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COMPTROLLER LEMBO PROJECTS $934 MILLION DEFICIT AMID COVID-19 CRISISComptroller Kevin Lembo today, in his monthly financial and economic update, projected a Fiscal Year 2020 deficit of $934 million, while noting that the speed and breadth of the ongoing COVID-19 pandemic has wounded the state’s economy and made budgetary projections more volatile.
“The continuing public health crisis brought on by COVID-19 has upended Connecticut’s economy and put tremendous strain on our communities,” said Comptroller Lembo. “As new data flows in, it is clear the pandemic is creating lasting economic damage for our residents, municipalities and virtually all sectors of our economy. As we work collaboratively to get people back to work, our primary concern remains keeping Connecticut residents safe and healthy.”
In a letter to Gov. Ned Lamont, Lembo noted that the monthly economic data largely looks back to past periods and captures only a portion of the effects of the COVID-19 pandemic on Connecticut’s economy. The full scope of its impact will play out in the coming months.
Lembo cited the rapidly growing number of unemployment claims, and the deterioration of state and municipal revenues, as signs that federal intervention to stem the economic damage of the pandemic is necessary.
“We are all in this together,” said Lembo. “This virus does not know political parties. It doesn’t recognize state borders. It is indiscriminate in who it reaches, and the federal response should be as well. Connecticut taxpayers have long contributed more into federal coffers than we receive back in federal aid. We have dutifully done our share to fund national efforts and support other states in need. Now we need help and I urge the federal government to do the right thing and not treat this pandemic as just another partisan exercise.”
Lembo noted that Connecticut is in a stronger financial position than some other hard-hit states due to recent contributions to the Budget Reserve Fund (“Rainy Day Fund”), which currently holds a balance of over $2.5 billion. However, Lembo and state economists forecast that the Budget Reserve Fund alone will not be enough to supplant revenue losses in the coming fiscal years.
Economic indicators included in Lembo’s monthly report show the COVID-19 pandemic is affecting virtually all aspects of the state and national economies, including:
- New consensus revenue projections showing state General Fund revenues for FY 20 down $975.1 million from the budget plan.
- Over 400,000 Connecticut workers applying for unemployment insurance benefits since March 13. Nationally, over 30.3 million Americans have filed claims in the last six weeks.
- New real estate listings in Connecticut decreasing 16.32 percent this month compared to March 2019 despite strong overall sales numbers.
- Projections from the Congressional Budget Office that anticipate inflation adjusted gross domestic product (GDP) to decline nearly 12 percent between the first and second quarters, and the national unemployment rate to rise to 12 percent in the second quarter.
“While this pandemic has been devastating and disruptive, I’m incredibly proud of how the people of Connecticut have responded,” said Lembo. “The contributions of essential workers, and the compliance of the overwhelming majority of residents to social distancing guidelines, have been inspirational and have saved lives.”