Income Tax receipts plummet adding more than one billion to two year budget shortfall.
New revenue state estimates show Connecticut's budget deficit problems continue to worsen.
The current fiscal year is now projected to end June 30 with an approximate $394 million shortfall while the following two fiscal years are now predicted to have deficits of $2.3 billion and $2.7 billion respectively.
The estimates were released Monday by the budget offices for the General Assembly and Gov. Dannel P. Malloy.
The governor's budget director says the "precipitous drop in revenue" creates "major challenges for the state" throughout the remainder of the current fiscal year and for the following two-year budget, which Malloy and state lawmakers still need to negotiate.
Senate Democrats suggested such talks be held in public, given what lawmakers call "dire circumstances."
Governor Dannel Malloy provided his own explanation for the downturn in income tax receipts, saying the state's highest earners are the ones who ended up paying less, and because of the state's overreliance on them for income taxes, the pain to the state is substantial.
“If you look over the three (stock market) years we’ve had new highs and then followed by raltively lows which is a perfect situation for developing a strategy for avoiding tax payment, legally.”
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Malloy also said Connecticut's recovery from the Great Recession remains a very fragile one. He said the cries from some of the most liberal members of the Connecticut House and Senate for higher taxes on the state's wealthiest residents and businesses only provide more uncertainty, leading to bad deficit news like Monday's.
“Someone had the proposal that we tax the hedge fund industry 19.5 percent," Malloy said. "The mere discussion of it in our state year after year is disruptive of commerce and of people’s thinking.”
In the General Assembly, they're already looking at a new kind of venue for budget negotiations: out in public view.
Sen. Martin Looney, the President Pro Tem of the Connecticut Senate, called on Senate Republicans, House Republicans, and House Democrats to hold all future budget talks out in the open, and broadcast live on the Connecticut Network, the state's version of C-SPAN.
“We believe that working together in public will enhance the prospect of achieving a bipartisan agreements which serves the public interest,” Looney said.
House Speaker Joe Aresimowicz said he supported Looney's idea.
Republicans wouldn't outright refuse to meet in public, but they did criticize Looney's motives and intentions.
“Now they’re just trying to use a shiny object to pull the attention away from their ineptness," said Sen. Len Fasano, the Republican President Pro Tem of the Senate. "They should put out a budget, a line by line budget and they should put all the ideas out.”
When asked about the effectiveness of having detailed, often-times contentious budget negotiations in plain sight, Fasano added, “You want to have an open meeting and invite everybody in? You think that’s going to do something? Knock your socks off.”
Democrat and GOP leaders in the General Assembly will meet with Malloy Tuesday afternoon in the State Capitol for a private budget meeting.
