Rell Says State Budget In Deficit [CT - but relevant everywhere]

[Pale Blue Dot]

Source: Hartford Courant


The state's budget surplus, once projected as high as $263 million, has vanished, Gov. M. Jodi Rell said Wednesday.

This fiscal year is now projected to end on June 30 at least $19 million in the red.

"In all candor I believe we will see the revenues continue to decline," said the Republican governor, who asked state lawmakers to come up with a list of funding priorities as they continue to debate what to do with the 2008-09 budget, which begins July 1.

Legislative leaders and Rell met privately on Wednesday and have until May 7 to reach a deal on a revised budget or allow the $18.5 billion tax and spending plan already approved last year to take effect without any changes.

The cause of the diminishing surplus appears to stem from a combination of slowing state revenues and a delay in federal Medicaid reimbursements. The bad fiscal news prompted Rell on Tuesday to threaten a veto of a key crime bill that includes tougher penalties for repeat violent offenders and $10 million for more prosecutors, state police, probation officers and other programs, such as housing for sex offenders.

Read more: http://www.courant.com/news/custom/topnews/hc-ap-budget-0430,0,5363814.story

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This is going on all over the country. In addition, city and state bond ratings are in real jeopardy, thanks to the credit crunch, which could further hamper the ability of state and local governments to raise funds.

[crimsonblue]

1. Recessions are a natural part of the economic cycle..

that being said, many states and municipalities have been stupid for far too long in assuming the good times will continue. When revenue goes up, spending goes up. Why not, say, put some of it away (maybe in a 'lockbox') for times like these? This is basic finances that millions of Americans do (or are encouraged to do), but when it comes to the government.... nothing? My town recently jacked up sales tax and property tax rates to pay for their multi-million dollar shortfall. Government in action!