OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www. cga. ct. gov/ofa

HB-5545

AN ACT CONCERNING DEFICIT MITIGATION FOR THE FISCAL YEAR ENDING JUNE 30, 2010.

As Amended by House "A" (LCO 3392)

OFA Fiscal Note

State Impact: See Below

Municipal Impact: See Below

Explanation

The bill makes modifications and revenue adjustments to the FY 10 and FY 11 budget. The various changes will result in a $323. 2 million net reduction in the anticipated FY 10 General Fund deficit and a net increase of $34. 2 million to the FY 11 General Fund deficit. The table below provides an overview:

General Fund

FY 10

FY 11

Expenditure Savings (Cost):

   

Net Changes to Appropriations

$77,597,665

$120,274,389

Other Expenditure Savings/(Cost)

($12,882,915)

($95,400,000)

Subtotal Expenditure Savings/(Cost)

$64,714,750

$24,874,389

Increased/(Decrease) Revenue:

   

Transfer from Funds/Accounts

$53,112,829

$33,600,000

Revenue Change due to Changes in Expenditures

($43,404,576)

$146,110,500

Other Revenue

$248,774,880

($238,774,880)

Subtotal Increased/(Decrease) Revenue

$258,483,133

($59,064,380)

     

Total GF Impact

$323,197,883

($34,189,991)

Sections 1 and 2 result in a net appropriations reduction of $77. 6 million in FY 10 and $120. 3 million in FY 11 in various agencies and accounts. The table below identifies the various programmatic impacts resulting from this section.

Agency

Reduction to Appropriations Includes:

FY 10

FY 11

CCT

Reduce Culture and Tourism and Arts and Basic Cultural Resources Grants by 5%

170,781

 

CCT

Reduce Line-Item Grants by 5%

437,836

 

CEQ

Convert Printing of Annual Report to Online Format

 

8,898

CFPC

Reduce CFPC grant payments

75,000

300,000

DAG

Reduce funding for CT Grown Product Promotion

 

5,000

DAG

Reduce funding for Fair Testing

 

1,000

DAS

Eliminate Correctional Ombudsman

 

200,000

DAS

Eliminate/Remove Vacant Positions

 

260,389

DAS

Reduce Various Accounts

 

84,496

DCF

Close 1 Therapeutic Group Home

 

917,614

DCF

Improved Management of Wrap-around Services

 

1,000,000

DCF

Intensive Safety Planning; Reconnecting Families

 

1,000,000

DCF

Reduce Juvenile Outreach, Tracking and Reunification Capacity

 

2,000,000

DCF

Restructure Safe Homes

 

1,000,000

DCF

Restructure Therapeutic Childcare Purchasing

 

521,619

DCF

Safe Harbor Respite Home

 

375,000

DCF

Suspend Life Long Family Ties Program

 

591,550

DCJ

Eliminate/Remove Vacant Positions

 

346,796

DCP

Eliminate/Remove Vacant Positions

 

141,243

DDS

Adjust Voluntary Services Program Funding to Reflect Caseload Decreases

 

1,696,390

DDS

Consolidation (close 2 bldgs) at Southbury Training School

 

1,190,748

DDS

Redirect Birth to Three Provider Incentive Payments

 

251,946

DDS

Reduce Overtime in DDS Operated Settings

 

2,386,800

DDS

Reduce Personal Services Through Attrition

 

3,211,338

DECD

Adjust Funding for Development Research and Economic Assistance

 

59,375

DECD

Adjust Funding for the CCAT Manufacturing Supply Chain Program

80,000

 

DECD

Suspend Entrepreneurial Centers Funding

 

128,606

DECD

Suspend the CCAT Energy Application Research Program

45,000

95,000

DEP

Reduce Councils, Districts & ERT's Land Use Assistance

83,333

250,000

DEP

Reduce DEP GF Funding for Harkness to reflect shifting to non-appropriated account

365,000

 

DEP

Reduce Reimbursement for Underground Storage Tank Program

1,500,000

1,785,640

DHE

Recalibrate Capitol Scholarship Program based on Prior Year Funding Availability

200,000

 

DHE

Require UCONN and CCSU to Fund CommPACT Schools Program

150,000

 

DHE

Suspend Funding for Americorps

 

500,000

DMHAS

Eliminate Administrative Functions at Eastern Region Service Center

 

280,000

DMHAS

Eliminate Co-Occuring Methadone Maintenance Disorder Screenings

 

251,000

DMHAS

Reduce Funding for Personal Services Due to Hiring Initiative

 

1,000,000

DMHAS

Reduce Funding for Pharmacy Costs

 

200,000

DMHAS

Reduce Funding for Positions in Specialized Services

 

2,500,000

DMHAS

Reduce On-Call Beeper Coverage

 

120,000

DMHAS

Suspend Funding for Yale Child Study Contract for Parent Training

 

124,924

DOC

Reduce Funding for Inmate Medical Services

 

2,000,000

DOC

Reduce Funding for Mental Health Alternative Incarceration Centers

 

200,000

DOIT

Eliminate/Remove Vacant Positions

 

719,214

DOIT

Reduce Internet, E-Mail and Information Services

 

1,270,917

DOL

Reduce Funding for Individual Development Accounts (IDAs)

 

50,000

DPS

Eliminate Meal Money for nonunion sworn personnel

 

192,837

DPS

Eliminate Payments to Civil Air Patrol

 

33,174

DPS

Reassign 2 Troopers Serving as Pilots or Spotters

 

100,000

DPS

Redeploy 21 School Resource Officers

 

1,050,000

DPW

Reduce Personal Services

 

100,000

DRS

Reduce Operational Expenses

 

400,000

DRS

Reduce Out of State Travel

 

150,000

DSR

Reduce Operational Expenses

 

130,145

DSR

Reduce Oversight of Non-Profits

 

375,000

DSS

Align HUSKY B Co-Pay Requirements with Co-Pays Charged in the State Employee Health Plans

78,000

710,000

DSS

Conform Payment of SSI Attorney Fees to Allowable Federal Law

 

200,000

DSS

Defer MCO Payment in FY 2010 & FY 2011

67,000,000

 

DSS

Delay Implementation of HIV/AIDS Waiver

 

1,000,000

DSS

Limit Maximum Allowable Cost Reimbursement for Certain Drugs

 

1,100,000

DSS

Limit Premium Assistance under the Charter Oak Plan

300,000

5,800,000

DSS

Pharmacy Savings Card Settlement

 

15,580,000

DSS

Eliminate Phase-In of Increased Premiums under Charter Oak Health Plan

1,000,000

1,400,000

DSS

Remove Mary Wade Funding

 

50,000

DSS

Restrict Vision Services for Adults under Medicaid

 

2,300,000

DSS

Revert to Original Payment Structure for Outstationed Eligibility Workers

 

272,611

DSS

Suspend Balance of Funds for HUSKY Outreach

 

335,565

DSS

Suspend Coverage of Most Over-the-Counter Drugs

744,700

7,670,000

DSS

Suspend Elderly Housing Support Services Grant

200,000

200,000

DSS

Suspend Funding for Elderly Services Transportation Initiative, Advocacy

 

175,000

DSS

Update Medical Necessity and Appropriateness Definition under Medicaid

1,491,300

4,500,000

DSS

Use Federal Funds to Support Elderly Nutrition Expansion

 

150,000

Judicial

Eliminate/Remove Vacant Positions

 

2,000,000

MIL

Reduce Overtime

 

25,000

OAG

Eliminate/Remove Vacant Positions

 

750,987

OLM

Additional Reductions

 

275,000

OLM

Put bills on-line in committee & on the floor (includes loose bills, booklets, list of bills, files & engross)

 

411,000

OPM

Adjust Funding for PILOT MME Grant

 

4,453,016

OPM

Reallocate Energy Management Unit to PUC Fund

 

773,443

OPM

Reallocate Long Term Care Program to Insurance Fund

 

223,669

OSC

Eliminate/Remove Vacant Positions

 

421,170

OSC

Reduce Funding for Interstate Environmental Commission

 

48,782

OSC - Fringe

Additional Reimbursement Due to Changes in Payment Structure for Outstationed Eligibility Workers

 

109,000

OSC - Fringe

Reduce Funding to Reflect Anticipated Expenditure Levels - Alternative Retirement Program

 

5,000,000

OTG

Eliminate Positions

 

166,141

OTLG

Eliminate a Temporary Position

 

7,000

OTT

Expenditure Update - Debt Service

 

8,407,032

OTT

Reduce Debt Service to Reflect Lower Projected Interest Rates

 

7,000,000

OTT

Reduce Funding for Cash Flow Borrowing

 

5,300,000

OTT

Suspend the Child Care Facilities Loan Fund Program for New Projects - debt service

3,500,000

3,500,000

OWC

Adjust Nanotechnology Study Funding

 

50,000

OWC

Adjust Small Business Innovation Research Matching Grant Funding

 

37,500

Public Defender

Reduce Funding for Non-Contractual Special Public Defenders

 

137,488

Public Defender

Reduce Funding for Training and Education

 

30,009

SDE

Best Practices

 

475,000

SDE

Eliminate Non-Formula Charter School Increase

 

70,000

SDE

Reduce Bilingual Education

 

212,903

SDE

Reduce Early Childhood Advisory Cabinet

 

71,250

SDE

Reduce Funding for Pupils In Private School

 

477,500

SDE

Reduce Funding for Regional Education Service Centers

 

368,730

SDE

Reduce Non-Sheff Related Interdistrict Cooperative Programs

 

3,000,000

SDE

Suspend Connecticut Pre-Engineering Subsidy

 

87,500

SDE

Suspend Funding for New Early Childhood Planning, Outreach and Coordination Program

 

400,000

SDE

Suspend Funding for Readers as Leaders Program

 

60,000

SDE

Reduce Funding for the LPN Program

 

2,700,000

SOTS

Eliminate Vacant Positions to Obtain Savings

 

221,000

various

De-appropriate General Fund Equipment Funding

11,901

4,434

Elections, FOI, Ethics

De-appropriate Funds to Watchdog Agencies in Lieu of Rescissions

164,814

 
 

Subtotal - Reduction to Appropriations:

$77,597,665

$120,274,389

Section 3 appropriates $3,349,982 in FY 11 from the Banking Fund for the Foreclosure Mediation Program in the Judicial Department.

Section 4(a) transfers $5 million in FY 10 from the Tobacco and Health Trust Fund (THTF). The FY 10 could be made following this transfer, THTF Board disbursements could be made following a transfer, FY 11 disbursements would be virtually eliminated. As of 3/2/10, the balance in the THTF was approximately $5. 3 million. Approximately $300,000 would remain in the THTF after the transfer. Note: At any point in time, the Fund balance includes significant dollars for prior year obligations not yet paid. Also, the balance does not include the annual deposit to the Fund (typically occurring in April) nor future interest earnings.

Section 4(b) transfers $3. 5 million in FY 10 from the Biomedical Research Trust Fund to the General Fund. This will not affect FY 10 grants. The number and/or size of future year awards from the Fund would be diminished by the transfer, which leaves approximately $5 million in the Fund based on the balance as of 3/2/10. Note: At any point in time, the Fund balance includes significant dollars for prior year obligations not yet paid. Also, the balance does not include the annual deposit to the Fund (typically occuring in April) nor future interest earnings.

Section 4(c) transfers, effective January 1, 2011, $10 million from the Citizens' Election Fund (CEF) to the General Fund. The CEF presently has a balance of $43 million with a scheduled transfer into the Fund of $11 million during FY 11 ($54 million total). It is anticipated that these funds will be sufficient to cover the cost of providing grants for the November 2010 election. It is estimated that the cost of the November 2010 election will range from $32-$48 million, depending upon participation levels in the Citizens' Election Program.

Section 4(d) transfers $2. 3 million from the Public, Educational and Governmental Programming Fund (PEG Fund). The PEG Fund provides grants to local community access television groups and boards of education for the purpose of installing public access television. The current balance of the Fund is approximately $4. 3 million. This reduction would delay grant approvals.

Section 4(e) transfers $1 million from the Emissions Enterprise Fund to the General Fund in FY 10. This is not anticipated to impact the Emissions Program.

Section 4(f) sweeps the remaining balances in the Department of Environmental Protection's (DEP) Environmental Conservation Fund, Environmental Quality Fund, and Clean Air Account for the fiscal year ending June 30, 2010 in FY 10. A portion of the Conservation Fund ($1 million) is transferred to the maintenance, repair and improvement account established in the bill. The remaining balance swept from the DEP funds and accounts into the General Fund is $10. 69 million.

Section 4(g) sweeps $5 million from the Community Investment Account into the General Fund in FY 10. The balance in the community investment act is approximately $29. 1 million as of 3/1/10. The community investment act is funded by a $40 land recording fee and funds affordable housing through the Connecticut Housing Finance Authority (CHFA), open space matching grants through the Department of Environmental Protection (DEP), historic preservation programs through the Connecticut Commission on Culture and Tourism (CCT), and various agricultural programs through the Department of Agriculture.

Section 4(h) sweeps the remaining balance of $222,411 in the Federal Emergency Management Agency (FEMA) account in the Office of Policy and Management (OPM) and credits it to the General Fund for FY 10. Prior to the creation of the Department of Emergency and Homeland Services, OPM received FEMA funds for disasters in Connecticut, and administered those funds on behalf of the federal government. Federal rules permit OPM to use a portion of the funds, at any point in time, for the administrative costs incurred by OPM.

Section 4(i) reduces the principal of the Department of Correction's Commissary Fund account by $1. 2 million and transfers an equivalent amount to the General Fund in FY 10. The projected 6/30/10 balance in the account will correspondingly be reduced from approximately $2. 6 million to $1. 4 million.

Section 4(j) transfers the unexpended balance of funds in the Commercial Recording Division account to the General Fund. The $3. 2 million unexpended balance represents the remaining balance of the account before it became an appropriated account (previously it was a separate nonlasping account within the General Fund).

Section 5 reduces $1 million of the funds carried forward under the Office of Policy and Management (OPM) for Operation Fuel for those between 151%-200% of poverty, and credits it to the resources of the General Fund for FY 10.

Section 6 transfers $15 million from the Banking Fund to the General Fund in FY 10 and transfers an additional $11. 6 million to the General Fund in FY 11.

Section 7 eliminates the $179,228 that was carried forward into FY 10 in the Teachers' Retirement Board for Retiree Health Service Cost. Since the biennial budget suspended the state's contribution for retiree health service costs for FY 10 and FY 11, these funds were to lapse.

Section 8 increases the co-payments under the HUSKY Plan, Part B to those in effect for state employees. This will save $78,000 in FY 10 and $710,000 in FY 11. These savings are reflected in section 1. Due to the 65% federal reimbursement available under SCHIP, this change will result in a net state savings of $26,000 in FY 10 and $250,000 annually thereafter.

Section 9 eliminates the requirement that the state pay certain attorney fees for individuals appealing Supplemental Security Income eligibility determinations. This change is expected to save $200,000 in FY 11. This savings is reflected in section 1.

Section 10 delays the April 2010 HUSKY Managed Care Organization payment until May 2010. This results in a one time savings of $67 million. These savings are reflected in section 1. Due to the 61. 5% federal reimbursement currently available under the Medicaid program, this change will result in a net state savings of $25. 7 million in FY 10.

Section 11 eliminates premium assistance under the Charter Oak program for new clients who enroll after March 31, 2010. This is expected to save $300,000 in FY 10 and $5. 8 million in FY 11. These savings are reflected in section 1.

Section 12 eliminates the coverage of over the counter medications under DSS medical assistance programs. This change is expected to save $744,700 in FY 10 and $7. 67 million in FY 11. These savings are reflected in section 1. Due to the 61. 5% federal reimbursement currently available under the Medicaid program, this change will result in a net state savings of $320,000 in FY 10 and $3. 3 million in FY 11.

Section 13 allows DSS to implement certain policies while in the process of adopting regulations. This provision will allow DSS to attain the savings assumed with these policies.

Section 14 enables the Department of Administrative Services (DAS) and state agencies to utilize existing cooperative purchasing contracts if any such contracts would achieve savings for state agencies and municipalities that purchase off of DAS contracts. As a result it is anticipated that the state will achieve savings of $50,000 in FY 10 and $2. 4 million in FY 11. 1

Section 15 reduces the transfer from the General Fund (GF) to the Special Transportation (STF) Fund by $10 million in FY 10 and by $1,950,000 in FY 11. For FY 10 the transfer from the GF to the STF is reduced from $81,250,000 to $71,250,000. For FY 11 the transfer is reduced from $126,000,000 to $124,050,000.

Section 16 transfers an additional $5 million and $10 million from the reserves of the University of Connecticut to the General Fund for FY 10 and FY 11, respectively. Section 74 of PA 09-3 had previously transferred $3 million and $5 million, respectively. The total transfer of reserves is $8 million in FY 10 and $15 million in FY 11.

Section 16 also transfers an additional $1 million and $2 million from the reserves of the Connecticut State University to the General Fund for FY 10 and FY 11, respectively. Section 74 of PA 09-3 had previously transferred $1 million and $3 million, respectively. The total transfer of reserves is $2 million in FY 10 and $5 million in FY 11.

Section 17 increases the transfer from the Budget Reserve Fund (BRF) to the General Fund by $238,774,880 in FY 10 and reduces the FY 11 BRF transfer by $238,774,880.

Section 18 eliminates meal allowances for non-unionized sworn officers in the Department of Public Safety. This savings of $192,837 in FY 11 is reflected in Section 1. Currently there are forty-nine non-unionized officers, all of whom are in managerial positions.

Section 19 establishes a separate, nonlapsing account within the General Fund known as the maintenance, repair and improvement account. This would result in an annualized revenue loss to the General Fund of approximately $736,000. The revenue loss would be offset by savings of $365,000 reflected in section 1.

Section 20 transfers $1 million from the Conservation Fund to the maintenance, repair and improvement account established in the bill for the fiscal year ending June 30, 2010. This does not impact the General Fund.

Section 21 mandates a reporting requirement that would not result in additional costs to the Department of Motor Vehicles because it already reports on its budget and programs to the Appropriations Committee on an annual basis.

Sections 22, 27 and 75 alter the DSS definition of “medically necessary” and “medical necessity”. It is uncertain how the definitional changes will alter the future prescribing patterns for benefits under the Medicaid program. Therefore, the impact of these changes is uncertain. Savings are reflected in section 1.

Section 23 requires DSS to amend the state Medicaid plan to extend Medicaid benefits to the current State Administered General Assistance (SAGA) population as of April 1, 2010. This change will require additional expenditures of $15 million in FY 10 and $97. 8 million in FY 11 to equalize the benefit package and rate structure. However, by making all SAGA expenditures eligible for federal reimbursement, the state would realize a gain in federal revenue of $165. 8 million in FY 11. Therefore, the net state impact would be a savings of $68 million in FY 11.

Section 24 requires that any Medicaid provider bill DSS at the lowest amount accepted from any member of the general public for a similar good or service. This "Most Favored Nation" pricing requirement is expected to result in FY 11 Medicaid savings of $15. 6 million. These savings are reflected in section 1. Due to the 61. 5% federal reimbursement currently available under the Medicaid program, this change will result in a net state savings of $6 million in FY 11.

Section 25 requires DSS to amend the state Medicaid plan to cover treatment of tuberculosis. This change will enable the state to claim up to $380,000 annually in federal revenue for tuberculosis treatments currently paid for under the Department of Public Health. This revenue is already assumed in the base estimates for the biennial budget.

Section 26 shall result in a savings of $37,857 due to a reduction in carry forward funding for the E-licensing permit.

Section 28 limits vision benefits under DSS programs to no more than one pair of eyeglasses per year. This change is expected to save $2. 3 million in FY 11. These savings are reflected in section 1. Due to the 61. 5% federal reimbursement currently available under the Medicaid program, this will result in a net state savings of $885,500 in FY 11.

Section 29 re-establishes the licensed practical nurse program at the regional vocational-technical school system. Savings of $2. 7 million is included in Section 1 to implement this provision. The re-established program will be run at six locations geographically distributed throughout the state. This section allows for tuition fees to be increased as needed to supplement the costs of operating the program.

Section 30 carries forward the unexpended balance, estimated to be $320,000, in the Department of Economic and Community Development for CCAT-CT Manufacturing Supply Chain to FY 11.

Section 31 transfers $850,000 from the Small Business Incubator account, which is a separate non-lapsing account in the General Fund, and credits it to the resources of the General Fund for FY 10.

Section 32 requires, by 4/15/11, the Department of Children and Families, in consultation with the Child Advocate, to submit a plan to various committees concerning the future of Riverview Hospital for Children and Youth. The agency can do so without incurring a fiscal impact.

Section 33 requires recipients of the Kirklyn M. Kerr grant program to practice veterinary medicine in Connecticut for at least five years. If participants do not practice veterinary medicine in the state for a period of five years, they will be required to repay the grant. This could result in a revenue gain to the state in the out-years, as some participants may have to repay portions of the grant. It is anticipated that the amount of revenue collected annually would be minimal, as no more than five students are accepted into the program on an annual basis.

Sections 34 - 68, 70 - 72, 74 and 15 increase various Department of Motor Vehicle (DMV) fines, rolls back various Department of Environmental Protection (DEP) fees, and adjusts the transfer from the General Fund to the Special Transportation Fund. This results in no fiscal impact to the state, as detailed in the table below:

General Fund

$(in millions)

DEP Fee Changes

(5. 35)

DMV Fine Changes

3. 40

Reduce GF to TF Transfer

1. 95

Net Impact

0. 00

Transportation Fund

$(in millions)

DMV Fine Changes

1. 95

Reduce GF to TF Transfer

(1. 95)

Net Impact

0. 00

Section 69 makes technical changes to ensure that the Department of Environmental Protection continues to receive approximately $7. 0 million in federal funds from the Wildlife Restoration Act, Sport Fish Restoration Act, and State Wildlife Grants. In FY 10, Conservation Fund costs were shifted to the General Fund. The agency must report that revenues generated by the sale of fish and wildlife licenses, permits, tags, and stamps are used exclusively in support of fish and wildlife programs managed by the department's Bureau of Natural Resources.

Section 73 recognizes the lapse of $380,000 for the funds carried forward in DECD, and $397,602 for the funds carried forward in OPM, for the HOME CT housing incentive zone program. These funds totaling $777,607 will be credited to the resources of the General Fund for FY 10.

House “A” eliminated the underlying bill which had no fiscal impact and replaced it with the changes resulting in the fiscal impacts described above.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

1 It should be noted that DAS is already working to negotiate entrance into the Western States Contracting Alliance (WSCA) contract in preparation for the contract expiration in November, 2010.