Connecticut’s already-bleak budget picture worsened as state officials projected an income-tax revenue drop of nearly $1.5 billion over the next two fiscal years.

Gov. Dannel Malloy’s budget chief, Office of Policy and Management Secretary Benjamin Barnes, and the General Assembly’s independent Office of Fiscal Analysis concurred Monday that expected revenues for fiscal 2018 and 2019 will drop by $600 million and $865 million, respectively.

Their consensus revenue estimates cited diminishing, eroding income tax receipts.

In addition, revenues for the current fiscal year are $413 million below anticipated levels, which puts the state more than $380 million in the red. Projected shortfalls for the following two fiscal years are $2.3 billion and $2.7 billion.

Connecticut only has $236 million in its rainy-day fund.

“The precipitous drop in revenue we experienced in late 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,” said Barnes. “We cannot afford business as usual.”

"We cannot afford business as usual," said state budget director Benjamin Barnes.

Barnes called for immediate spending cuts and additional moves to balance the budget for the years ahead. The fiscal year ends June 30.

Bond rating agencies cited Connecticut’s persistent budget imbalance and unfunded pension liability in three general obligation downgrades last year.

S&P Global Ratings assigns Connecticut its AA-minus rating and negative outlook. Fitch Ratings and Kroll Bond Rating Agency also assign AA-minus ratings, though with stable outlooks. Moody's Investors Service rates the bonds an equivalent Aa3, also with a negative outlook.

“Although still one of the wealthiest states, Connecticut is grappling with challenges to the sustainability of its finances,” Moody’s said in a commentary last month. “Growing fixed costs from pension, retiree health care and bonded debt liabilities are crowding out services and forcing difficult political choices, placing pressure on the state's credit quality.”

Malloy is scheduled to discuss budget gridlock with top lawmakers on Tuesday. Malloy proposed a $40.6 billion biennial budget in February. The Republicans countered with a $40.3 billion spending plan.

The Senate is split 18-18 between Democrats and Republicans. Democrats hold a 79-72 edge in the House of Representatives.

“Today is a devastating day for the state of Connecticut. A nearly $5 billion historic deficit over a two-year period is staggering,” Senate Republican President Pro Tempore Len Fasano, R-North Haven, and Deputy Senate Republican President Pro Tempore Kevin Witkos, R-Canton, said in a joint statement. “What we have to do now is change the state’s failing policies.”

Joe Brennan, chief executive of the Connecticut Business and Industry Association, said budget woes would continue to force companies out of state. Fortune 500 behemoth General Electric Co. left Fairfield, Conn, for Boston last year.

“If this isn't the wakeup call, I don't know what is,” he said. “If we can't get this right now, I'm afraid we're going to lose a generation.”

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