PA 14-47—HB 5596

Emergency Certification

AN ACT MAKING ADJUSTMENTS TO STATE EXPENDITURES AND REVENUES FOR THE FISCAL YEAR ENDING JUNE 30, 2015

SUMMARY: This act modifies appropriations and revenue estimates for FY 15. The previous appropriations were adopted in 2013 as part of the 2014-2015 biennial state budget. Among other things, the act:

1. reduces net General Fund appropriations for FY 15,

2. modifies certain FY 15 budgeted lapses,

3. carries forward unspent balances from FY 14 appropriations and directs funds to be spent in FY 15 for specific programs and purposes,

4. specifies each municipality's Education Cost Sharing (ECS) grant, and

5. transfers $25 million from the Connecticut Student Loan Foundation's (CSLF) assets for various purposes.

The act also makes various state tax and revenue changes. Among other things, it:

1. delays, by one month, the effective date of a sales and use tax exemption on clothing and footwear costing less than $50;

2. beginning April 1, 2015, exempts nonprescription drugs and medicines from the sales and use tax;

3. exempts a portion of state teacher pension income from the income tax; and

4. repeals the authorization for the state to operate keno as a lottery game.

EFFECTIVE DATE: July 1, 2014, unless otherwise noted below.

1-44, 30-31, & 65 — FY 15 BUDGET ADJUSTMENTS

The act modifies FY 15 appropriations for state agency operations and programs in seven of the state's 10 appropriated funds, as shown in Table 1. (PA 14-217 ( 80 & 231-233) adjusts certain FY 15 General Fund appropriations, resulting in a $526,814 net increase. )

Table 1: Changes in FY 15 Net Appropriations, by Fund*

Fund

FY 15 Net Appropriation

Prior Law

Act

Increase (Reduction)

1

General Fund

$17,497,560,861

$17,457,150,607

($40,410,254)*

2

Special Transportation Fund (STF)

1,322,312,395

1,321,563,162

(749,233)

3

Regional Market Operation Fund

941,498

1,029,273

87,775

4

Banking Fund

27,845,849

28,791,624

945,775

5

Insurance Fund

31,968,453

68,344,562

36,376,109

6

Consumer Counsel and Public Utility Control Fund

25,384,201

25,589,345

205,144

7

Workers' Compensation Fund

24,789,229

26,157,484

1,368,255

* PA 14-217 ( 80 & 231-233) changes the net appropriation total for the General Fund to ($39,883,440).

It also modifies the FY 15 budgeted lapses for General Fund, personal services, and “other expenses” expenditures, as shown in Table 2. As under prior law, the Office of Policy and Management (OPM) secretary must recommend spending reductions in each government branch to reduce these expenditures. The provision concerning personal services reductions does not apply to the higher education constituent units.

Table 2: Changes in FY 15 Budgeted Lapses for General Fund, Personal Services, and Other Expenses

 

General Fund

Personal Services

Other Expenses

Branch

Prior Law

Act

Prior Law

Act

Prior Law

Act

Executive

$13,785,503

$9,678,316

$16,675,121

$8,060,000

$3,312,000

$0

Legislative

56,251

39,492

579,285

280,000

140,000

0

Judicial

401,946

282,192

3,434,330

1,600,000

548,000

0

8, 10, 12, 14-17, 24, & 40 — FUNDS CARRIED FORWARD

The act carries forward funds from FY 14 to FY 15 for the purposes shown in Table 3.

Table 3: Funds Carried Forward to FY 15

From FY 14

To FY 15

Amount

Agency

Purpose

Agency

Purpose

8

Secretary of the State

Personal Services

Secretary of the State

Other Expenses — programming costs for the online business registration system

$60,000

10

Department of Housing (DOH)

Housing/Homeless Services

DOH

$1 million for rental assistance

$650,000 for rapid rehousing

1,650,000

12

Soldiers', Sailors' and Marines' Fund (SSMF)

Personal Services

SSMF

Same, but the comptroller must record such FY 15 expenditures in FY 14

Unspent balance

14

Department of Energy and Environmental Protection (DEEP)

Emergency Spill Response

DEEP

Other Expenses — marketing costs for a free park admission weekend

40,000

15

Department of Revenue Services (DRS)

Personal Services

DRS

Other Expenses — modifications to tax systems and forms related to changes to the Connecticut Higher Education Trust (CHET) plans and the implementation of the CHET Baby Scholars program

80,000

16

DEEP

Solid Waste Management

DEEP

Updating the state's comprehensive materials management strategy

600,000

17 (a)

Office of Early Childhood (OEC)

School Readiness

OEC

Other Expenses — developing a statewide universal prekindergarten (pre-k) plan

450,000

17 (b)

DOH

Tax Relief for Elderly Renters

OEC

School Readiness Quality Enhancement — district and regional universal pre-k planning grants

600,000

17 (c)

OEC

Child Care Services

OEC

School Readiness — startup costs for additional pre-k seats in districts eligible for school readiness competitive grants

1,000,000

17 (d)

DOH

Tax Relief for Elderly Renters

OEC

School Readiness — startup costs for additional pre-k seats in districts eligible for school readiness competitive grants

275,000

24

Department of Labor (DOL)

Workforce Investment Act

DOL

Personal Services

1,345,600

40

Department of Social Services (DSS)

Medicaid

State Comptroller

$170,000 for Personal Services

$186,000 for Other Expenses

$13,000 for State Comptroller—Fringe Benefits, for Employers Social Security Tax

$31,000 for State Comptroller—Fringe Benefits, for State Employees Health Service Cost to fund a market feasibility study and support a public retirement plan for Connecticut employers

400,000

9 — FEDERAL REIMBURSEMENT FOR DSS PROJECTS

For FY 14 and FY 15, the act authorizes DSS to establish receivables for the anticipated reimbursement from the Department of Development Services' (DDS) Medicaid waiver management system. Existing law allows DSS to do so for the (1) health insurance and information exchanges, (2) Medicaid data analytics system, (3) integrated eligibility management system, and (4) other related information technology systems. By law, it must do so in compliance with advanced planning documents approved by the federal Department of Health and Human Services for developing these projects.

EFFECTIVE DATE: Upon passage

11 — NEWBORN SCREENING ACCOUNT

For FY 15, the act increases, from $1. 15 million to $1. 735 million, the amount allocated to the General Fund's newborn screening account. The funding comes from fees the Department of Public Health (DPH) charges institutions for comprehensive newborn testing, parent counseling, and treatment. DPH must use the money (1) to buy upgraded screening technology and (2) for its testing expenses.

EFFECTIVE DATE: Upon passage

13 — DEPARTMENT OF MENTAL HEALTH AND ADDICTION SERVICES (DMHAS) COST RECONCILIATION WITH NONPROFIT PROVIDERS

For FY 15, the act requires nonprofit organizations providing services under contract with DMHAS to reimburse DMHAS for the difference between their actual expenses and the amount they received from DMHAS under the contract. The reimbursement amount must be (1) 100% of the difference or (2) an alternate amount identified by the DMHAS commissioner, approved by the OPM secretary, and allowed by applicable state and federal laws and regulations.

18 — ECS GRANTS TO TOWNS

The act overrides the statutory formula for calculating ECS grants for FYs 14 and 15 and specifies each town's grant for such years.

EFFECTIVE DATE: Upon passage

19 — CSLF

The act transfers the following amounts from CSLF's assets:

1. $4. 4 million, by October 30, 2014, to the CHET Baby Scholars fund for the Baby Scholars program;

2. $19 million, by June 30, 2015, to the Board of Regents for Higher Education (BOR) for Transform CSCU; and

3. $1. 6 million, by June 30, 2015, to the Office of Higher Education (OHE) for the Governor's Scholarship program.

20 & 25 — RESERVED AMOUNTS FROM LINE ITEM APPROPRIATIONS

The act reserves certain amounts from line items in agency budgets for various purposes, as shown in Table 4. (PA 14-217 ( 231) reserves additional amounts from certain DRS and Department of Emergency Services and Public Protection (DESPP) FY 15 appropriations for different purposes. )

Table 4: Reserved Amounts from FY 15 Line Item Appropriations

Agency

Appropriation For

Reserved For

Amount

20

State Department of Education (SDE)

After School Program

Plainville ($50,000), Thompson ($25,000), and Montville ($25,000) school districts

Up to $100,000

25

Judicial Department

Court Support Services Division: to provide continued support for children of incarcerated parents

Institute for Municipal and Regional Policy – Central Connecticut State University, pursuant to a memorandum of understanding, and made available to the New Haven Family Alliance, pursuant to a personal service agreement

Up to $100,000

21 — TOBACCO SETTLEMENT FUND ALLOCATIONS

The act allocates money from the Tobacco Settlement Fund in FY 15 for the programs and purposes shown in Table 5.

Table 5: Tobacco Settlement Fund Allocations

Agency

Program/Purpose

Amount

DMHAS

Grants for Substance Abuse

$3,000,000

Grants for Mental Health Services

7,000,000

SDE

After School Program: grants for after school programs in the following towns – Waterbury ($143,000), Meriden ($71,000), Lighthouse Program of Bridgeport ($164,000), Stamford ($123,000), New Britain ($87,000), East Hartford ($65,000), Hartford ($172,000), New Haven ($149,000), and Windham ($26,000)

1,000,000

Department of Economic and Community Development (DECD)

Other Expenses: grant to Connecticut Innovations, Inc. (CII) for regenerative medicine and bioscience grant award management

500,000

22 — PAYMENTS IN LIEU OF TAXES (PILOT) FOR BRADLEY INTERNATIONAL AIRPORT PROPERTY

Beginning in FY 15, the act eliminates the state PILOT for any Bradley International Airport real property located in the four towns (Windsor Locks, Suffield, East Granby, and Windsor) receiving specific annual payments from the Connecticut Airport Authority for such property.

23 — OPERATION FUEL ENERGY ASSISTANCE

For FY 15, the act transfers $500,000 from funds collected through the systems benefit charge (SBC) on electric utility customers to DEEP for energy assistance through Operation Fuel. (PA 14-217 ( 208 & 256) repeals this transfer and instead, beginning in FY 15, annually transfers $1. 1 million from the SBC to Operation Fuel. )

26 — YOUTH SERVICES PREVENTION APPROPRIATIONS

The act eliminates a $100,000 grant to the Chester Addison Community Center, funded through OPM's FY 15 Youth Services Prevention appropriation, and instead directs the grant funds to Domus of Stamford. (PA 14-217 ( 230) repeals this provision and modifies these and other youth services prevention grants for FY 15. )

27 — SDE EDUCATIONAL GRANTS TO BRIDGEPORT

The act requires SDE to provide grants for educational purposes to Bridgeport in the amount of (1) $1,200,000 for FY 14 and (2) $700,000 for FY 15.

EFFECTIVE DATE: Upon passage

28 — REGIONAL EMERGENCY MEDICAL SERVICES COORDINATORS

The act increases, from $500,000 to $525,000, the amount allocated to DPH from the Tobacco Health and Trust Fund in FY 15 for regional emergency medical services coordinators.

29 — DSS REIMBURSEMENT TO PHARMACIES

For FY 15, the act authorizes the DSS commissioner, with the OPM secretary's approval, to revise the methodology DSS uses to reimburse pharmacies for prescriptions dispensed to Medicaid recipients to meet the requirements of the federal Patient Protection and Affordable Care Act (P. L. 111-148) and Health Care and Education Reconciliation Act of 2010 (P. L. 111-152). It also authorizes the commissioner to increase the dispensing fee that DSS pays pharmacists for each prescription they fill for beneficiaries of DSS pharmacy assistance programs (e. g. , Medicaid) to help pharmacists transition to the new reimbursement methodology.

32-33 & 36-38 — TRANSFERS TO THE GENERAL FUND

As Table 6 shows, the act transfers funds from various sources to the General Fund.

Table 6: Transfers to the General Fund

Source

Amount (millions)

FY

32-33

Tobacco and Health Trust Fund

$1. 0*

14

1. 0*

15

3. 0*

15

36

1998 Tobacco Master Settlement Agreement

Up to $19. 46

15

37

Biomedical Research Trust Fund

0. 5 (transfer must be made in FY 14)**

15

0. 5

15

38

Private Occupational School Student Protection Account

0. 5

15

*PA 14-217 ( 214-216) (1) repeals the FY 14 transfer from the Tobacco and Health Trust Fund, (2) requires the $1 million transfer for FY 15 to be made in FY 14, and (3) makes a technical change to the $3 million FY 15 transfer.

**Although the act requires this $500,000 transfer to be made in FY 14, the provision is effective July 1, 2014. PA 14-217 ( 217) makes the transfer effective upon passage.

EFFECTIVE DATE: July 1, 2014, except for the provisions transferring (1) $1 million from the Tobacco and Health Trust Fund for each of FYs 14 and 15 and (2) funds from the 1998 Tobacco Master Settlement Agreement, which are effective upon passage. (PA 14-217 ( 217-218) makes the transfers from the Biomedical Research Trust Fund and Private Occupational Student Protection Account effective upon passage. )

34 & 35 — TOBACCO MASTER SETTLEMENT AGREEMENT LITIGATION SETTLEMENT AND GAAP ACCRUALS

The act reduces by $13,955,945 from $40,000,000 to $26,044,055, the amount of litigation settlement funds received under the 1998 Master Settlement Agreement reserved to reduce FY 14 aggregate appropriations for “Nonfunctional-Change to Accruals” (i. e. , GAAP accruals). These appropriations represent the change to accruals in an agency's budget due to the conversion to GAAP-based budgeting. The act similarly reduces, from $40,000,000 to $26,044,055, the amount by which FY 14 General Fund appropriations must be reduced for Transfer GAAP Funding.

It also eliminates the FY 14 appropriation to DSS for GAAP accruals.

EFFECTIVE DATE: Upon passage

39 — OHE'S MINORITY ADVANCEMENT PROGRAM

The act requires $686,538 in unused funds for OHE's Minority Advancement program to lapse in FY 14, instead of being carried forward to FY 15.

EFFECTIVE DATE: Upon passage

41-44 — ADJUSTMENTS IN FY 14 GENERAL FUND AND STF APPROPRIATIONS

The act adjusts certain FY 14 General Fund and STF appropriations, as shown in Table 7. The adjustments result in a $1 million (1) net decrease in General Fund appropriations and (2) net increase in STF appropriations.

Table 7: Adjustments in FY 14 General Fund and STF Appropriations

Agency

Purpose

Increase/(Reduction) in millions

General Fund

Department of Administrative Services

Personal Services

$6. 5

State Insurance and Risk Management Operations

1. 5

DESPP

Personal Services

3. 9

Other Expenses

0. 5

Workers' Compensation Claims

0. 4

DECD

Capitol Region Development Authority

3. 0

Office of the Chief Medical Examiner

Other Expenses

0. 1

SDE

Magnet Schools

10. 4

Public Defenders Services Commission

Personal Services

4. 9

Expert Witnesses

1. 8

State Comptroller – Miscellaneous

Adjudicated Claims

6. 2

Workers' Compensation Claims – Administrative Services

Workers' Compensation Claims

2. 8

DSS

Medicaid

(43. 0)

STF

DOT

Personal Services

7. 0

Other Expenses

2. 1

Bus Operations

4. 0

ADA Para-transit Program

0. 6

State Comptroller – Fringe Benefits

State Employees Health Service Cost

1. 5

Workers' Compensation Claims – Administrative Services

Workers' Compensation Claims

0. 8

Department of Motor Vehicles (DMV)

Personal Services

(1. 5)

Other Expenses

(0. 5)

DOT

Pay-As-You-Go Transportation Projects

(4. 0)

Debt Service – State Treasurer

Debt Service

(9. 0)

EFFECTIVE DATE: Upon passage

45 — CONNECTICUT TELEVISION NETWORK (CT-N) FUNDING

Beginning in FY 15, the act increases, from $2. 5 million to $3. 2 million, the amount the comptroller must set aside each fiscal year from the cable television companies' tax to defray the Office of Legislative Management's costs of providing CT-N coverage of state government deliberations and public policy events.

EFFECTIVE DATE: Upon passage

46 — MUNICIPAL REVENUE SHARING GRANTS

The act requires the DRS commissioner to deposit $12. 7 million of FY 15 sales and use tax payments into the Municipal Revenue Sharing Account (MRSA). It requires the OPM secretary to distribute the funds to municipalities according to a specified municipal revenue sharing formula. Under the formula, the grants are distributed as follows:

1. 50% on a per capita basis and

2. 50% according to an existing property tax relief formula that apportions funds based on a municipality's population, adjusted equalized net grand list per capita, and per capita income of town residents.

These grants were previously funded through MRSA by a portion of sales, luxury, and state real estate conveyance tax revenue.

47-48 — SALES TAX EXEMPTIONS

Clothing and Footwear

The act delays, from June 1, 2015 to July 1, 2015, the effective date of a sales and use tax exemption on clothing and footwear costing less than $50. The exemption was enacted in 2013 (PA 13-184 ( 79)).

Nonprescription Drugs and Medicines

Beginning April 1, 2015, the act exempts from the sales and use tax nonprescription drugs and medicines for use in or on the body. The exemption applies to vitamin and mineral concentrates, dietary supplements, and natural or herbal drugs or medicine; cough, cold, asthma, allergy, or antihistamine products; antacids, laxatives, anthelmintics, emetics, and antiemetics; analgesics, antibiotic, antibacterial, antiviral, antifungal, antidiarrheal, and steroidal medicines; antiseptics, astringents, and anesthetics; and any eye, ear, or nose medication. It does not apply to cosmetics, dentrifrices, mouthwash, shaving and hair care products, soaps, or deodorants.

An identical sales and use tax exemption was eliminated in 2011 (PA 11-6 ( 166)).

EFFECTIVE DATE: July 1, 2014, and applicable to sales occurring on or after April 1, 2015.

49 — ADMISSIONS TAX EXEMPTION

The act exempts admission charges for events held at the XL Center in Hartford from the 10% admissions tax. (PA 14-217 ( 225) similarly exempts admission charges for events held at the Webster Bank Arena in Bridgeport. )

50 — INCOME TAX EXEMPTION FOR TEACHER PENSIONS

The act exempts a portion of state teachers' retirement system (TRS) income from the income tax. It does so by allowing taxpayers, when calculating Connecticut adjusted gross income for state income tax purposes, to deduct 10% of TRS income for the 2015 tax year, 25% for the 2016 tax year, and 50% for 2017 and subsequent tax years.

EFFECTIVE DATE: July 1, 2015, and applicable to tax years beginning on or after January 1, 2015.

51 — ANGEL INVESTOR TAX CREDIT

The act postpones the sunset date for the angel investor tax credit program from July 1, 2014 to July 1, 2016. By law, the angel investor tax credit program provides personal income tax credits for people investing at least $25,000 in start-up, technology-based Connecticut businesses approved for such credit-eligible investments.

Prior law required CII to review the credit's effectiveness by July 1, 2014. The act (1) requires CII to conduct this review annually, beginning by July 1, 2014; (2) specifies that CII must review the credit's cumulative effectiveness; (3) requires it to report its findings to OPM, in addition to the Commerce Committee; and (4) identifies certain elements that CII must include in its report.

Under the act, the annual report must include the:

1. number, type, and current status of Connecticut businesses that received angel investments;

2. number and type of angel investors;

3. aggregate amount of cash investments;

4. number of employees each business employed in each year following the year in which it received the angel investment; and

5. economic impact each business has in the state.

The act also makes technical changes.

EFFECTIVE DATE: Upon passage, and applicable to tax years beginning on or after January 1, 2014.

52-53 & 66 — REPEAL OF KENO

The act repeals a law allowing the state to operate keno as a lottery game. It does so by eliminating the authority of the (1) Connecticut Lottery Corporation (CLC) to introduce keno as a lottery game and (2) OPM secretary, on the state's behalf, to enter into separate profit-sharing agreements with the Mashantucket Pequot and Mohegan Tribes concerning CLC's operation of keno. Under prior law, the agreements had to require the state to share with each tribe up to 12. 5% of its keno profits.

EFFECTIVE DATE: Upon passage

54 — GENERAL FUND TRANSFER TO THE STF

The act eliminates a $2. 1 million transfer to the STF from the General Fund for FY 15.

55-64 — REVENUE ESTIMATES

The act modifies previously adopted revenue estimates for FY 15 for nine of the state's 10 appropriated funds, as shown in Table 8.

Table 8: Modified FY 15 Revenue Estimates

Fund

Prior Law

Act

General Fund

$17,500,700,000

$17,459,362,000

Special Transportation Fund

1,322,700,000

1,328,400,000

Mashantucket Pequot & Mohegan Fund

61,800,000

61,780,000

Regional Market Operation Fund

1,000,000

1,029,000

Banking Fund

27,847,000

28,800,000

Insurance Fund

31,968,000

68,345,000

Consumer Counsel & Public Utility Control Fund

25,384,000

25,600,000

Workers' Compensation Fund

25,235,000

27,251,000

Criminal Injuries Compensation Fund

3,310,000

3,355,000

65 — GRANT TO INSTITUTE OF MUNICIPAL AND REGIONAL POLICY

The act eliminates a $150,000 earmark in FYs 14 and 15 for a grant to the Institute of Municipal and Regional Policy to assist in the development of the Connecticut-specific model within the Pew-MacArthur Results First Initiative. Under prior law, the funds were reserved from an appropriation to BOR for the initial stages of collection and arrangement of the official papers of former Governor William O'Neill (PA 13-184 ( 42)).

OLR Tracking: RP: DC: PF: am