability of the $19.76 billion budget Malloy and legislators approved recently for the fiscal year beginning July 1.
“We’re facing a sustained period of slower-than-normal growth as we adjust to this new economic reality,” Office of Policy and Management Secretary Benjamin Barnes, the governor’s budget chief, wrote in a statement. “… We are committed to making difficult choices to reduce spending throughout the end of this fiscal year and into the next.”
