Malloy warns of deeper budget cuts to avoid deficit
Published 7:21 pm, Tuesday, March 27, 2012
HARTFORD -- Gov. Dannel P. Malloy warned his department heads Tuesday to plan for deeper spending cuts if tax revenue projections don't meet expectations next month.
The nonpartisan legislative budget office this week projected a $124.4 million deficit in the fiscal year that ends June 30, down more than $36 million from February. That increases the likelihood more spending cuts beyond the nearly $79 million Malloy ordered last month are needed to balance the budget.
The state's budget for this fiscal year is about $20 billion.
"I think a lot of this will depend on the final April numbers," Malloy told reporters after his monthly meeting with about 60 commissioners and their deputies. "Having said that, prudence requires that we don't spend money that we're otherwise authorized to spend and I have instructed commissioners to act accordingly."
Malloy told the commissioners to "eliminate, minimize or delay those expenditures that are absolutely critical in nature." He said that department heads should identify funds that could be unspent at the end of the fiscal year and then "maximize" them.
"The only thing we're wary of is on the revenue side we had a tough few weeks in December and the first two weeks of January," Malloy said. "Since we won't have a real good look at that until April has come and gone, I just ask that you do everything you can to curtail expenditures."
If the tax collections fall short and the expenditure reduction efforts fall short, Malloy would prepare a deficit-reduction plan for the Legislature's approval in May.
The Office of Fiscal Analysis reported Monday that while the gross receipts tax on petroleum sale was about $13 million last month, the inheritance tax fell off by an equal amount and there was a $12 million reduction in state rentals, fines and deposit-bottle returns.
Speaking to his commissioners, Malloy said he was relieved that the state's unemployment rate, which last year was 9.3 percent, is down to 8 percent, with 16,300 new jobs created last year and 7,000 jobs in January.
He said that tackling the state's multibillion-dollar deficit last year, followed by last October's special legislative session on jobs, were keys to raising employment levels.