Connecticut governor will make US$65.2m of mid-year budget cuts

[NEW YORK] Connecticut Governor Dannel Malloy on Wednesday detailed US$65.2 million of widespread cuts for the current fiscal year because of the state's potential budget shortfall, he said in a letter to lawmakers.

"I find it prudent to take steps to ensure this year's budget ends in balance," he wrote in the letter.

More cuts are expected this year as officials struggle with a budget deficit that could be as high as US$900 million in the coming fiscal year. Mr Malloy also proposed an additional US$13.6 million of reductions from judicial and legislative branches combined.

Connecticut has had to slash its revenue forecast because the weak stock market is cutting into capital gains tax receipts, which play a large role in the budget.

In February, state officials said they would cancel pay raises for managers at state agencies because of the growing projected deficit.

Adding fiscal pressure, Moody's Investor Service last week revised its outlook for the state's approximately US$19 billion in debt to negative, citing weakening demographics in the state that have led to some budgetary strain. The state has had two years of population loss since 2013.

The wealthiest state in the nation, Connecticut's ability to make mid-year budget adjustments is in the end a credit strength, Moody's said.

According to the governor's letter on Wednesday, the biggest cuts by dollar amount are to services for people with developmental disabilities, which will see US$17.2 million in reductions.

Other departments to be cut include corrections, education, services for children and families, arts and economic development, environmental protection, public health, mental health and addiction services and the University of Connecticut.

The reductions take effect April 1.

REUTERS