Malloy Says State Will End Fiscal Year 'In the Black' Despite Declines in Revenue

Gov. Dannel P. Malloy's office released a statement Tuesday that the state was planning to limit spending for the remainder of the 2011-12 fiscal year in order to maintain a balanced budget to compensate for a decline in projected revenue. 

“Last year at this time, we were staggering under the weight of a $3.5 billion dollar deficit,” Malloy said in a statement.  “As a result of the actions we took last year, we eliminated that deficit, and we did it honestly. All today’s announcement means is that, as is the case in other states with high wage earners, fourth quarter revenue is coming up short of expectations. That’s why today, I’ve instructed Secretary Barnes to pare back on current year expenses. But let there be no confusion – we will end the current fiscal year in the black, and in a more stable fashion than this state has seen in many years.”

The revenue figures were provided to the Governor's Office by the Office of Policy and Management (OPM) and the Office of Fiscal Analysis (OFA). The agencies announced that projected revenue for the current fiscal year shows a decline of $94.9 million or one-half of one percent of the state's about $20 billion annual budget; revenue for the 2012-13 fiscal year is also projected to decline by $139 million or seven-tenths of a percent of the annual budget.

Malloy said that in light of the new information he has directed OPM Secretary Ben Barnes to develop a budget management plan that limits spending for the remainder of the 2011-12 fiscal year, which ends June 30. 

OPM attributed the declining revenue to a drop in taxable income, particularly among high income taxpayers that file quarterly returns that a number of other states, including New York, New Jersey and Massachusetts are also experiencing. This may be a result of taxpayers shifting capital gains and income due to the uncertainty at the federal level of the status of the Bush-Era tax cuts that are slated to expire at the end of 2012 unless Congress votes to extend them, according to OPM. 

Malloy said he plans to announce "mid-term adjustments" to his on Feb. 8.