OLR Bill Analysis

HB 5095 (as amended by House “A”)*

AN ACT CONCERNING DEFICIT MITIGATION FOR THE FISCAL YEAR ENDING JUNE 30, 2009.

SUMMARY:

This bill makes various changes to address the projected FY 09 deficit. A section-by-section summary follows.

EFFECTIVE DATE: Upon passage, unless otherwise specified.

*House Amendment “A”:

§§ 1 & 2 – LONG TERM CARE REINVESTMENT ACCOUNT

To the extent permitted by federal law, the bill postpones until July 1, 2009 the establishment of a separate, nonlapsing Long Term Care Reinvestment account in the General Fund to hold the enhanced federal matching funds the state receives for the Money Follows the Person demonstration project. The bill also postpones, from January 1, 2009 to January 1, 2010, the date by which the Department of Social Services (DSS) commissioner must report on expenditures from the account to the Human Services and Appropriations committees.

§ 3 & 25 – FY 07 SURPLUS FUNDS CARRY FORWARDS

The bill reduces amounts carried forward from the FY 07 surplus and available for FY 09 by $ 3,050,000 as shown in Table 1.

Table 1: Reduced Carryforwards for FY 09

§ 4 – REDUCED FY 09 GENERAL FUND APPROPRIATIONS

The bill reduces FY 09 General Fund appropriations for specified agencies and purposes by a total of $ 4,455,446. Individual agency reductions are listed in the bill and the fiscal note.

§§ 5-14, 17-21, & 24 – TRANSFERS TO FY 09 GENERAL FUND REVENUE

For FY 09, the bill transfers money from various special funds and accounts to the General Fund and bars certain General Fund transfers to special funds as shown in Table 2 below.

Table 2: Transfers from Special Funds and Accounts to the General Fund

*The bill both transfers $ 5 million of the Fuel Oil Conservation account's existing balance to the General Fund and bars an FY 09 transfer of up to $ 5 million from the General Fund to the account.

**The bill eliminates a $ 3 million transfer from the General Fund to the Underground Storage Tank and Petroleum Clean-Up account from petroleum products gross earnings tax payments due on January 31, 2009.

§ 15 – BOTTLE DEPOSIT ESCHEATS

The law requires a distributor or manufacturer that sells beverage containers and collects deposits on them under the state's bottle deposit law (“deposit initiators”) to place the refund value of the containers in a separate, interest-bearing account. Current law requires deposit initiators to make these deposits within three days of the beverages' sale. The bill instead requires deposit initiators to make the deposits within one month of a sale. By law, when a consumer returns the container, the deposit initiator must refund the deposit from this special account. Initiators must file quarterly reports on the accounts with the Department of Environmental Protection (DEP).

This bill requires each deposit initiator to pay the outstanding balance in its account at the end of every quarter to the DEP commissioner. Deposit initiators must pay the initial payment by April 30, 2009 (for the period from December 1, 2008 to March 3, 2009). They must make subsequent payments within one month after the end of each quarter. The commissioner must deposit the money in the General Fund. If a deposit initiator does not have enough money in its account in any quarter to pay all refunds, it must subtract the deficiency from the next quarterly payment until the deficiency is completely subtracted.

If a deposit initiator fails to make the required payments within seven days of the due date, the bill imposes a penalty of 10% of the amount due. An additional penalty of 1. 5% of the amount due is also applied every month, or the corresponding fraction depending on when the deposit initiator pays. A deposit initiator may not pay these penalties from its special deposit account.

EFFECTIVE DATE: April 1, 2009 and applicable to periods starting on or after December 1, 2008.

§ 16 – REVENUE ACCRUAL - BOTTLE ESCHEATS

Starting with FY 09, the bill authorizes the comptroller to count (“accrue”) any unclaimed bottled deposit payments (see §15 above) the state receives within five business days after July 31 each year as revenue for the proceeding fiscal year.

EFFECTIVE DATE: April 1, 2009

§§ 22 & 23 – TRANSFERS TO THE TRANSPORTATION FUND

For FY 09, the bill transfers $ 1,166,440 from the Local Emergency Relief account and $ 287,000 from the Insurance Recoveries account to the Transportation Fund.

§ 26 – CONSULTING SERVICES REDUCTION

The bill requires the governor to direct executive branch agencies to reduce personal services and consulting agreements for FY 09 by $ 2 million. The Office of Policy and Management (OPM) secretary must submit a report to the Appropriations and Government Administration and Elections committees by March 15, 2009, identifying at least $ 8 million in additional reductions in FY 09 executive branch agency personal services and consulting agreements. The report must identify (1) all personal services and consulting agreements to be affected for each executive branch agency, (2) the reduction for each affected agreement, and (3) any penalties that might result for any agreement included in the report.

§ 27 – RIVERVIEW HOSPITAL SERVICE PLAN

The bill requires the Department of Children and Families (DCF) commissioner, in consultation with the social services commissioner, to create a plan to establish services for children and youth needing residential treatment who would normally be placed in out-of-state facilities. The DCF commissioner must submit the plan to the Human Services and Appropriations committees by March 1, 2009. The plan must (1) use existing state facilities when clinically appropriate and feasible; (2) address available licensed residential treatment capacity; and (3) delineate the cost, savings, and feasibility of implementing the plan by July 1, 2009, or as soon as practicable after that date.

§§ 28, 34 – 2008 ECONOMIC STIMULUS PAYMENTS

The bill exempts any payment an individual received from the federal Economic Stimulus Act of 2008 from any income calculation used to determine eligibility for, or the benefit received under, a wholly or partially state-funded state or local benefit, property tax exemption, property tax credit, or rental rebate program or any optional municipal property tax relief program. It also excludes such payments from being counted as resources in determining eligibility for benefits or services in the month the payment was received or the following two months.

The bill repeals an existing, narrower law (PA 08-68, § 2) that prohibits the Department of Social Services (DSS), to the extent permitted by federal law, from counting a tax refund received under the federal Economic Stimulus Act of 2008 (P. L. 110-185) as income or resources when determining eligibility for, or amounts of services and benefits under, any DSS-operated need-based program. This prohibition applies to the month the tax refund is received and the following two months.

§§ 30 & 31 – HOUSING FUNDS TRANSFERS

The bill transfers funds from an FY 09 appropriation to the Department of Economic and Community Development deferred maintenance for housing. It redirects $ 1,704,890 of the appropriates to tax abatements for low- and moderate-income housing and $ 2,204,000 to payments in lieu of taxes for such housing on property owned or leased by housing authorities or the Connecticut Housing Finance Authority.

§ 32 – CHARTER OAK HEALTH PLAN FUNDING TRANSFER

The bill redirects to the General Fund $ 3. 7 million previously designated for the Charter Oak Health Plan. The funds are part of an $ 11 million transfer the 2007 budget act made from the Tobacco and Health Trust Fund to DSS for the Charter Oak Health Plan for FY 09. The remaining $ 7. 3 million continues to be directed to the plan.

§ 33 – HEALTH COVERAGE FOR CUSTODIANS

The bill appropriates $ 274,000 to the Department of Administrative Services for Other Expenses for FY 09. The department must distribute the funds to state agencies that contract for custodial services and whose contractors employ workers who (1) are covered by the state's law setting standard wage rates for service workers and (2) receive health care benefits. Those agencies must use the money to help cover the cost of the benefits. The assistance is additional to other amounts the state must pay under the standard wage rate to cover health care benefits for the workers and their dependents.

§ 34 – ENERGY CONTINGENCY REPEALED

The bill eliminates a $ 35 million appropriation from excess FY 08 surplus funds by PA 08-1, August Special Session, and deposited in the Energy Contingency Account.

§ 501 – GOVERNOR'S FUND TRANSFER AUTHORITY

For FY 09 only, the bill allows the governor, at an agency's request, to transfer money between budgeted agencies if the agency does not have enough money to achieve the lapse required under a provision of PA 08-1, November 24^th Special Session. Current law permits the governor to make transfers only within budgeted agencies. The November act (§ 4) required the governor to direct agencies to lapse no more than an aggregate of $ 1. 5 million in additional funds from Other Expense accounts in FY 09. This bill allows the governor to transfer the amount needed to achieve the directed lapse. She must have Finance Advisory Committee (FAC) approval for (1) transfers over $ 50,000 or 10% of an appropriation, whichever is less or (2) $ 1. 5 million dollars in total.

As under current law, the Appropriations Committee through the Office of Fiscal Analysis must be sent notice of any such transfer.