Comptroller To Malloy: ‘Closely Monitor’ Spending After $144-Million Deficit

State Comptroller Kevin Lembo said Tuesday that the state had a $143.6-million deficit for the fiscal year that ended June 30, and warned Gov. Dannel Malloy that “careful monitoring” is needed to avoid another one next year.

“It will be necessary to closely monitor General Fund spending during this fiscal year,” which runs from his past July 1 through June 30, 2013, Lembo said in a letter to Malloy, after closing the books on the old fiscal year.

Spending is budgeted to increase by 2.6 percent in the fiscal year ending next June 30, and, with revenues projected to increase by just 3.1 percent, that leaves little margin for error, Lembo said. “This rate of [spending] increase is historically low and will require careful monitoring and swift remedial action if outlays trend higher,” he said.

Last fiscal year’s revenue advanced 4.8 percent or $854 million, but still fell $227 million short of the original budget projection, Lembo said.The deficit of $143.6 million has been covered money saved from various state general fund reserves from the past.

Despite Republican protests, state lawmakers this year decided to transfer $222 million from the 2011 surplus to cover a shortfall. The surplus finds had been intended to pay off bonds that financed the previous deficit from fiscal 2009 under Gov. M. Jodi Rell. Lawmakers said those bond payments would still be made, but not as soon as planned.

State general fund spending during the past fiscal year was up 5.2 percent or $936.9 million. The biggest part of that came from a $409.4-million increase in Department of Social Services – a 7.6 percent jump – as Medicaid caseloads grew by 52 percent, Lembo said.

Lembo said other spending increases stemmed from: contributions to teachers’ retirement, up $210.2 million (“reflecting full funding,” he said); debt service payments; and state employees’ retirement funding. Salary and wage costs declined by more than 8 percent after adjusting for the the state’s payment of a 27^th payroll, which occurs once every 10 years, Lembo said.