PA 03-2-HB 6495

Emergency Certification

AN ACT CONCERNING MODIFICATIONS TO CURRENT AND FUTURE STATE EXPENDITURES AND REVENUES

SUMMARY: For FY 2003, the act reduces General Fund, Special Transportation Fund, and Mashantucket Pequot and Mohegan Fund allotments and reduces grants to towns. It also increases General Fund revenues for FYs 2003, 2004, and 2005; reduces FY 2003 Special Transportation Fund revenue; and increases municipal revenue for FYs 2003 and 2004.

The act makes many major changes to implement its spending reductions. It:

1. implements an early retirement incentive program for state employees;

2. eliminates the continuous eligibility policy for the HUSKY A program under which a child determined eligible for benefits remains eligible for 12 months, regardless of changes in his status that would make him ineligible;

3. requires Medicaid and State Aided General Assistance (SAGA) recipients to pay $1 for all outpatient medical services and each prescription;

4. suspends Medicaid coverage for parents of children enrolled in the HUSKY program with incomes between 100% and 150% of the federal poverty level until July 1, 2005;

5. reduces the dispensing fee paid to pharmacies for each prescription dispensed under the Medicaid, SAGA, ConnPACE, and AIDS drug assistance programs from $3. 85 to $3. 60 per prescription;

6. requires the Department of Social Services (DSS) to adopt a preferred drug list by July 1, 2003; and

7. eliminates a scheduled increase in the personal needs allowance for recipients of assistance under the State Supplement Program (SSP).

The act also increases many state taxes. It:

1. increases the income tax rate from 4. 5% to 5% for adjusted gross incomes (AGI) over $44,000 for joint filers, $22,500 for single filers, $22,000 for married people filing separately, and $35,000 for heads of household;

2. caps the price of clothing and footwear exempt from the sales tax at items costing no more than $50 instead of $75;

3. extends the sales tax to for-profit health and athletic clubs, newspapers, and magazine subscriptions;

4. imposes a 3% sales tax on advertising services for developing media and cooperative direct mail advertising;

5. increases the cigarette tax by 40 cents per pack from $1. 11 to $1. 51;

6. imposes a 20% tax surcharge for 2003 on corporations, limited liability companies and partnerships, and S corporations; and

7. from March 15, 2003 to June 30, 2004, increases the municipal real estate conveyance tax from 0. 11% to . 25% of the sale price and gives 18 towns the option of increasing their municipal real estate conveyance tax by an additional quarter point to 0. 5%.

EFFECTIVE DATE: Various, see below.

REDUCTIONS IN FY 2003 APPROPRIATIONS (§§ 1-3)

The act reduces General Fund appropriations for specified programs in agencies by the totals shown in Table 1. It requires total reductions to be no more than the greater of the governor's January 24, 2003 reductions or the act's reduction.

Table 1: FY 2003 General Fund Reductions

The act also reduces FY 2003 appropriations (1) from the Special Transportation Fund for Town Road Aid grants by $9 million and (2) from the Mashantucket Pequot and Mohegan Fund for Grants to Towns by $21. 5 million.

EFFECTIVE DATE: Upon passage

REDUCTIONS IN FY 2002 FUNDS (§ 4)

The act reduces or eliminates amounts transferred from FY 2002 General Fund resources as shown in Table 2.

Table 2: Transfers from FY 2002 General Fund Resources

EFFECTIVE DATE: Upon passage

ADDITIONAL REDUCTIONS REQUIRED (§ 5)

The act eliminates funding for the items shown in Table 3 from the FY 2003 budget based on its direction to the governor to make economies in those areas.

Table 3: Additional FY 2003 General Fund Reductions

The act specifies that the maximum 1. 75% additional allotment reduction it imposes in each appropriated account does not apply to appropriations for municipal aid, personal services, higher education operating expenses, or entitlements (§ 6).

EFFECTIVE DATE: Upon passage

FUND TRANSFERS AND SPECIAL PROVISIONS (§ 6)

Proportional Reductions

The act overrides conflicting laws and special acts to require that its reductions affecting municipal grants or appropriated accounts with more than one grantee be applied proportionately.

Suffield Correctional Facility

The act requires the Department of Correction to open a facility in Suffield on or after July 1, 2003, effectively delaying the opening of the expanded McDougal Correction Center. (PA 03-6 later repealed this provision, eliminating the delay. )

Transfers to the General Fund

The act transfers the following amounts to the General Fund: $52 million from the Special Transportation Fund, $10 million from the Probate Court Administration Fund, and $2. 5 million from the Commercial Recording Account.

Priority School District Grants

The act bars the governor from modifying allotments for priority school district grants for FY 2003.

EFFECTIVE DATE: Upon passage

EARLY RETIREMENT INCENTIVE PROGRAM (§ 6)

Additional Retirement Credit

The act establishes an early retirement incentive program for active full-and part-time state employees who retire directly from state employment between March 1 and June 1, 2003. The incentive allows an eligible employee to add up to three years to his age or service credit. The credit must be applied first to the employee's actual age to reach age 55, with any remainder added to his service. Additional credit for hazardous duty members must be applied to their service. (Hazardous duty members may retire after 20 years' hazardous duty service regardless of age. ) Credit must be applied in one-month units.

Eligibility

To be eligible for the retirement incentive, a state employee must:

1. be at least age 52 by May 31, 2003;

2. be a member of Tier I, Tier II or Tier IIA the State Employees Retirement System (SERS) (Special Act 03-2 later expanded eligibility to cover state employees who are members of the Teachers' Retirement System and explicitly excluded part-time higher education instructors. ); and

3. have at least 10 years of actual state service in SERS or 20 years for hazardous duty employees. (The requirement to have 10 years actual state service effectively excludes Tier IIA members from eligibility because Tier IIA applies only to state employees hired on or after July 1, 1997. )

Employees laid off or whose positions were abolished between November 1, 2002 and May 31, 2003 are eligible for the retirement incentive program if they would have been eligible had they not lost their jobs. Such former employees who are at least age 52 on March 1, 2003 are eligible to receive benefits under the plan as of that date. Such employees who turn 52 before May 31, 2003 are eligible to receive benefits as of the first day of the month following their birthdays. Laid-off employees who retire are not eligible for rehire. Any such employee who has already received payment for unused sick and vacation time need not repay the amount.

Retirement Effective Dates

Retirements must take effect on March 1, April 1, May 1, or June 1, 2003. The act gives the state the option of deferring retirements on a case-by-case basis until no later than June 1, 2004 for (1) hazardous duty employees, (2) State Retirement Division employees, and (3) employees of the Office of Policy and Management's (OPM) budget division. (SA 03-2 adds extensions through June 1, 2004 for (1) employees of the state treasurer primarily responsible for issuing state debt or in-house short term investment management of state and municipal funds and (2) at the request of the CORE-CT steering committee, employees assigned to the CORE-CT project (a project to replace the state's core financial and administrative data systems with a new integrated system) at least three days per week and critical to its implementation. SA 03-2 also allows the Legislative Management Committee's personnel policies subcommittee to extend the retirement date of any employee who is critical to the legislative process to no later than December 1, 2003. )

The state must ask the employee, in writing, to defer his retirement and send a copy to the employee's bargaining unit representative. An employee who refuses the state's request to stay past May 31, 2003 remains eligible for the retirement incentive.

Additional Restrictions

The act imposes the following additional conditions.

1. It defines a full-time employee as one who works at least 35 hours per week.

2. It requires the employee's actual age to be used to calculate all related benefits including Plan B actuarial reductions and group life insurance.

3. It requires the employee's actual, not his projected, wages to be used to calculate benefits and requires accrued vacation days as of the retirement date to be added to service.

4. It excludes disability retirement and employees eligible for terminated vested retirement benefits.

Payment for Unused Sick and Vacation Days

The act requires retiring employees to be paid for unused sick and the balance of vacation time according to existing rules but requires the payments to be made over three years, with one-third of the amount owed paid on July 1, 2005; July 1, 2006; and July 1, 2007. The act gives the state the choice of making the payment in one installment by July 1, 2005 if the total payment is less than $2,000.

Restrictions on Refilling Positions

The act requires the OPM secretary to make sure that at least 2,000 state positions are refilled between March 1, 2003 and June 30, 2004. It also allows up to 80% of the positions in any employer unit that are vacated because of the early retirement incentive program to be refilled for FYs 2004 and 2005. But it specifies that, of the refilled positions, at least 70% must be classified as essential and no more than 30% may be classified as nonessential. (The act does not define "essential" and "nonessential. ")

The act requires that in refilling positions under these provisions, union-represented positions be offered first to employees laid off on or after December 1, 2002 who have reemployment or State Employee Bargaining Agent Coalition (SEBAC) rights to them, and then to other such laid off employees who may be qualified for them.

The act specifies that a laid-off employee reemployed by the state under the act's job refill provisions must be considered to have been continuously employed by the state between his layoff date on or after November 1, 2002 and June 30, 2003 and that the employee suffer no interruption in service or pension credit for the layoff period.

SERS Valuation

The act requires the state Retirement Commission to (1) ask for an actuarial interim valuation for SERS that takes the early retirement incentive program into account and (2) certify revised state contributions for the 2003-05 biennium to the General Assembly.

EFFECTIVE DATE: Upon passage

HUSKY PROGRAM CHANGES (§§ 7 & 10)

Elimination of Continuous Eligibility

The act eliminates the HUSKY A and B programs' continuous eligibility policy, which allowed children determined eligible for benefits to remain eligible for a full 12 months, even if a change in family income or other circumstances would otherwise have made them ineligible.

Elimination of Certain Adult HUSKY A Coverage

From April 1, 2003 to July 1, 2005, the act suspends coverage for parents and needy caretaker relatives of children enrolled in HUSKY A (which is Medicaid managed care) with incomes between 100% and 150% of the federal poverty level.

EFFECTIVE DATE: Upon passage

HOME HEALTH SERVICES MEDICATION ADMINISTRATION FEE (§ 8)

The act requires the DSS home health fee schedule, which lists what the state will pay for various home health services for its medical assistance programs, to include a fee for a nurse who makes a home visit solely to administer medications. It allows such medication administration to include blood pressure checks, glucometer readings, pulse rate checks, and similar health status indicators. The act requires the fee to include administration of medications while the nurse is present, pre-pouring additional doses for the client to self-administer at a later time, and teaching self-administration. The act explicitly prohibits DSS from paying for medication administration when other nursing services are provided at the same visit. It allows DSS to establish prior authorization requirements for this service. It requires the DSS commissioner, before implementing the change, to consult with the chairmen of the Public Health and Human Services committees.

EFFECTIVE DATE: Upon passage

MEDICAID COPAYMENT (§ 9)

The act requires the DSS commissioner to impose a $1 copayment on Medicaid recipients for (1) each outpatient medical service by an enrolled Medicaid provider to a Medicaid recipient enrolled in a fee-for-service plan (low-income elderly and people with disabilities), as permitted under federal law, and (2) each drug prescription at the time it is filled. The commissioner may modify the prescription copayment requirement for certain people who receive less than a 30-day supply and may exempt institutional residents from the copaymant requirement, to the degree permitted under federal law.

By law, the commissioner may require coinsurance from Medicaid recipients but, under prior law, was expressly prohibited from imposing a copayment for prescription drugs. Federal law allows imposition of a nominal deductible, coinsurance, copayment, or similar charge, but it exempts people institutionalized in a hospital, long-term care facility, or other medical institution who are required to spend down nearly all their income to pay for the medical services, as well as children, pregnant women, emergency services, and family planning (42 C. F. R. § 447. 53 (a) and (b)).

EFFECTIVE DATE: Upon passage

REDUCTION IN PHARMACY DISPENSING FEE UNDER MEDICAL ASSISTANCE PROGRAMS (§ 11)

As of March 1, 2003, the act reduces, from $3. 85 to $3. 60, the per-prescription dispensing fee DSS pays to pharmacies under the Medicaid, State-and-Town-Administered (SAGA and GA), General Assistance SAGA and (GA), Connecticut Pharmaceutical Assistance Contract to the Elderly and Disabled (ConnPACE), and Connecticut AIDS Drug Assistance programs.

EFFECTIVE DATE: Upon passage

MEDICAID GUARANTEED ELIGIBILITY ELIMINATED (§ 12)

The act eliminates the guaranteed eligibility policy in the Medicaid program. Under this policy, adults determined eligible for benefits remained eligible for six months, even if a change in status (such as income) during that time would have otherwise made them ineligible.

EFFECTIVE DATE: Upon passage

REDUCTION IN TFA EXTENSIONS (§ 13)

The act reduces, from three to two, the number of six-month extensions that Temporary Family Assistance (TFA) recipients can receive at the end of the program's normal 21-month eligibility period, starting July 1, 2003.

EFFECTIVE DATE: July 1, 2003

CONNPACE COPAYMENT AND ANNUAL FEE INCREASE (§§ 14 & 15)

The act (1) increases the copayment for ConnPACE participants to $16. 25 per prescription and applies it to everyone, regardless of income or enrollment date; (2) increases the annual fee from $25 to $30; and (3) makes several technical changes. The copayments were previously $12 or $15 per prescription depending on participants' income or enrollment date. The act also codifies the program's current income limits, which are $20,300 for single people and $27,500 for married couples, adjusted annually for inflation.

EFFECTIVE DATE: Upon passage

TRANSITIONAL CHILD CARE REDUCED INCOME ELIGIBILITY (§ 16)

The act reduces income eligibility for transitional child care benefits from 75% of statewide median income to 55%, starting March 1, 2003. These benefits are available to families transitioning off the TFA program.

EFFECTIVE DATE: Upon passage

NURSING HOME RATE INCREASE DELAY (§ 17)

The act delays a scheduled 2% Medicaid rate increase for certain nursing homes from January 1, 2003 until June 1, 2003.

EFFECTIVE DATE: Upon passage

SAGA AND GA MEDICAL AND PRESCRIPTION COPAYMENTS (§ 18)

The act requires the DSS commissioner to impose a $1 copayment on recipients of SAGA and town GA medical benefits for (1) each outpatient medical service by an enrolled provider to a recipient and (2) each drug prescription at the time it is filled. The commissioner may modify the prescription copayment requirement for certain people who receive less than a 30-day supply and may exempt institutional residents from the copayment requirement.

EFFECTIVE DATE: Upon passage

DSS PREFERRED DRUG LIST (§ 19)

The act requires DSS to adopt a preferred drug list for its medical assistance programs by July 1, 2003 in consultation with the 11-member Medicaid Pharmaceutical and Therapeutics Committee. Prior law established the committee in DSS and required DSS to adopt a preferred drug list when this committee recommended one. This act requires the committee to convene by March 31, 2003. The act requires DSS, instead of the committee, to review the list at least once a year and make additions and deletions to it.

EFFECTIVE DATE: Upon passage

TRANSFERS FROM ENERGY CONSERVATION AND LOAD MANAGEMENT FUNDS (§§ 20 & 21)

From February 2003 through July 2005, the act requires the Department of Public Utility Control (DPUC) to authorize electric distribution companies to send a total of $1 million per month from their energy conservation and load management funds to a nonlapsing account in the General Fund to pay for state agencies' electricity costs and conservation projects. Each fund's contribution to the $1 million must be in proportion to its fund receipts. Starting with FY 2003, the act requires the comptroller to count as revenue for the preceding fiscal year any payments from the funds she receives through the last day of July or, if that day is a weekend or holiday, through the next regular business day after that date.

The electric company energy conservation and loan management funds are funded by a surcharge of 3 mills on each kilowatt-hour of electricity the companies sell. By law, the companies must use the funds to implement cost-effective energy management programs and electricity market transformation initiatives.

EFFECTIVE DATE: Upon passage

INCOME TAX (§§ 22-24)

Rate Increase

Starting with the 2003 tax year, the act increases the tax rate on the higher of the two state income tax brackets from 4. 5% to 5%. The higher rate applies to taxable income over $20,000 for joint filers; $10,000 for single filers and married people filing separately; and $16,000 for heads of household. Because the act does not change amount of income exempt from the tax or the 3% rate on the lower tax bracket, the increase affects only those with Connecticut adjusted gross incomes (AGIs) over $44,000 for joint filers; $22,500 for single filers; $22,000 for married people filing separately; and $35,000 for heads of household.

By law, taxable income is Connecticut AGI minus exempt income. For 2003, the maximum exemptions are $12,000 for married people filing separately; $12,500 for singles; $19,000 for heads of household; and $24,000 for married couples. Exemptions are phased out at higher incomes. Taxpayers with Connecticut AGIs above $71,000 for joint filers; $56,000 for heads of household; $36,000 for singles; and $35,000 for married separate filers receive no exemptions.

The act also increases the income tax rate for trusts and estates from 4. 5% to 5. 0%. Under both prior law and the act, trust and estate income is taxed at a flat rate.

Withholding Tables

The act requires the Department of Revenue Services (DRS) commissioner to issue special withholding tables by March 1, 2003 that reflect the act's income tax changes from January 1, 2003. The new tables must, as far as practicable, result in six months worth of withholding under the new rates by June 30, 2003. The commissioner must issue new withholding tables for the second half of the year, beginning July 1, 2003, under the usual procedures.

Estimated Tax Payments

The act also requires taxpayers who must pay estimated tax through the year to adjust their June 2003 estimated tax payments for any increase that applies to them for the 2003 tax year. It thus overrides a "safe-harbor" provision that ordinarily requires estimated tax payers to make quarterly payments of 25% of their tax liability for the preceding year and total annual payments of 90% of their liability for the current year.

EFFECTIVE DATE: Upon passage and applicable to tax years starting on or after January 1, 2003 for the new tax rate; upon passage for the withholding table and estimated tax requirements.

SALE AND USE TAX

Tax Extensions (§§ 25-27 & 58)

Starting April 1, 2003, the act imposes a 3% sales and use tax on sales of advertising or public relations services for developing media and cooperative direct mail advertising. Taxable services include layout, art direction, graphic design, mechanical preparation, and production supervision. Under DRS policy, "cooperative direct mail advertising" means advertisements or coupons from several businesses sent in one envelope or bundle to potential customers in a specific area.

As of April 1, 2003, the act also extends the 6% sales and use tax to sales of the following items and services:

1. health and athletic club services, unless provided by a municipality or nonprofit organization or unless the charges for the services are included in club dues or fees already subject to the dues tax;

2. newspapers; and

3. magazine subscriptions.

Exemption for Clothing and Footwear (§ 28)

The act limits the sales tax exemption for clothing and footwear to items costing less than $50. Prior law exempted clothing and footwear costing less than $75.

EFFECTIVE DATE: Applicable to sales on or after April 1, 2003.

CIGARETTE TAX (§§ 29-31)

The act increases the cigarette tax by 40 cents per pack, from $1. 11 to $1. 51 (55. 5 to 75. 5 mills per cigarette), starting March 15, 2003.

It also imposes a 40-cent "floor" tax on each pack of cigarettes (20 mills per cigarette) that dealers and distributors have in inventory at the close of business or at 11: 59 p. m. on March 14, 2003, whichever is earlier. By April 15, 2003, each dealer and distributor must report to DRS the number of cigarettes in inventory as of that time and date. Failure to file the report by the due date is grounds for the department to revoke a dealer's or distributor's license, and willful failure to file subjects the dealer or distributor to a fine of up to $1,000, one year in prison, or both. A dealer or distributor who willfully files a false report can be fined up to $5,000, sentenced to between one and five years in prison, or both.

EFFECTIVE DATE: Upon passage. The tax increase applies to cigarettes sold on or after March 15, 2003.

BUSINESS TAX SURCHARGE (§ 32-35)

For 2003, the act imposes a 20% surcharge on (1) the corporation tax and (2) the annual $250 tax on limited liability companies (LLCs), limited liability partnerships (LLPs), limited partnerships (LPs), and S corporations. The surcharge is due, payable, and collectible as part of each company's total tax for the year. Companies subject to the corporation tax must calculate the surcharge based on their tax liability before credits.

The act requires corporation taxpayers to adjust their June 2003 installment payments to incorporate its changes in their liability for the 2003 income year. It thus overrides a safe-harbor law requiring corporation tax payers to pay installments equal to (1) 90% of their liability for the current income year or (2) 100% of their liability for the previous year, whichever is less. Under the safe harbor law, the percentages due in each quarterly installment are 30% for the first quarter, 40% for the second, 10% for the third, and 20% for the fourth.

EFFECTIVE DATE: Upon passage and applicable to income years or tax years, as appropriate, starting on or after January 1, 2003; upon passage for the provision concerning the corporation tax installments due in June 2003.

PETROLEUM PRODUCTS GROSS EARNINGS TAX REVENUE (§ 36)

For FY 2003, the act suspends transfers to the Special Transportation Fund (STF) of petroleum products gross earnings tax revenue derived from motor fuel sales. Prior law required the DRS commissioner to transfer $5 million per quarter of such revenue to the STF during FY 2003.

EFFECTIVE DATE: Upon passage

ACCRUALS OF TAX PAYMENTS (§§ 37-39)

By law, the comptroller counts ("accrues") certain tax payments received during July as part of the state's revenue for the preceding fiscal year, which ends June 30. This act:

1. extends the deadline for accruing corporation tax payments for the preceding fiscal year to payments postmarked by August 15 or, if that is a weekend or holiday, the following business day instead of by July 31 or, if that is a weekend or holiday, the following business day;

2. allows the comptroller to accrue for the preceding fiscal year all personal income tax payments instead of only payments withheld by employers from employee wages, if they are postmarked by July 31 or, if that is a weekend or holiday, the following business day; and

3. starting with FY 2003, allows the comptroller to accrue to the preceding fiscal year all real estate conveyance tax payments postmarked by July 31 or, if that is a weekend or holiday, the following business day.

EFFECTIVE DATE: Upon passage

MUNICIPAL REAL ESTATE CONVEYANCE TAX (§ 40)

From March 15, 2003 to June 30, 2004, the act increases the municipal portion of the real estate conveyance tax from 0. 11% to 0. 25% of the sale price. Starting July 1, 2004, the tax rate reverts to 0. 11%.

The act also gives 18 towns, the 17 "targeted investment communities" and a town that has a manufacturing plant that qualifies for enterprise zone benefits, the option of increasing their municipal real estate conveyance taxes by an additional quarter point to 0. 5%, during the same 15-month period. This provision applies to Bloomfield, Bridgeport, Bristol, East Hartford, Groton, Hamden, Hartford, Meriden, Middletown, New Britain, New Haven, New London, Norwalk, Norwich, Southington, Stamford, Waterbury, and Windham.

The real estate conveyance tax is paid by sellers. Unimproved land or property sold for $2,000 or less is exempt.

EFFECTIVE DATE: March 15, 2003

HOTEL TAX ALLOCATION TO TOURISM DISTRICTS (§ 41)

The act requires the DRS commissioner to hold back for the General Fund an extra $1 million per year in FYs 2003, 2004, and 2005 from the state's 12% tax on hotel and lodging house rooms. He must deduct the funds proportionately from the revenue ordinarily distributed to the state's 11 tourism districts without reducing statutorily required allocations to the:

1. Capital City Economic Development Authority,

2. Greater Hartford Arts Council,

3. New Haven Coliseum Authority,

4. Stamford Center for the Arts,

5. Maritime Center Authority in Norwalk, and

6. Greater Fairfield Tourism District to market Bridgeport attractions.

EFFECTIVE DATE: Upon passage

ATTORNEY OCCUPATIONAL TAX (§ 42)

The act extends the annual $450 occupational tax on attorneys admitted to practice in Connecticut to attorneys admitted to practice here temporarily under court rules as attorneys pro hac vice to conduct a particular case. The act requires such attorneys to file an occupational tax return with the DRS commissioner and pay the tax for any year in which they are temporarily admitted and practicing law in the state. It credits General Fund revenue attributable to this change to the Judicial Department's Other Expense account (See § 51).

EFFECTIVE DATE: Upon passage

COURT FEES (§ 43-49)

New Fees and Fee Increases

The act establishes three new court fees and increases seven others as shown in Table 4. It credits General Fund revenue attributable to these changes to the Judicial Department's Other Expense account.

Table 4: Court Fee Changes

*The figures shown exclude an additional $5 fee.

Fee Exemptions (§ 44)

The act extends the exemption from certain court fees already granted to various state officials and employees to attorneys employed by DSS. It also expands the fees from which the officials are exempt.

The exemption already applies to jury fees, court fees, additional fees for civil cases, property and wage execution fees, and fees for appeals from family support magistrate decisions. The act adds new fees on executions against money payable to judgment debtors by banks and credit unions.

The following officials and employees were already exempt from paying the fees:

1. members of the Division of Criminal Justice or Public Defender Services;

2. Judicial Department employees performing their duties;

3. the attorney general and any assistant attorney general;

4. the consumer counsel;

5. attorneys employed by the Consumer Counsel's Office within the Department of Public Utility Control, DRS, the Commission on Human Rights and Opportunities, the Freedom of Information Commission, the Board of Labor Relations, Office of Protection and Advocacy for Persons with Disabilities, and the Office of Victim Advocate; and

6. any attorney the court appoints either to assist any of the above or to act for them in any special case, while the attorney is acting in that capacity.

EFFECTIVE DATE: Upon passage

COMMUNITY SERVICE LABOR PROGRAM FEE (§ 50)

The act requires anyone who enters the Judicial Department's Community Service Labor Program to pay a $205 fee. It requires the revenue from the fee to be deposited into the department's Alternative Incarceration Program Account in the General Fund. Under the act, someone who cannot pay may not be excluded from the program if (1) he files an affidavit with the court that he is indigent or cannot pay, (2) the Court Support Services Division confirms his indigency, and (3) the court find him so.

By law, certain people charged with violating drug laws may participate in the Community Service Labor Program. Program activities include performing unpaid labor for government agencies and nonprofit charitable organizations. The court must dismiss the charges against anyone who successfully completes the program.

EFFECTIVE DATE: July 1, 2003

JUDICIAL DEPARTMENT OTHER EXPENSE ACCOUNT REVENUE (§ 51)

The act credits all revenue from specified fees and taxes established or increased on or after its effective date, up to a maximum of $1. 5 million in FY 2003 and $4. 9 million annually thereafter, to the Judicial Department's Other Expense account. The allocation covers revenue from the extension of the attorney's occupational tax (§ 42) and the new court fees and fee increases the act establishes (§§ 43-49).

The Judicial Department must, for each applicable fee or tax, certify to the state treasurer the amounts to be credited to its Other Expense account and to the General Fund.

EFFECTIVE DATE: Upon passage

PRESCRIPTION PRIOR AUTHORIZATION AND GENERIC SUBSTITUTION (§ 52)

The act limits the Medicaid, SAGA, GA, and ConnPACE programs requirement for prior authorization for brand name prescription drugs when a chemically equivalent generic drug is available to only those situations where the generic costs less than the brand name drug.

EFFECTIVE DATE: Upon passage

PROPERTY TAX EXEMPTION FOR MANUFACTURING MACHINERY AND EQUIPMENT AND TRUCKS (§ 53)

By law, certain machinery, equipment, and large trucks are exempt from property taxes for five years after being acquired. The state reimburses municipalities for 100% of the revenue lost from such exemptions approved before October 1, 2000 and 80% for exemptions approved on or after that date.

The act allows a town, by vote of its legislative body, to impose a tax in its 2004 municipal fiscal year on such property exempted from its October 1, 2001, grand list. The tax must be no more than the difference between the state reimbursement grant, as modified by the governor under the extra rescission authority granted in PA 02-1, May 9 Special Session, and the grant specified under the act.

The property tax exemptions and the act apply to:

1. new or newly acquired machinery and equipment used in manufacturing or biotechnology, including machinery and equipment used for research and development, metal finishing, or producing motion pictures, video, or sound recordings;

2. new commercial trucks and vehicles used in combination with them that have a gross vehicle weight rating of more than 26,000 pounds and are used exclusively for carrying freight in inter- or intrastate commerce; and

3. new commercial trucks and vehicles used in combination with them that have gross vehicle weight ratings of more than 55,000 pounds.

EFFECTIVE DATE: Upon passage

CABLE T. V. GROSS EARNINGS TAX (§§ 54 & 55)

The act requires cable t. v. companies to pay their 5% gross earnings tax on a quarterly rather than an annual basis, starting January 1, 2003. It requires companies to file tax returns for quarters ending March 31, June 30, September 30, and December 31 by the last day of the following month, instead of every April 1 for the year ending on the preceding December 31. Quarterly returns must contain the amount of the company's taxable gross earnings and any other information the DRS commissioner requires. Previously, annual returns had to contain the company's taxable gross earnings, name, and location and its total miles of wire operated.

The act specifies that it does not affect annual returns and taxes for the 2002 tax year due on April 1, 2003 under the prior law.

Starting with FY 2003, the act allows the comptroller to accrue to the preceding fiscal year all cable television gross earnings tax payments postmarked by July 31 or, if that is a weekend or holiday, the following business day.

EFFECTIVE DATE: The quarterly tax payment requirement is effective on passage and applies to calendar quarters starting on or after January 1, 2003. The accrual provision is effective on passage.

BUDGET RESERVE FUND (§ 56)

The act increases the Budget Reserve Fund's maximum balance from 7. 5% to 10% of the net General Fund appropriations for the fiscal year in progress. By law, once the fund reaches the maximum, the treasurer may not transfer additional unappropriated General Fund surpluses to it. Also by law, certain surpluses that exceed the maximum allocated to the reserve fund must be transferred for such purposes as funding the State Employees Retirement Fund and paying off state debt.

EFFECTIVE DATE: Upon passage

REPEALED LAWS (§ 57)

SSP Personal Needs Allowance

The act eliminates a scheduled increase in the personal needs allowance for those receiving assistance under the State Supplement Program.

Estate Tax Provision

The act repeals a law that (1) automatically voids the state tax on the estates of people who die after the effective date of either a repeal of the federal estate tax or the state estate tax credit against the federal tax or after a U. S. Supreme Court decision that the federal tax or the state credit is unconstitutional and (2) requires that, if Congress changes the federal estate tax credit, the state tax automatically adjust to absorb the full federal credit.

EFFECTIVE DATE: Upon passage

BACKGROUND

Related Acts

PA 03-4 requires newspaper producers and wholesalers to collect the 6% sales tax when they transfer newspapers to vendors who do not sell any other taxable items and allows these vendors to pass the tax along to their customers by adding it to the retail sales price of the newspapers without remitting the amount to the state.

PA 03-6 eliminates the section of this act that delays the opening of a Suffield correctional facility until at least July 1, 2003.