Governor Lamont and his budget director, Melissa McCaw, gave an update on the state’s budget picture at his daily briefing today, as well as an overview of what Connecticut stands to receive from the federal government in COVID-19 relief.
The Governor said the state is in “pretty good shape” through the end of the fiscal year thanks to its strong cash position and robust Budget Reserve Fund (BRF = $2.6 billion). However, recent economic disruptions, stock market losses, and extensions of various tax filing deadlines will likely result in a year-end deficit of about $500 million, which will be automatically covered by the BRF.
As we move into the next fiscal year, which begins July 1, Lamont said we will begin seeing a larger fallout from the COVID-19 pandemic, particularly in income and sales tax receipts. For this reason, Lamont said he is hopeful that the next relief package, currently being discussed in Washington, D.C., includes reimbursement for revenue shortfalls and infrastructure programs.
McCaw sounded a bit more pessimistic, adding that she is anticipating a “gaping need for revenue reimbursement” due to revenue deterioration in FY 2021. “We will have to continue to monitor revenues as we move into fiscal year 2021,” she said. Asked what she projected the deficit might reach in FY 21, McCaw said somewhere between $1 billion and $1.4 billion, gauging from the last recession.
Connecticut’s Share of Latest Federal COVID-19 Relief Package: $1.45 billion
Connecticut’s share of the recent $2 trillion COVID-19 federal relief bill is going to be approximately $1.45 billion, McCaw said. She emphasized that this money is for COVID-19-related expenses only, but that it will help state residents in myriad ways, including:
- Providing much-needed aid to towns and cities.
- Assisting with unemployment compensation claims.
- Providing one-time checks to individuals who meet certain income criteria.
- Allowing increases in Medicaid services.
- Holding nonprofit social service providers harmless so they can maintain staff.
- Supporting online and other education costs.
- Supporting housing, food, shelter, and childcare.