Connecticut budget has $27 mln hole, sales tax rev lags

Sept 21 Fri Sep 21, 2012 3:04pm EDT

Sept 21 (Reuters) - Connecticut has sprung a $27 million hole in its current $20.5 billion budget, partly because sales tax revenue and payments from Native American gaming casinos were weaker than expected, a state official said in a letter.

"The revenue forecast that underlies the fiscal year 2013 budget assumes a modestly accelerating national expansion which has yet to materialize," Benjamin Barnes, secretary of the Office of Policy and Management, said in a letter to the state comptroller.

The monthly letter from Barnes, dated Sept. 20, covers the first three months of the budget that started July 1. A state spokesman was not immediately available to comment.

Connecticut's jobless rate rose to 9 percent in August from 8.5 percent in July, according to the U.S. Department of Labor. Only 12 states and Puerto Rico have rates that are 9 percent or higher..

Connecticut will get an extra $50 million in September from the federal government for Medicaid, Barnes said.

But the rising number of low-income adults enrolling in Medicaid and increased demand for medical services will cost the state an extra $100 million.

A number of casinos are still struggling to fully recover from the recession, and Connecticut's two main Native American casinos - Mohegan Sun and Foxwoods - will soon face competition from Massachusetts, which last month began accepting applications for three new licenses..