Connecticut's Tax Collections Miss Forecast, Leaving Budget Gapby
State finds itself with sudden $380 million shortfall
Hedge fund sector under pressure, residents deferred taxes
Connecticut’s personal income-tax collections plummeted in April, leaving a $380 million shortfall in the budget.
Income-tax collections for the current budget year ending in June will be about $8.99 billion, about $451 million short of the state’s estimates in January as the liabilities of the biggest taxpayers tumbled. Analysts have speculated that high earners may have deferred some income last year, anticipating that President Donald Trump would lower taxes.
Connecticut is also home to dozens of hedge funds, an industry which has fallen on hard times.
About 1,060 hedge funds shuttered globally last year, the fastest pace of closures since the aftermath of the financial crisis, according to Hedge Fund Research Inc. Investors pulled $70 billion from the loosely regulated investment pools, which have suffered a widespread backlash over poor returns and high fees.
“The precipitous drop in revenue we experienced in April creates major challenges for the state throughout the remainder of this fiscal year and into the next biennial budget we are currently working on," Office of Policy and Management Secretary Ben Barnes said in a news release.
The downturn will force to changes to Governor Dannel Malloy’s biennial budget, according to Chris McClure, a spokesman for Barnes.