In a letter to the governor, Lembo notes that “overall employment for 2012 has now turned negative with the loss of 100 payroll jobs. This follows a gain of 7,800 jobs in 2011.”
“The slow growth in the national economy has created increasing demand for state services while at the same time producing lower revenue collections,” Lembo said. “Traditionally, even after the national economy improves, there is a lag before the state budget realizes the full benefit of the general economic improvement.”
Lembo said there is still an opportunity for the current budget year to recover, and he agrees with OPM’s note that less than half of projected General Fund revenue for 2013 was collected as of December.
“April is a significant month for income tax collections,” Lembo said. “Recent federal tax changes combined with favorable market performance could result in a shift of capital gains revenue from future years to the current budget year. This would improve the budget forecast, so we will continue to modify our projections based on actual experience.”