BOSTON -- Connecticut projects a $178 million deficit for fiscal 2018, state budget secretary Benjamin Barnes said two weeks after the state passed a biennial compromise budget.

“The governor’s caution regarding our ability to get through FY 18 in balance under the bipartisan budget passed by the General Assembly was well-warranted," Barnes said in a statement late Tuesday after releasing his latest consensus revenue estimate.

Gov. Dannel Malloy on Oct. 31 signed a $41.3 billion spending plan for fiscal 2018 and 2019 -- ending a four-month budget stalemate -- while exercising a line-item veto on a hospital tax, the wording of he said puts the state at risk for losing $1 billion in federal funding.

Benjamin Barnes

"This consensus revenue projection will likely place us more than $178 million in deficit before we have even had an opportunity to effectuate the large lapses and spending cuts built into the budget," Barnes added.

Barnes said his Office of Policy and Management would finalize its projection next week in a letter to state Comptroller Kevin Lembo, "and the administration will continue to do its part to monitor revenues and expenditures closely.”

Lawmakers were scheduled to discuss revisions to the hospital tax this week.

Connecticut has received several negative bond-rating actions over the past two years. S&P Global Ratings on Oct. 13 lowered its outlook on the state's general obligation bonds to negative from stable while affirming its A-plus rating.

Fitch Ratings also rates Connecticut GOs A-plus. Moody’s Investors Service and Kroll Bond Rating Agency rate them A1 and AA-minus, respectively.

On Friday, Moody's downgraded West Haven, Conn., to Baa3 from Baa2, and revised its outlook to negative despite state funding remaining unchanged at $53 million, or roughly 30% of revenue.

"Structural imbalance remains a challenge," said Janney Capital Markets, despite the use of $15 million of its upcoming $25 million bond sale for deficit reduction.

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Paul Burton

Paul Burton

Paul Burton is the Northeast Regional Editor for The Bond Buyer and the author of the book "Tales from the Newsrooms." He is a sought-after public speaker and has appeared on radio and TV shows, including former CBS News White House correspondent Sharyl Attkisson’s public-affairs program, “Full Measure.”