HARTFORD, Conn. (CBSNewYork) – Connecticut’s deficit has grown to $365 million, according to Gov. Dannel Malloy’s budget director Benjamin Barnes.

Part of reason for the increase in the budget gap is declines in expected state revenues and increased spending for Medicaid services, according to the governor’s office.

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WCBS 880 Connecticut Bureau Chief Fran Schneidau reports

The deficit could balloon even further for the years 2014 and 2015, officials cautioned.

State Representative Brendan Sharkey, the incoming Democratic House Speaker, said he was surprised by the numbers.

“We’re seeing indications of a turnaround, anecdotally at least, in Connecticut in terms of job growth and economic development,” Sharkey told WCBS 880 Connecticut Bureau Chief Fran Schneidau.

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To help solve the coming fiscal troubles, Sharkey urged towns and cities regionalize their services to save on costs as part of a leaner and meaner government.

“The deficit is going to have to be solved through cuts, period,” he said.

The governor’s office announced plans to release updated budget projections on Nov. 20 but has already ruled out any further tax hikes.

“Cutting programs is a very, very painful thing to do but if you can’t print money, that’s the only choice on the table,” said Republican State Senator Scott Frantz. “So that means he’s got to go in and find a way to balance the books, unfortunately by making cuts. They will be very painful.”

Barnes announced last week that Connecticut’s tax revenues dropped by nearly $53 million since April.

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