HARTFORD, Conn. (WTNH) — Connecticut will close the fiscal year with a $900 million budget deficit, and the state projects a more than $2 billion deficit for fiscal year 2021, which starts in July.
In a Friday morning briefing, Governor Ned Lamont announced the state is in a lasting budgetary hole. Sales tax, income tax and gas tax revenues are all down.
When businesses do eventually reopen, job markets could be different.
“Every one of my employees; we’ve had to furlough everyone, which I think there’s 12 staff members here,” said Theodore Gargano, of Gargano Family Dentistry in North Haven.
Gargano is in a typically stable industry that’s been upended by the economic crisis brought on by the pandemic. Data from the Connecticut Department of Labor shows dentists’ offices are one of the leading healthcare fields to file for unemployment.
As the state gears up for a soft opening on May 20, businesses and consumers alike will need confidence that it’s safe to go out and spend.
“There’s nothing better for consumer confidence than to have your job back and have that paycheck coming back, and you’re not always wondering what Washington is going to do on June 30,” Lamont said. “That said, I have to balance that with the healthcare risk and that’s why we lead with public health because the economy never comes back until the consumer is confident that the public health is under control.”
Lamont said he’ll try to avoid tax hikes but said there will likely be no spending increases either— and he’s adamant about opening new discussions with labor unions.
Senate President Pro Temp Marty Looney said the rainy day fund was related for times like this. Connecticut has an estimated 47 days worth of expenses in the state’s $2.5 billion rainy day fund. And he said we’re better off than most states that have only half of that.
Lamont said the State’s Special Transportation Fund will be running on fumes in a year. Lamont hedged on whether he’d renew a push for truck tolls, saying he’s open to other ideas offered by state legislators.
“We are going to have to streamline things,” he said. “Make some cuts. Work in collaboration with our friends in labor. Work with all the different entities that provide services here to see how we can hold down costs and stretch our dollars as best we can.”
Budget Chief Melissa McCaw with the Office of Policy and Management (OPM) offered some hope. She said looking ahead, this economic comeback will be faster than 2008.
“A sharp downward impact for quarters of fiscal ’20 and into fiscal ’21, but then we begin to see growth,” she said. “The extent to which our businesses recover and reopen will impact those estimates.”
OPM officials will present a modified budget plan during a special session of the legislature June.