$900M deficit has officials scrambling

‘Sobering’ numbers may mean a delayed recovery as hospitalizations stay down for ninth day in row

Connecticut faces a deficit of more than $900 million during the current fiscal year that ends June 30, Gov. Ned Lamont said Friday, largely due to a sharp loss of revenue related to the ongoing COVID-19 outbreak.

The state could run a $2.3 billion deficit next year and a deficit as high as $3.2 billion in the following year, officials said.

“The numbers are sobering,” Lamont said in his daily briefing. “COVID has been tough on our physical health, it’s been tough on our mental health and it’s been tough on our fiscal health.”

Lamont said the projections assume no additional federal aid. Connecticut has received $1.4 billion in federal aid so far, but that money can only be used for coronavirus-related expenses, not to make up for lost revenue.

Officials plan to close the budget gaps in the short term by implementing cuts and by dipping into the state’s $2.5 billion rainy day fund.

“We are going to have to streamline things, make some cuts, work in collaboration with our friends in labor, work with all the different entities that provide services here … to stretch our dollars as best we can,” Lamont said.

Melissa McCaw, Lamont’s budget director, said state officials hope to refrain from significant tax increases but said the situation remains fluid and officials would not have a clearer picture until the fall.

“Our rainy day fund will be a major support in 2021 … [but] we do believe that the rainy day fund will be inadequate,” to completely close the budget gap, she said.

Lamont said the state’s Special Transportation Fund has also been impacted by the crisis with gasoline sales cratering and less money coming in from gas taxes.

“Right now it looks like given the drastic cut in gasoline prices … that Special Transportation Fund probably runs out … by about July 1 of next year,” he said.

McCaw said the state’s economic recovery could be slow and may not start until July 2021.

“As we’ve seen in prior downturns,” she said, “it does take multiple years for our revenues to actually return to prior levels.”

Hospitalizations drop again

Hospitalizations related to COVID-19 dropped Friday for the ninth straight day and are now down 19% from their peak on April 22, an encouraging sign as Connecticut moves toward eventually reopening businesses.

Still, 1,592 patients remain hospitalized due to COVID-19, according to state numbers, including at least 400 in each of the state’s three largest counties.

The state announced 82 additional coronaviruslinked deaths Friday, bringing the total to 2,339 over the course of the outbreak. Data released Thursday night showed that deaths at nursing homes represented more than half of all COVID-19 deaths in the state, following a spike over the past week.

Connecticut has had 28,764 confirmed cases of COVID-19, according to the state Department of Public Health, including another 1,064 reported Friday. The state ranks in the top five nationwide in both confirmed cases and deaths per capita.

In other news: t Although the coronavirus has caused thousands of additional deaths in Connecticut in April as compared to the same month last year, almost 500 additional deaths remain unaccounted for, according to new data from Chief Medical Examiner James Gill. The data show 4,602 people died in April 2020 compared to 1,938 people in April 2019. The 2,188 people who died last month of coronavirus make up most of that increase, but that still leaves 476 additional deaths that have not been linked to COVID-19. t PhysicianOne Urgent Care announced Friday antibody testing would be available at each of its 16 urgent care locations in Connecticut. Antibody tests can reveal whether a person has previously been infected with COVID-19, though researchers are not yet sure that the presence of antibodies leaves patients immune from future infection. t Whole Foods will provide free face masks to shoppers at its grocery stores nationwide, the company announced. t Lamont announced that the Federal Emergency Management Agency has approved funding for crisis counseling under the disaster declaration it approved in late March. “This pandemic is having an impact on nearly every segment of our society and daily lives, and that includes mental health services,” the governor said. t Connecticut U.S. Attorney John H. Durham said the Department of Justice is increasing efforts to combat sexual harassment of tenants by landlords after receiving reports that some have demanded sexual favors in exchange for a delay in payment. “This behavior is not tolerated in normal times, and certainly will not be tolerated now,” Durham said. t The state will disburse an additional $15.4 million in emergency food assistance benefits to half of the state’s SNAP recipients — almost 100,000 households — on May 8. The extra funding will give the maximum benefit, which varies by household size, to those not already receiving it. The state disbursed $32.7 million in such emergency benefits in April. t The Connecticut Legal Rights Project has filed a federal lawsuit seeking to force the release of inpatient psychiatric patients at the Connecticut Valley and Whiting Forensic hospitals to protect them from COVID-19.

Lamont to seek labor savings

In order to close the widening budget gaps, Lamont said that he will be talking to labor unions that represent the state’s workforce about potential savings. Lamont refused to say exactly what he would be asking from the unions until he talks to their leaders.

“Look, overall, I think all the stakeholders are going to have to be at the table, and that includes our friends in labor,” he said. “I’m going to be asking them to help with the pain that we’re all sharing around this state right now. You look at the incredible number of people who are unemployed and you see the stress upon our budget.”

Lamont said he would not ask the unions to reopen the long-running benefits contract that lasts through 2027. Wage contracts are handled separately and have different expiration dates.

Some legislators have called on Lamont to suspend pay raises that are scheduled for state employees for the new fiscal year on July 1. Lamont has been noncommittal on the issue. The union representing those workers has rejected the idea, saying the employees include front-line employees like doctors, nurses, correction officers and social workers.

Alex Putterman can be reached at aputterman@courant.com. Christopher Keating can be reached at ckeating@courant.com.