OLR Bill Analysis

HB 7601

Emergency Certification

AN ACT CONCERNING DEFICIT MITIGATION.

1 – FY 07 SURPLUS FUNDS CARRIED FORWARD

The bill reduces total appropriations from the FY 07 General Fund surplus for various purposes by $ 14. 52 million, from $ 613. 71 million to $ 599. 19 million. The 2007 budget act carried these funds forward and made them available to be spent in FYs 08 and 09.

The bill reduces amounts carried forward and available for FY 09 as shown in Table 1.

Table 1: Reduced Carryfowards for FY 09

Agency

For

Current

Proposed

Reduction

Administrative Services

Other expenses

$ 40,000

0

$ 40,000

Public Works

Rents and moving

350,000

0

350,000

Public Utility Control

Statewide energy efficiency and outreach

5,000,000

2,000,000

3,000,000

Environmental Protection

Clean diesel buses

5,000,000

3,000,000

2,000,000

Education

Longitudinal data systems

$ 2,750,000

1,250,000

1,500,000

School safety grants

5,000,000

3,000,000

2,000,000

State Library

Arts inventory

75,000

0

75,000

Higher Education

Other expenses

100,000

0

100,000

Transportation

Bus operations

7,294,500

2,294,500

5,000,000

EFFECTIVE DATE: Upon passage

2 – BIOFUELS APPROPRIATION

The 2007 budget appropriated $ 5. 1 million from the FY 07 surplus to the Department of Economic and Community Development (DECD) for biofuels and made the money available for FY 08 and FY 09. The bill reduces the total appropriation by $ 450,000 to $ 4. 65 million. For FY 09, the bill allocates $ 3. 65 million of this amount for production grants and $ 1 million for the fuel diversification research grant program. It allows DECD to conclude personal service agreements with other entities to distribute the production grants or operate the diversification research grant program.

EFFECTIVE DATE: Upon passage

3 – REDUCED FY 09 GENERAL FUND APPROPRIATIONS

The bill reduces FY 09 General Fund appropriations for specified agencies and purposes by a total of $ 9,071,137. Individual agency reductions are listed in the bill. Please refer to the fiscal note for additional detail.

EFFECTIVE DATE: Upon passage

4 – INCREASED FY 09 LAPSE

The bill requires the governor to direct executive branch agencies to lapse no more than an additional $ 1. 5 million in aggregate for FY 09 from Other Expense accounts. This amount is in addition to the FY 09 lapse specified in the 2007 budget act.

EFFECTIVE DATE: Upon passage

5 –TRANSFERS TO FY 09 GENERAL FUND REVENUE

The bill transfers $ 5 million from the Citizens' Election Fund (CEF) to the General Fund as revenue for FY 09. The CEF was established by PA 05-5, October 25 Special Session as the source of payments to participating candidates in the state's public financing program for election campaigns.   The state treasurer administers the fund, which is a separate, nonlapsing account in the General Fund.

The bill also transfers $ 559,426 originally appropriated from the FY 01 General Fund surplus to Department of Transportation for the Transportation Strategy Board to the General Fund as revenue for FY 09. The funds have been carried forward each year since 2001.

EFFECTIVE DATE: Upon passage

6 – CONNECTICUT INDEPENDENT COLLEGE STUDENT GRANT PROGRAM

By law, colleges and universities participating in the Connecticut Independent College Student Grant (CICSG) program must return unused grant funds to the Department of Higher Education (DHE) by January 15th of each fiscal year. For FY 09, the bill eliminates a requirement that DHE redistribute all unused funds to other participating colleges, using a statutory formula and the most recent enrollment data available.

For FY 09 only, if the aggregate amount of unused funds is $ 500,000 or less, the bill bars the department from redistributing any funds. If unused funds total more than $ 500,000, the bill requires DHE to redistribute only the amount exceeding $ 500,000. It does not specify what DHE must do with the unused funds it does not redistribute.

The CICSG program funds annual grants based on merit and financial need to Connecticut undergraduate students attending the state's independent colleges.

EFFECTIVE DATE: Upon passage

7(A) – MONEY FOLLOWS THE PERSON DEMONSTRATION

The bill requires the Department of Social Services (DSS) Commissioner to expedite the establishment of a federal Money Follows the Person (MFP) demonstration program required under current law. DSS must facilitate the placement of 140 eligible individuals in the program by June 30, 2009. MFP is a five-year program that permits states to move individuals out of nursing homes or other institutional settings and into less-restrictive, community-based settings and not jeopardize federal funding (see BACKGROUND).

EFFECTIVE DATE: Upon passage

7(B) – MEDICAID COVERAGE FOR LIMITED ENGLISH PROFICIENCY INTERPRETERS

PA 07-185 (codified in CGS 17b-28e(b)) required the DSS commissioner to amend the Medicaid state plan to include foreign language interpreter services provided to any beneficiary with limited English proficiency as a “covered service” under the Medicaid program. This provision was effective July 1, 2007. The commissioner has not amended the state plan.

The bill requires the commissioner to expedite amending the state plan to include these interpreters as Medicaid covered services by June 30, 2009.

Federal Medicaid law allows states to get federal matching funds for limited English proficiency (LEP) interpreters either by designating them as (1) a covered state plan service or (2) an administrative cost. In Connecticut, the matching rate would be 50% of the state's cost for providing the interpreters.

As a covered service, it would be reimbursed as part of another service provided. For example, if a physician bills for a service and also provides interpreter services, the state would reimburse him or her more than if just the medical service had been provided. And the federal government would reimburse the state for half of these costs. As an administrative expense, the state could either pay translators directly or contract with medical providers and bill the federal government for the match along with any other administrative costs for which it would normally bill.

Currently, DSS does not pay for medical interpreter services for Medicaid fee-for-service clients. Managed care plans serving HUSKY clients have a contractual obligation (based on federal requirements) to provide interpreters and their capitation payments include the costs of doing so. DSS receives a 50% federal match for the capitation payments but the interpreter services are not separated.

Making interpreters a state plan service would entitle any Medicaid recipient to it if it were deemed necessary, as with any other service DSS includes in its Medicaid state plan.

(See BACKGROUND on interpretation of federal law. )

EFFECTIVE DATE: Upon passage

8 & 9 – STATE TAX AMNESTY

Taxes and Period Covered

The bill requires the Department of Revenue Services (DRS) commissioner to establish a tax amnesty program for individuals, business, or other taxpayers that owe Connecticut state taxes (other than motor carrier road taxes). The amnesty runs from May 1 to June 25, 2009 and covers any taxable period ending on or before November 30, 2008 for which a taxpayer:

1. did not file a required tax return and the DRS commissioner did not file one on his or her behalf or

2. filed a return that did not report his or her full tax and DRS did not examine the return.

Amnesty Conditions

The DRS commissioner must prepare an amnesty application that requires applicants to specify the taxes and taxable periods for which they seek amnesty. If a taxpayer files the application during the amnesty period and pays all the taxes owed for the applicable tax periods, plus interest, the commissioner must waive applicable civil penalties and refrain from seeking criminal prosecution for those periods.

If the commissioner grants amnesty, the affected taxpayer relinquishes all unexpired administrative and judicial appeal rights as of the payment date. The bill bars taxpayers from receiving any refund or credit of amnesty tax payments. Failure to pay all amounts due invalidates the amnesty. A taxpayer is not entitled, by virtue of penalty waivers and interest reductions under the amnesty, to any refund or credit of previously paid amounts.

The bill allows the commissioner to require that taxpayers file certain amnesty applications, and make payments, electronically, either by computer or by another technology the commissioner specifies.

Interest Reduction

If a taxpayer pays the taxes due by June 25, 2009, the bill reduces the interest rate on those taxes to 0. 75% for each month or part of a month from the original tax due date to the payment date or June 25, 2009, whichever is earlier. The interest rate on overdue taxes is generally 1% per month.

Amnesty Exclusions

The bill bars any amnesty for those who:

1. have received notice from DRS that they are being audited for the period for which they are seeking amnesty or

2. are parties to any criminal investigation or civil or criminal litigation pending on the date the bill passes in any federal or Connecticut court for failure to file or pay Connecticut taxes or for Connecticut state tax fraud.

A taxpayer who deliberately submits any false or fraudulent application, document, return, or other statement to DRS is ineligible for amnesty. In addition to any other penalty, such a taxpayer is subject to a fine of up to $ 5,000, a prison term of one to five years, or both.

Implementation

The bill allows DRS to use up to $ 1 million in revenue from the amnesty to administer the program. It gives the DRS commissioner authority to do anything necessary to implement the program in a timely fashion.

EFFECTIVE DATE: Upon passage

10-14 – BOTTLE ESCHEATS

Summary

The bill requires a distributor or manufacturer that sells beverage containers and collects deposits on them under the state's bottle deposit law to place the deposits in a separate, interest-bearing account. The law defines a “beverage container” as an individual, separate, sealed glass, metal, or plastic bottle, can, jar, or carton containing a beverage.

The bill applies to the first distributor to collect the deposit on a beverage container sold to a person in the state (i. e. , “deposit initiators”). It requires them to file reports on their special accounts with DEP within one month after the end of each calendar quarter. The first report is due March 15, 2009 and must cover the period from December 1, 2008 to February 28, 2009. The second is due July 31, 2009, covering March 1, 2009 to June 30, 2009, and then reporting continues at normal quarterly intervals thereafter. Once DEP adopts accounting procedures and other requirements specified in implementing regulations the bill requires, distributors must follow them or be subject to penalties. (See BACKGROUND for information on the nickel deposit process. )

It also makes technical changes.

EFFECTIVE DATE: Upon passage, except the DEP penalty provisions are effective February 1, 2009.

Special Accounts

The bill requires each deposit initiator to deposit the refund value of containers they sell (nickel deposits) into a special interest-bearing bank account at a Connecticut branch of a financial institution, no later than three days after the sale, except deposits made between December 1 and 31, 2008 must be deposited by January 5, 2009. They must keep all these deposit funds separate from others and pay any interest and dividends earned on the deposits into the special account.

When a consumer returns a container, the deposit initiators must refund the deposit from the special account.

Quarterly Reports

Deposit initiators' quarterly reports must be on forms prescribed by the DEP commissioner and contain the information she considers necessary, including at least:

1. the account balance at the beginning of the quarter;

2. a list of deposits, including refunds, and interest and dividends or return payments;

3. a list of withdrawals, service and overdraft charges; and

4. the balance at the end of the most recent quarter.

Audits

The bill allows the state treasurer, on her own or at the DEP commissioner's request, to examine a deposit initiator's records relating to the account the bill requires, including receipts, disbursements, and whatever other items she considers appropriate. Any penalty cannot be paid from the special account.

Regulations

The commissioner must adopt written policies and procedures to implement the provisions creating the accounting system at the same time she is in the process of adopting the policies and procedures in regulation form (i. e. , temporary regulations). Once the commissioner adopts written accounting policies and procedures, deposit initiators must comply with them, until she adopts regulations, at which time accounting must be done according to the regulations. The commissioner must print a notice of intention to adopt the regulations in the Connecticut Law Journal no later than 20 before implementing the policies and procedures. The commissioner must submit final regulations to implement these policies and procedures to the Legislative Regulation Review Committee by May 1, 2009, unless a later date is approved by a majority vote of the committee. Policies and procedures implemented under this section are valid until:

1. May 1, 2009, or, if applicable, the later date the committee approves or

2. the time that committee adopts or disapproves the proposed final regulations, whichever is earlier.

Penalties

The bill subjects those who violate any of its requirements for establishing accounts and filing reports to existing penalties of $ 50 to $ 100 for a first offense, $ 100 to $ 200 for a second offense, and $ 250 to $ 500 for a third offense. It also subjects violators of the bill's account opening and reporting requirements to an existing penalty for failing to file required information with DEP or to obey DEP regulations, orders, or permits. The maximum penalty is $ 1,000 plus a maximum of $ 100 per day for each day the violation continues. The attorney general, on his own or at the DEP commissioner's complaint, may institute actions to enforce the bill or its regulations.

15-17 & 3 – OFFICE OF THE BUSINESS ADVOCATE

The bill eliminates the Office of the Business Advocate and transfers his duties to the economic and community development commissioner as of January 1, 2009. It reduces the FY 09 appropriation to the Office of Policy and Management (OPM) for the business advocate by $ 225,000 and transfers $ 80,000 from OPM to the Department of Economic and Community Development to carry out the business advocate's duties.

Under current law, the business advocate office is in OPM for administrative purposes only. He is authorized to hire staff and must report annually to the governor and the Commerce and Finance, Revenue and Bonding committees.

EFFECTIVE DATE: January 1, 2009, except the $ 225,000 reduction in OPM's budget is effective upon passage.

BACKGROUND

Money Follows the Person (MFP)

In 2005, Congress, as part of the Deficit Reduction Act, enacted the MFP provisions as a way to encourage states to rebalance their long-term care spending by moving individuals from nursing homes or other institutions into less-restrictive, community-based settings. The law requires that program participants (1) reside in the nursing home for at least six months and (2) need a nursing home level of care once they leave.

States that run the demonstration projects are eligible for an enhanced federal match (75% instead of 50%) of state expenditures for the first year of Medicaid-eligible services. States must commit to provide some of these services once the year is up through some other authority (e. g. , federal home- and community-based services waiver). Federal matching funds of 50% are also available to support services not allowed by Medicaid that the state will provide during the demonstration, such as housing coordinators.

Other federal law allows states to provide Medicaid–funded community-based services to the elderly and disabled, and Connecticut currently runs several waiver programs that offer these services. These programs generally have enrollment caps. State law allows the DSS commissioner to modify the existing Medicaid waivers if necessary to carry out the demonstration.

MFP in Connecticut

In 2006, the legislature authorized DSS to submit an application to the federal government to establish an MFP demonstration program for 100 participants (PA 06-188). In 2007, the legislature required, rather than allowed, DSS to run the program and increased the number of program slots from 100 to 700.

The legislature amended the program again in 2008, requiring, rather than allowing, DSS to apply for federal approval of its MFP protocol. (DSS subsequently applied for and received federal approval. ) And it increased the number of program slots from 700 to 5,000 (PA 08-180).

PA 08-180 also required the DSS commissioner to develop a plan to establish and administer a similar home- and community-based services project for adults who may not meet the MFP six-month institutionalization requirement. And it established a separate, nonlapsing General Fund account to hold the enhanced federal matching funds the state receives for MFP. It specified the uses of account funds and required a report on expenditures from it.

Limited English Proficiency Interpreters – Federal Civil Rights Act

The federal Civil Rights Act prohibits discrimination based on race, color, or national origin. The courts and the U. S. Department of Health and Human Services have applied this law to protect national origin minorities who do not speak English well. The Office of Civil Rights has issued guidance on this law that essentially says health care providers caring for Medicaid clients must take reasonable steps to provide meaningful access to care. Providers have done so by relying on “language lines” that they can call, in which three-way calls (doctor, patient, and interpreter) are available when a Medicaid recipient with a language barrier needs medical care. Medicaid recipients, including HUSKY clients, using federally qualified health centers for their care are as likely to get in-person interpreter services.

Bottle Escheats

By law, Connecticut's deposit system currently works as follows:

1. a retailer (dealer) pays beverage container distributors 5 for each beer or carbonated soft drink container that the distributors deliver;

2. the consumer pays the dealer 5 for each beer or carbonated soft drink container that he or she purchases from the dealer;

3. the dealer or redemption center pays the consumer 5 for each container that he or she returns;

4. the distributor reimburses the dealer or redemption center 5 for each beer and carbonated soft drink container returned, plus a handling fee of 1. 5 on each beer container and 2 on each carbonated soft drink container; and

5. the distributor keeps the 5 for each unclaimed deposit.

The law defines a “distributor” as anyone who sells beverage containers to a state dealer, including (1) any manufacturer who also sells and (2) a dealer who sells beverage containers on which no deposit has been collected before retail sale (CGS 22a-243).