Malloy budget adviser says state economy is improving despite projected revenue shortfalls



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HARTFORD, Connecticut — A top budget adviser to Democratic Gov. Dannel P. Malloy said Friday that Connecticut's economy is showing signs of improvement despite a projected $99.5 million revenue shortfall this year and projected $1 billion deficits in each of the next three fiscal years.

Karen Buffkin, deputy secretary of the state's Office of Policy and Management, told state lawmakers that employment is increasing, income is rising and retail sales are growing.

"That's a fact. The economy is recovering," Buffkin said. "Do we still face fiscal challenges? Yes, we do. This has not been a smooth recovery. It has been somewhat of an uneven recovery. But what is occurring now is good news for Connecticut's economy."

Buffkin, who filled in for an ailing OPM Secretary Ben Barnes, was questioned by legislative Republicans about why Malloy had to make midyear spending cuts and impose limits on state spending and hiring if the state's economy is really improving. GOP leaders are seeking a special session next month to address this year's shortfall, which they say could be $100 million more than what Malloy has acknowledged.

"You're saying basically everything is going well and yet we can't seem to maintain a balanced budget," said veteran state Rep. Arthur O'Neill, R-Southbury, a member of the legislature's Appropriations Committee. "I've been through a number of economic cycles. When things are going well, usually you have surpluses, not deficits."

Buffkin stressed that Connecticut does not have a deficit this fiscal year, calling it instead "a projected deficiency we are addressing." She said much of the gap stems from a delay in anticipated federal grants. Like Barnes and Malloy, she predicted the current budget, which ends June 30, will ultimately be balanced.

Sen. John Fonfara, D-Hartford, co-chairman of the legislature's Finance Revenue and Bonding Committee, urged his colleagues to put a $99.5 million gap in a $20 billion budget in perspective. For a family with an annual household budget of $100,000, he said, that would mean a shortfall of about $500.

"I think most people would feel like that's not bad, less than six months into a year," Fonfara said.

Besides OPM, members of the General Assembly's budget- and tax-writing committees on Friday heard from the legislature's Office of Fiscal Analysis on the state's current and future financial situations. Both OPM and OFA projected approximately $1 billion deficits in each of the next three fiscal years. Buffkin said Medicaid, debt service, and state employee and retiree health care are among some of the biggest costs driving the budget shortfalls.

Rep. Themis Klarides, R-Derby, the incoming House minority leader, said lawmakers should take action beyond Malloy's spending cuts and finally address the state's continued fiscal troubles.

"It's a continuing saga of let's hope and pray at night that it isn't what it really is," she said. "You know, hoping doesn't make it so."

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