Gov. Dannel Malloy released a plan Wednesday to close a $208 million state deficit this year by offering a combination of cuts to social service programs and tax increases on cigarettes, hotels, and the state sales tax.
Although Connecticut’s 2017 budget crisis may have come to an end when Gov. Dannel Malloy signed the bipartisan budget on Tuesday, the next budget promises to be just as difficult. The nonpartisan Office of Fiscal Analysis is already projecting a $4.6 billion deficit, largely due to the rapidly rising costs of pensions, retiree healthcare and debt service combined with declining tax revenue. Fixed costs now consume more than 50 percent of General Fund expenditures.
Connecticut’s government spending outpaced the state's gross domestic product by a wide margin since 1990, according to a review of past figures compiled at U.S. Government Spending, an online database of state and federal spending.
The newest budget negotiated between Democratic and Republican leaders in both the House and Senate has yet to be released, but based on the information we have received, this is a breakdown of the changes included in the new budget package.
A financial stress test of all fifty states by Moody’s Analytics showed that Connecticut is unprepared should the country experience another recession - even a moderate one. Connecticut was one of the bottom 15 states that were “substantially unprepared” for an economic downturn, which would lower tax revenue and increase state service needs to help those affected by a recession.
Gov. Dannel Malloy released his 4th budget proposal this year in an effort to reach a bipartisan consensus to pass a budget. Connecticut is well over 100 days into the new fiscal year, and is the last state in the nation without a budget. Touting it as a “bare bones” budget, Malloy eliminated many of the controversial proposals from both Republican and Democrat authored budget plans, but still shifts some of the state's burden onto municipalities.