State Budget Forecast Improves From September Estimates

Connecticut’s budget forecast has continued to improve as revenues from sales, income and real estate taxes exceed earlier projections. The Office of Policy and Management, Gov. Ned Lamont’s budget agency, projected a $1.26 billion deficit for fiscal year 2021 in its monthly forecast released Tuesday. It’s much worse than the $166.2 million surplus the state budgeted back in December, but it’s 76 percent less than the $2.02 billion deficit the office was projecting as recently as Sept. 20. The improved budget picture is a combination of better than projected revenues —  $18.5 billion compared to $18.05 billion last month –

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Lamont Releases Plan to Tap Rainy Day Fund, Trim Spending and Extend Tax Surcharge

Gov. Ned Lamont proposed using $1.82 billion from the state’s “Rainy Day” reserve fund to offset a project $2 Billion budget deficit in 2021. Lamont’s proposal, released on Thursday, included $200 million in “mitigations,” including projections that the state could save $30 million through a hiring restriction for state jobs, $25.3 million rescinded from the current budget, and using $100 million in federal COVID relief funds to pay for state public health and safety costs. Another $44.8 million in mitigations proposed by Lamont, most significantly maintaining the existing 10 percent corporate tax surcharge for 2021, would require legislative approval. Melissa

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Connecticut’s Rainy Day Fund Tops $3 Billion

HARTFORD — A deposit into the state’s rainy day fund last week brought the balance to just over $3 billion, or 15.1 percent of net general fund appropriations, a record high according to Comptroller Kevin Lembo, that could be quickly depleted based on early revenue projections for fiscal year 2021. In his monthly financial update on Tuesday, Lembo said that his office agreed with the Office of Policy and Management forecast of a $2.07 billion general fund deficit for the 2021 fiscal year. The deficit projection is on the high end of possible ranges, according to Lembo, but it was

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UConn President Warns Lawmakers of Spending Cuts, $73.8 Million Deficit

The University of Connecticut will begin the school year this week with a projected deficit of $73.8 million for fiscal year 2021, and that’s the best-case scenario. If students are forced to leave campus early due to an outbreak of COVID-19, the university could see a $116.2 million deficit. In an attempt to offset the financial impact, UConn President Tom Katsouleas told lawmakers on Friday that the state’s flagship university is planning to cut between $48 and $60 million from a budget of just over $1.5 billion. “There are not enough paper clips to cut to make this difference. We

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After Republicans Voice Concerns about Borrowing, Lamont Moves Ahead on $545 Million Bonding Package

Gov. Ned Lamont brushed off Republican concerns that the state could be approaching a borrowing limit as the Bond Commission approved another $545 million in spending on capital projects on Tuesday. On July 1, Treasurer Shawn Wooden issued a semi-annual report on the state’s bond picture that showed the state’s borrowing was at 84 percent of its limit of 1.6 times the general fund tax revenue, as estimated by the legislature’s Finance Revenue and Bonding Committee each fiscal year. The legislature is still operating under revenue estimates from June 2019, since it vacated the Capitol in March due to the

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State Faces Borrowing Cap, Bonding Rollbacks and Possible 3/5 Vote by Legislature

With the State Bonding Commission set to meet on Tuesday for the first time since April, a recent report to the governor from the Connecticut Office of the State Treasurer calculates that the state doesn’t have much room left to borrow. By law, the state’s borrowing is capped at 1.6 times the general fund tax revenue estimated by the legislature’s Finance Revenue and Bonding Committee each fiscal year. When debt reaches that limit, the legislature can’t approve more debt. Even at 90 percent of the limit, the governor and legislature are required to look at possible rollbacks of authorized, but

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Widely Varying Totals Cast Doubt on Reported $400+ Million Impact on Municipal Finances from COVID-19

As advocates for cities and towns push for federal dollars in response to the COVID-19 pandemic, a state-sponsored survey of towns across Connecticut reports widely varying financial impacts. The results of an April survey from the Office of Policy and Management paint an apparently overall bleak picture of local finances, with municipalities reporting an estimated total of more than $400 million of impacts to local revenues. Office of Policy and Management Spokesman Chris McClure cautioned against viewing the survey as a definitive account of municipal finances.  “This report helps us gauge the order of magnitude for municipalities’ potential losses and

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Deep River Follows other Towns and Considers Authorizing Short-term Borrowing

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Facing temporary cash shortfalls under new emergency tax-leniency rules and with the fiscal year beginning in July, more municipalities are considering a rarely-used short-term borrowing option. “We just don’t know where we’re gonna land,” cautioned Deep River First Selectman Angus McDonald. “I’m certainly hopeful that the majority of our revenue will come in as normal, but this is anything, but a normal situation.” Deep River typically collects about half its tax revenues in July and August. The town also completes the majority of its spending for the year prior to September, McDonald explained. The town has built its reserve fund

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Despite Setting a High Bar, Mounting $934 Million and $2.2 Billion Deficits Spur Announced Four-phase Reopening for Connecticut

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Governor Ned Lamont announced a four-phase reopening plan beginning May 20 in hopes of capturing increased sales and income tax revenues as the state faces a $934 million deficit in fiscal year 2020 and a projected $2.2 billion deficit in fiscal year 2021 caused by efforts to control the spread of COVID-19. “The numbers are sobering,” Lamont said, leading off a Friday morning press conference. “COVID has been tough on our physical health, mental health and fiscal health. The state was on track and doing well on budget until a couple months ago.” In addition to significant declines in personal

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Across Connecticut Towns Choose Options for Local Tax Relief

Municipal governments across Connecticut have until Saturday, April 25 to choose one of two local tax leniency programs mandated by Governor Ned Lamont in executive orders signed on April 1 and April 9. The two options, one a tax deferment program and the other a low interest program, would apply to local tax property taxes and many other levies typically collected by local government between March 10 and July 1 of 2020. Local Government Tax Program Clinton Low interest rate Deep River Low interest rate East Lyme Deferment Essex Low interest rate Lyme Low interest rate Old Lyme Low interest

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Under Governor’s Order, Towns Offered Two Programs for Local Tax Leniency

Given the coronavirus and economic downturn, all of Connecticut’s 169 municipalities have options for making local tax collection more lenient for local residents by taking advantage of one or both of two options laid out in Governor Ned Lamont’s executive orders on April 1 and April 9. “We do believe a great majority of people will be paying their taxes on time and that’s important for cash flow reasons for the town, but we do know and recognize that there are those who are having economic difficulty,” said Mark Nickerson, first selectman of East Lyme. The East Lyme Board of

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