OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

EMERGENCY CERTIFICATION

SB-492

AN ACT CONCERNING DEFICIT MITIGATION FOR THE BIENNIUM ENDING JUNE 30, 2011.

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 $384. 3 million net reduction in the anticipated FY 10 General Fund deficit and a net reduction of $34. 8 million to the FY 11 General Fund deficit. The table below provides an overview:

All Appropriated Funds

FY 10

FY 11

Expenditure Savings (Cost):

   

Net Changes to Appropriations

$87,775,972

$61,818,738

Other Expenditure Savings/(Cost)

(13,432,782)

(280,494,247)

Subtotal Expenditure Savings/(Cost)

74,343,190

(218,675,509)

Increased/(Decrease) Revenue:

   

Transfer from Funds/Accounts

39,514,124

12,000,000

Revenue Change due to Changes in Expenditures

(10,946,576)

422,890,000

Other Revenue

281,358,153

(181,435,820)

Subtotal Increased/(Decrease) Revenue

309,925,701

253,454,180

     

Total FY 10 GF Impact

$384,268,891

$34,778,671

Sections 1-8 reduces appropriations by $87. 8 million in FY 10 and $61. 8 in FY 11 in various funds and accounts. The table below identifies the various programmatic impacts resulting from this section.

Agency

Reduction to Appropriations Includes:

FY 10

FY 11

 

General Fund:

   

Auditors

De-appropriate Funding in Lieu of Rescissions

603,355

-

CCT

Reduce Culture and Tourism and Arts and Basic Cultural Resources Grants by 10%

170,781

-

CCT

Reduce Line-Item Grants by 10%

437,836

-

CCT

Suspend Funding for the Film Training Program for One Year

61,665

250,000

CFPC

Reduce CFPC grant payments

75,000

300,000

DAG

Reduce funding for CT Grown Product Promotion

1,667

5,000

DAG

Reduce funding for Fair Testing

333

1,000

DCF

Close 1 Therapeutic Group Home

229,403

917,614

DCF

Improved Management of Wrap-around Services

137,500

1,000,000

DCF

Initiate Proposed FY 11 Contract Suspensions in FY 10

1,124,614

-

DCF

Intensive Safety Planning; Reconnecting Families

166,000

1,000,000

DCF

Restructure Safe Homes

-

1,000,000

DCF

Restructure Therapeutic Childcare Purchasing

86,936

521,619

DCF

Safe Harbor Respite Home

-

375,000

DCF

Suspend New Funding for Care Coordination

120,000

DDS

Consolidation(close 2 bldgs) at Southbury Training School

297,687

1,190,748

DEP

Reduce Councils, Districts & ERT's Land Use Assistance

83,333

250,000

DEP

Reduce DEP GF funding to reflect shifting to non-approp account

365,000

DEP

Reduce Reimbursement for Underground Storage Tank Program

1,500,000

-

DHE

Suspend Funding for AmeriCorps

175,000

-

DHE

Suspend Funding for Education and Health Initiatives

235,125

-

DHE

Suspend Funding for Washington Center

1,187

-

DMHAS

Delay Young Adult Placements

2,561,250

10,245,000

DMHAS

Eliminate Administrative Functions at Eastern Region Service Center

70,000

280,000

DMHAS

Eliminate Co-Occurring Methadone Maintenance Disorder Screenings

62,750

251,000

DMHAS

Reduce On-Call Beeper Coverage

30,000

120,000

OTT

Debt Service - delay supportive housing New Starts until FY 11

1,000,000

-

DMHAS

DMHAS - delay supportive housing

510,000

DSS

DSS - delay supportive housing

264,000

DOL

Suspend Funding for Individual Development Accounts (IDAs)

-

100,000

DPS

Eliminate Meal Money for nonunion sworn personnel

48,209

192,837

DPS

Eliminate Payments to Civil Air Patrol

-

34,920

DRS

Reduce Out of State Travel

 -

150,000

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

120,000

710,000

DSS

Conform Payment of SSI Attorney Fees to Allowable Federal Law

50,000

200,000

DSS

Defer MCO Payment in FY 2010 & FY 2011

67,000,000

DSS

Limit Premium Assistance under the Charter Oak Plan

300,000

5,800,000

DSS

Pharmacy Savings Card Settlement

-

15,580,000

DSS

Suspend Balance of Funds for HUSKY Outreach

176,613

-

DSS

Suspend Coverage of Most Over-the-Counter Drugs

1,280,000

7,670,000

DSS

Suspend Elderly Housing Support Services Grant

200,000

200,000

DSS

Suspend Funding for Children's Law Center, Inc.

37,500

-

DSS

Suspend New Funding for Citizenship Training

25,000

-

DSS

Update Medical Necessity and Appropriateness Definition under Medicaid

2,250,000

4,500,000

DSS/CTF

DSS/CTF-Safe Harbor Respite Related Services

-

95,000

OSC

Reduce Funding for Interstate Environmental Commission

19,513

-

OTT

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

3,500,000

3,500,000

SDE

Best Practices

-

475,000

SDE

Reduce Interdistrict Cooperative Funding

-

1,000,000

SDE

Suspend Connecticut Pre-Engineering Subsidy

15,000

-

SDE

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

400,000

-

SDE

Suspend Funding for Readers as Leaders Program

57,000

60,000

SDE

Youth Service Bureau Enhancements

176,000

625,000

various

De-appropriate General Fund Equipment Funding

11,901

-

Ethics, Elections, FOI

De-appropriate Funds to Watchdog Agencies in Lieu of Rescissions

164,814

-

OLM

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

194,000

411,000

DSS

Limit Maximum Allowable Cost Reimbursement for Certain Drugs

280,000

-

 

Subtotal General Fund

86,675,972 

59,385,738 

 

 

 

 

 

Other Appropriated Funds:  

 

 

DOI

Reduce Fringe Benefits

-

186,000

DOI

Reduce Other Expenses

-

477,000

DOI

Reduce Personal Services

-

300,000

DPUC

Reduce Fringe Benefits

500,000

500,000

DPUC

Reduce Personal Services

600,000

600,000

DMV

Regionalize DMV

-

370,000

 

Subtotal Other Appropriated Funds

1,100,000

2,433,000

 

All Appropriated Funds

87,775,972

61,818,738

Section 9(a) transfers $5 million in FY 10 from the Tobacco and Health Trust Fund (THTF). The THTF Board disbursements could be made following a transfer of $5 million from the THTF to the General Fund; 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 Fund (which occurs around April) nor future interest earnings.

Section 9(b) transfers $3. 5 million from the Biomedical Research Trust Fund to the General Fund. This will not affect FY 10 grantees. 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 Fund (which occurs around April) nor future interest earnings.

Section 9(c) transfers $6 million from the Citizens' Election Fund (CEF) to the General Fund. The transfer increases the likelihood that the CEF will have insufficient funds to cover the cost of grants for the November 2010 election. In the event that overall funding is deemed to be insufficient, grants to candidates would be reduced.

The CEF has a balance of $43 million and would be left with a balance of $37 million for the rest of FY 10 as a consequence of the $6 million transfer. The CEF is scheduled to receive approximately $18 million in revenue during FY 11 with a budgeted fund sweep of $7 million (net gain of $11 million). The total funds available are therefore approximately $48 million. It is unknown whether or not the full $18 million in revenue will be deposited into the fund prior to 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 9(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 board of educations 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 9(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 9(f) sweeps the remaining balances in the Department of Environmental Protection's (DEP) Environmental Conservation Fund, the Environmental Quality Fund, and the Clean Air Account for the fiscal year ending June 30, 2010. A portion of the Conservation Fund ($2. 3 million) is transferred to the Harkness maintenance, repair and improvement account established under section 29 of this bill. The remaining balance swept from the DEP funds and accounts into the General Fund is $9. 29 million for the fiscal year ending June 30, 2010.

Section 9(g) sweeps $5. 0 million from the community investment account into the General Fund for the fiscal year ending June 30, 2010. The balance in the community investment act is approximately $29. 1 million as of March 1, 2010. 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 9(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 9(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 10 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 11 transfers $850,000 from the Department of Economic and Community Development's Small Business Incubator Account, a separate non-lapsing account, to the resources of the General Fund for FY 10.

Section 12 (a) and (b) reduces $380,000 of the funds carried forward in DECD, and $397,602 of the funds carried forward in OPM, for the HOME CT housing incentive zone program, and credits it to the resources of the General Fund for FY 10.

Section 13 eliminates the $179,228 that was carried forward 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 14 will result in a savings of $1. 74 million in FY 10, as reflected in Section 1 of the bill, due to delaying round three of the Next Steps supportive housing initiative. Funding is reduced in the Department of Social Services ($264,000), the Department of Mental Health and Addiction Services ($510,000), and the Office of the State Treasurer for Debt Service ($1. 0 million).

Section 15 increases the co-payments under the HUSKY Plan, Part B to those in effect for state employees. This will save $120,000 in FY 10 and $710,000 in FY 11. Due to the 65% federal reimbursement available under SCHIP, this change will result in a net state savings of $40,000 in FY 10 and $250,000 annually thereafter. These savings are reflected in section 1.

Section 16 eliminates the requirement that the state pay certain attorney fees for individuals appealing Supplemental Security Income eligibility determinations. This change is expected to save $50,000 in FY 10 and $200,000 in FY 11. These savings are reflected in section 1.

Section 17 delays the April 2010 HUSKY Managed Care Organization payment until May 2010. This results in a one time savings of $67 million. 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. These savings are reflected in section 1.

Section 18 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 $5,800,000 in FY 11. These savings are reflected in section 1.

Section 19 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. 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. These savings are reflected in section 1.

Section 20 eliminates the coverage of over the counter medications under DSS medical assistance programs. This change is expected to save $1. 28 million in FY 10 and $7. 67 million in FY 11. Due to the 61. 5% federal reimbursement currently available under the Medicaid program, this change will result in a net state savings of $550,000 in FY 10 and $3. 3 million in FY 11. These savings are reflected in section 1.

Section 21 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 22 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 23 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.

Section 24 reduces the transfer from the General Fund (GF) to the Special Transportation (STF) Fund by $10 million in FY 10 and by $1,095,000 in both FY 11 and FY 12. For FY 10 the transfer from the GF to the STF is reduced from $81,250,00 to $71,250. 00. For FY 11 and FY 12 the transfer is reduced from $126,000,000 to $124,905,000. For FY 13 and thereafter the transfer remains at the same level of $172,800,000.

Section 25 transfers an additional $5. 0 million and $10. 0 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. 0 million and $5. 0 million respectively. The total transfer of reserves is $8. 0 million in FY 10 and $15. 0 million in FY 11.

Section 25 also transfers an additional $1. 0 million and $2. 0 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. 0 million and $3. 0 million respectively. The total transfer of reserves is $2. 0 million in FY 10 and $5. 0 million in FY 11.

Section 26 increases the transfer from the Budget Reserve Fund (BRF) to the General Fund by $262. 7 million in FY 10 and reduces the FY 11 BRF transfer by $262. 7 million.

Section 27 implements a hospital gross earnings tax of 5. 5%, effective July 1, 2010. Based on the definitions of gross earnings used in prior applications of this tax, it is anticipated that the tax will generate approximately $207 million beginning in FY 11.

Section 28 eliminates meal allowances for non-unionized sworn officers in the Department of Public Safety. This savings of $48,209 in FY 10 and $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 29 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.

Section 30 transfers $2. 3 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 31 mandates a reporting requirement that would not result in additional cost to the Department of Motor Vehicles because it already reports on its budget and programs to the Appropriations Committee on an annual basis.

Section 32 and 91 represent an estimated $1. 2 million in annual savings as a result of requiring non-union employees to take one additional furlough day in FY 10 and in FY 11. These additional furlough savings figures represent all appropriated funds and include social security savings. This excludes non-union employees of the constituent units of higher education due to ARRA maintenance of effort funding level requirements.

Section 33 eliminates Deputy Commissioners. This would result in 21 positions being eliminated with an estimated savings of $3. 1 million in FY 11. The savings reflect total wage savings including fringe benefits.

Sections 34-51 eliminate longevity payments for non-union state employees, on or after April 1, 2010. This would result in an estimated savings of $5. 2 million in FY 10 and $10. 5 million in FY 11 for all appropriated funds. The savings does not include the constituent units of higher education due to the ARRA maintenance of effort funding level requirements.

The elimination of longevity payments as a component of non-union state employees' compensation will reduce non-union employees' pension benefits, and as a result, reduce the liabilities of the state's pension systems. The amount of this liability reduction cannot be determined at this time.

Section 52 requires the Department of Children and Families to submit a plan concerning the future of Riverview Hospital for Children and Youth by 4/15/11. The Department can do so without incurring a fiscal impact.

Sections 53 and 92 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. These savings are reflected in section 1.

Section 54 requires DSS to amend the state Medicaid plan to extend Medicaid benefits to the current State Administered General Assistance (SAGA) population by April 1, 2010. This change will require additional expenditures of $22. 8 million in FY 10 and $91 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 $33. 4 million in FY 10 and $129. 5 million in FY 11. Therefore, the net state impact would be a savings of $10. 6 million in FY 10 and $38. 5 million in FY 11.

Section 55 transfers funds from the DSS Disproportionate Share - Medical Emergency Assistance, DSH - Urban Hospitals in Distressed Municipalities and Connecticut Children's Medical Center accounts to the Medicaid account. The section further requires DSS to increase Medicaid hospital rates by a proportionate amount.   FY 11 funding for these three accounts totals $94,295,000.

Currently, the state is reimbursed by the federal government at a 50% level for expenditures under these accounts. However, through December 31, 2010 the state is receiving an enhanced match of 61. 5% on Medicaid expenditures. Therefore, should the federal government approve the enhanced match on these new Medicaid rates, the state would realize a revenue gain in FY 10 of $2. 7 million and FY 11 of $5. 4 million. There have been several proposals at the federal level to extend the enhanced federal Medicaid match until June 30, 2011. Should this extension happen, the state would realize a total revenue gain in FY 11 of $10. 8 million.

Sections 56-57 do not result in a fiscal impact to the state or municipalities as they affect School Based Health Centers' (SBHCs) ability to recover payment for services billed to private insurers; while SBHCs receive funding from the Department of Public Health (DPH), they are independent entities. SBHCs supplement DPH funding through the billing of public and private health insurers for services provided to their insured.

It should be noted that these sections would result in a revenue gain of approximately $1. 5 million to SBHCs in FY 11. It is estimated that $3. 6 million in private insurance payments are not recovered by SBHCs each year, as some private insurers currently refuse to remit payment for services billed.

Sections 58-59 results in a General Fund revenue gain of $5. 9 million in FY 10 and $70. 3 million in FY 11.

The bill does the following:

It delays the scheduled 25% reduction in the unified gift and estate tax rates that were scheduled to take effect on January 1, 2010 until January 1, 2012.

The bill still eliminates the cliff and an increase, from $2. 0 million to $3. 5 million, in the threshold value of an estate or gift subject to the tax. But, to offset the resulting reduction in taxes on affected estates and gifts, it temporarily increases the tax rates on taxable estates and gifts to a range of between 14. 8% and 20. 0% from 9. 6% to 16. 0%. These higher rates affect estates of those who die, and gifts made, on or after January 1, 2010 and before J

Section 60 suspends mileage reimbursement for Worker's Compensation Commissioners as of 4/1/2010. This would result in an estimated savings of $18,987 in FY 10 and $75,950 in FY 11.

Sections 61-63 reestablishes a separate, nonlapsing account of the General Fund known as the wildlife conservation account. The sections also require that any funds transferred from the wildlife conservation account prior to the effective date of this section would be transferred into the wildlife conservation account reestablished under this bill. This would result in a one-time revenue loss to the General Fund of $19,873 for the fiscal year ending June 30, 2010. It would also result in an annualized revenue loss to the General Fund of approximately $15,000 from revenue attributable to the sale of wildlife conservation license plates.

Section 64-66 reestablishes a separate, nonlapsing account of the General Fund known as the greenways account. The sections also require that any funds transferred from the greenways account prior to the effective date of this section would be transferred into the greenways account reestablished under this bill. This would result in a one-time revenue loss to the General Fund of $63,468 for the fiscal year ending June 30, 2010. It would also result in an annualized revenue loss to the General Fund of approximately $17,500 from revenue attributable to the sale of greenways license plates.

Sections 67-88 increases various Department of Motor Vehicle fines (DMV) and rolls back various Department of Environmental Protection (DEP) hunting and fishing fees to a 20% increase over the fees established prior to October 1, 2010. This results in a net revenue gain of approximately $167,000 to the General Fund in FY 11.

Section 89, which consolidate the Department of Economic and Community Development (DECD), the Connecticut Innovations Inc. , Connecticut Development Authority, and the Connecticut Housing Finance Authority, results in the elimination of three non-union, executive level position from the Department of Economic and Community Development with a net FY 11 savings of $287,700, after accruals and unemployment compensation expenses.

Section 90 shall result in a savings of $37,857 due to a reduction in carry forward funding for the E licensing permit.

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.