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State now in deficit for this year, worse for 09-11

By Adam Wilson | • Published November 19, 2008

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OK, first glance is this: The state budget is in a deficit this fiscal year, to the tune of $413 million.

For the 2009-11 budget, the total projected revenue is down to $30.07 billion, more than $4 billion short of what the government is on track to spend. Make that $5 billion total gap now.

Arun Raha, the chief forecaster, says things are as bad as they have ever been in a few areas, including home starts.

Retail sales alone have been downgraded by $358 million from the last forecast.

Still, revenues are supposed to be up 5 percent next year, but lower than the 8 percent increase planned on, Raha says.

“Part of the problem now is that this recession is driven by a drop-off in consumer spending, versus the last recession, which was driven by a drop-off in business spending," Raha says, predicting turnaround in late 2010.

"We're assuming it's over $5 billion right now," budget director Victor Moore says of the deficit. "We're going to have to find some cuts in the current biennium."

They've already assumed $330 million in cuts, expect another $300 million to $400 million in cuts by June.

"The sooner the better. Agencies are anticpating that next biennium will be tough ... I think we have to get them started earlier," Moore says.

Republican Sen. Joe Zarelli says a supplemental fiscal year 2009 budget should be job No. 1 in session. He notes there is growth in the next budget, but they've overspent it.

Moore takes slight exception, noting that there is an actual drop in general fund revenue from FY08 to FY09 by 4.1 percent. He says that is "unprecedented," even if there is overall growth in future years.