Connecticut will end fiscal 2012 with a general fund deficit of $20.7 million, according to Comptroller Kevin Lembo.

Lembo said that under the provisions of generally accepted accounting principles, rather than the modified cash basis of accounting the state uses, the projected deficit would be $95.7 million.

Lembo’s estimates contrast with Gov. Dannel Malloy’s Office of Policy and Management, which projects a deficit of $39.1 million under GAAP, which would be a $35.9 million surplus without GAAP.

Two factors explain the variance, Lembo said in a letter he wrote Thursday to Malloy and OPM secretary Benjamin Barnes.

Lembo, a Democrat like Malloy, said the earned income tax credit is generating refunds about 20% above budget expectations. If the trend continues through the end of the fiscal year, refunds will exceed budget expectations by $22 million, he said.

Additionally, Lembo said, general fund spending through January over the past four years has represented roughly 58% of that year’s total spending. If the trend continues this year, OPM’s additional lapse of $34.5 million will be difficult to realize, Lembo said.

Moody’s Investors Service in January cited budgetary and pension shortfalls, and depleted reserves, when it lowered Connecticut’s general obligation bond rating to Aa3 from Aa2.  Standard & Poor’s and Fitch Ratings each assign the state’s GO credit AA. All three agencies have a stable outlook.

“Spending pressures to support state services are growing,” Lembo said, pointing to outlays in the “other expenses” appropriation category rising by more than 20% between December and January. That account covers expenses beyond personnel costs, such as supplies and consulting.

Senate Sen. L. Scott Frantz, R-Greenwich, urged belt-tightening. He also praised Lembo’s report.

“Comptroller Lembo has as good a grip on the numbers as anyone in the state. And his outlook is objective and independent.

“The deficit isn’t that big, but the numbers are on the wrong side of zero. They are red numbers.”

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