Budget crisis to be financial super-storm

HARTFORD, Conn. (WTNH) -- The state's budget crisis just turned into a financial super-storm.

Wednesday night we reported that the state is facing a $365 million deficit this year, and now the news is that next year's red ink projection is almost four times worse.

All the Governor's commissioners were gathered to hear that the state is facing a financial super-storm, three times worse than Hurricane Sandy.

"Based on our consensus revenue projections with our current services expenditure needs...is a short fall...uh...between the two...of about...just under $1.2 billion," said Ben Barnes, State Budget Director.

An explosion in Medicaid expenses is driving most of the increased expense with thousands more Connecticut residents seeking medical help because they no longer have insurance.

"After the first quarter of our budget year, what we're anticipating is about a $252 million expenditure....over our budget," said Commissioner Roderick Bremby, CT Dept. of Social Services, "most of that is Medicaid."

And the news for state government gets even worse, a major financial research firm has rated Connecticut dead last in the nation for credit quality.

Noting home prices here in the past year fell more than anywhere else, almost 15,000 jobs lost, the highest per capita debt in the nation, and the state is very vulnerable to federal budget cuts.

The Governor continues to say he doesn't intend to raise taxes.

"I have no intention of raising taxes," said Governor Dannel Malloy.

"Why do you keep saying 'you have no intention,' why don't you say 'I promise' or 'I pledge' not to raise taxes," asked News 8's Mark Davis.

"I almost lost an election because I wouldn't do that," Malloy said.

In other words, even though the Governor says all kinds of difficult spending cuts are on the table to close the gap, increasing taxes next year may be as well, as the Governor pledges that the state's generous safety net will not be cut.

"If I had the choice of cutting every person over the age of 80 and throwing them out of a nursing home, would I potentially then have to consider raising taxes," asked Malloy. "Of course I would."

The Governor doesn't have too many alternatives. He can't layoff state employees because that big union concession deal he signed guarantees no layoffs.

He says he'll have a plan to cut spending ready within the next few weeks, but that all depends on what kind of a deal the President makes with the Congress on the federal level.