NEW YORK (Reuters) - Connecticut’s governor signed on Wednesday legislation to close a $220 million budget gap by the end of the fiscal year on June 30, as the state battles a fiscal crisis set to worsen next year with a projected budget deficit of nearly $1 billion. The bill, which received bi-partisan support, comes on top of a series of budget cuts during the current fiscal year after revenue projections failed to meet projections, a fact officials blamed partly on weak capital gains tax receipts. The administration of Governor Dannel Malloy, a Democrat, has been fighting fires around the budget for most of the year. Indications are that the fiscal situation will worsen before it gets better. One report predicted the deficit could be as high as $900 million in the next fiscal year. Last month, Connecticut canceled pay increases for almost 2,000 managers at state agencies. The raises, which had been postponed twice, are now frozen indefinitely. Officials have said there will be reductions in staff numbers in the months ahead. The amount Connecticut pays to borrow has risen in relation to other municipal bond market borrowers, a sign investors see greater risk. Connecticut now pays 0.58 of a percentage point more than top-rated muni bond issuers to borrow for 10 years, up from 0.3 of a percentage point last year. Connecticut has a high investment grade rating at the major ratings agencies, although Moody’s (Aa3) and Standard & Poor’s (AA) have a negative outlook on the state. Fitch rates Connecticut AA with a stable outlook. 
Connecticut governor signs bill to close $220 million budget gap