OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

HB-5596

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

AMENDMENT

LCO No.: 5208

House Calendar No.: 504


OFA Fiscal Note

State Impact: See Below

Municipal Impact: See Below

Explanation

The amendment includes: (1) modifications to the FY 15 original appropriations of $81.9 million, this results in total appropriations of $18.9 billion in FY 15 for the nine appropriated funds, (2) provisions to implement the budget, and (3) revised FY 15 revenue estimates that include policy changes that total a net positive change of $12.5 to the General Fund and $18.4 million to the Special Transportation Fund. The table below provides an overview of the revised FY 15 budget.

FY 15 Revised Fund Balance

Fund

Revised Revenue $

Revised Appropriations $

Balance $

General

17,416,100,000

17,416,094,512

5,488

Transportation

1,348,884,000

1,318,393,117

30,490,883

Other Appropriated

183,500,000

178,950,132

4,549,868

Sections 1-7 include appropriations totaling $18.9 billion in FY 15, a decrease of $81.9 million from the original FY 15 budget. The table below summarizes the changes by fund.

FY 15 Revised Expenditure Changes

Item

Original $

Revised $

Difference $

Gross Appropriations

 

General Fund

17,656,098,266

17,563,301,463

(92,796,803)

Special Transportation Fund

1,333,312,395

1,329,393,117

( 3,919,278)

Banking Fund

27,845,849

28,460,263

614,414

Insurance Fund

31,968,453

33,283,640

1,315,187

Consumer Counsel and Public Utility Control Fund

25,384,201

25,452,549

68,348

Workers' Compensation Fund

24,789,229

26,157,484

1,368,255

Mashantucket Pequot and Mohegan Fund

61,779,907

61,779,907

-

Regional Market Operation Fund

941,498

1,029,273

87,775

Criminal Injuries Compensation Fund

2,787,016

2,787,016

-

Total Gross Appropriations

19,164,906,814

19,071,644,712

(93,262,102)

General Fund (GF) Lapses

Unallocated Lapse

(91,676,192)

(91,676,192)

-

Unallocated Lapse - Legislative

(3,028,105)

(3,028,105)

-

Unallocated Lapse - Judicial

(7,400,672)

(7,400,672)

-

General Other Expenses Reductions - Legislative

(140,000)

-

140,000

General Other Expenses Reductions - Executive

(3,312,000)

-

3,312,000

General Other Expenses Reductions - Judicial

(548,000)

-

548,000

General Lapse - Executive

(13,785,503)

-

13,785,503

General Lapse - Judicial

(401,946)

-

401,946

General Lapse - Legislative

(56,251)

(5,000,000)

(4,943,749)

Municipal Opportunities and Regional Efficiencies Program

(10,000,000)

(10,000,000)

-

GAAP Lapse

(7,500,000)

(8,310,000)

(810,000)

Statewide Hiring Reduction - Executive

(16,675,121)

(15,710,537)

964,584

Statewide Hiring Reduction - Judicial

(3,434,330)

(3,235,669)

198,661

Statewide Hiring Reduction - Legislative

(579,285)

(545,776)

33,509

Statewide Travel Ban

-

(2,300,000)

(2,300,000)

Total GF Lapses

(158,537,405)

(147,206,951)

11,330,454

Transportation Fund (TF) Lapses

Unallocated Lapse

(11,000,000)

(11,000,000)

-

Total TF Lapses

(11,000,000)

(11,000,000)

-

Net Appropriations

General Fund

17,497,560,861

17,416,094,512

(81,466,349)

Special Transportation Fund

1,322,312,395

1,318,393,117

(3,919,278)

Banking Fund

27,845,849

28,460,263

614,414

Insurance Fund

31,968,453

33,283,640

1,315,187

Consumer Counsel and Public Utility Control Fund

25,384,201

25,452,549

68,348

Workers' Compensation Fund

24,789,229

26,157,484

1,368,255

Mashantucket Pequot and Mohegan Fund

61,779,907

61,779,907

-

Regional Market Operation Fund

941,498

1,029,273

87,775

Criminal Injuries Compensation Fund

2,787,016

2,787,016

-

TOTAL NET APPROPRIATIONS

18,995,369,409

18,913,437,761

(81,931,648)

Spending Cap

The amendment is under the spending cap by approximately $83.2 million in FY 15, assuming deficiency appropriations are made in FY 14.  This is $83.0 million closer to the cap than the original FY 15 budget, which is under the spending cap by $166.2 million. Of the reduction in cap room, $106.1 million is attributable to a recalculation of the allowable growth rate from 2.4% to 1.7%.

Growth Rate

The growth rate for all appropriated funds is 2.1% over FY 14 expenditures. The calculations are detailed in the table below.

Growth Rates of Appropriations (in millions)

Fund

FY 14 Estimated Expenditures $

FY 15
Original $

FY 15
Revised $

Change From FY 14 Estimated to FY 15 Revised

General

17,108.1

17,497.6

17,416.1

308.0

1.8%

Transportation

1,243.2

1,322.3

1,318.4

75.2

6.0%

Other Appropriated

174.6

175.5

179.0

4.4

2.5%

TOTAL

18,525.9

18,995.4

18,913.4

387.5

2.1%

Section 8 transfers $6 million from the General Fund to the Tobacco and Health Trust Fund (THTF), reducing General Fund resources and increasing the THTF by this amount in FY 15. Section 71 of PA 13-184 reduced the annual $12 million disbursement from the Tobacco Settlement Fund to the THTF by $6 million; the $6 million was credited to the resources of the General Fund in both FY 14 and FY 15.

Section 9 restores a transfer of $5 million from the General Fund to the Municipal Video Competition account, resulting in a General Fund revenue loss and a corresponding revenue gain to various municipalities.

Section 10 limits the Statewide Marketing account to $5 million annually. This results in a savings of $7 million in FY 15.

Sections 11 and 12 result in a cost of $3.25 million in FY 15 to provide a 1% COLA for home and community based providers who serve individuals on the Medicaid program and through the Connecticut Home Care Program for the Elders.

Section 13 requires the Commissioner of Correction to solicit bids or proposals for the provision of inmate medical services no later than September 1, 2014 and does not result in a fiscal impact in FY 15.  The section may result in a potential savings in future years to the extent that the agency receives proposals with lower costs than those currently provided.

Section 14 and 15 reserve the FY 14 General Fund surplus to be used to repay interest due in 2014 on amounts borrowed from the federal government to maintain solvency of the state unemployment compensation fund. This reduces the projected FY 14 surplus by an estimated $15.0 million.

Sections 16 and 17 reduce all grants from the Citizens' Election Fund (CEF) by 30% and reduce deposits to the fund by $5 million in FY 16 and FY 17. Reducing CEF grants is anticipated to result in a savings to the CEF of approximately $4.2 million in FY 17 (for grants during the 2016 election cycle). By reducing deposits into the CEF by $5 million in both FY 16 and FY 17 this results in a General Fund revenue gain of $5 million in each FY 16 and FY 17.

Section 18 requires the current acquired brain injury (ABI) waiver to be continuously operated and that no person receiving services under the waiver shall be institutionalized in order to meet cost neutrality. As this language is not anticipated to alter the manner in which the waiver is currently operated, there is no fiscal impact.

The section also allows the Department of Social Services to seek a second ABI waiver, but does not specify the size or scope of the waiver. Most individuals on the current ABI wait list are currently receiving state funded services from the Department of Mental Health and Addiction Services. Should this second waiver succeed in gaining federal reimbursement for these costs this may result in additional state revenue.

There may be a cost of less than $1,000 in FY 15 to those agencies participating in the advisory committee to reimburse legislators and agency staff for mileage expenses.

Section 19 reduces expenditures in Personal Services by $5.7 million in FY 15. Savings are anticipated to be achieved by implementing a statewide hiring freeze across executive branch agencies.

Section 20 reduces expenditures by $2.3 million in FY 15. Savings are anticipated to be achieved by implementing a statewide travel ban across all agencies.

Section 21 uses $58.4 million to pay off Economic Recovery Notes (ERNs) rather than refunding them to maturity dates between FY 16 and FY 18 resulting in a total savings of $1.0 million in interest payments that would have been made from FY 16 to FY 18. The estimate is based on the results of the first ERN refinancing, which occurred in October 2013.

Section 22 requires the Comptroller to deposit $21 million from sales and use tax collections into the Municipal Revenue Sharing account in FY 15. This results in a General Fund revenue loss of $21 million in FY 15 and a subsequent revenue gain to municipalities.

Section 23 re-opens eligibility for the Renters' Rebate Program which results in an annualized cost of $6.5 million in FY 15.

Sections 24, 25, and 44 repeal the authorization for the Connecticut Lottery Corporation (CLC) to operate keno. This results in an estimated revenue loss of approximately $13.5 million in FY 15 and $27.0 million annually thereafter. This also results in a savings of $6.7 million to CLC in FY 15 and approximately $2.5 million annually thereafter attributable to avoiding costs for the necessary equipment, materials, and ongoing operating expenses necessary to implement keno in the state.

Section 26 increases the FY 15 General Fund transfer to the Special Transportation Fund (STF) by $18.4 for a total transfer of $20.5 million. This results in a revenue gain to the STF by $18.4 million and a corresponding revenue loss to the General Fund.

Sections 27 - 34 limit benefits from the Soldiers, Sailors and Marines' Fund to at least $2.0 million annually (annual benefits in FY 12, FY 13 and FY 14 are approximately $2.0 million). The amendment permits these benefits to be paid from interest income and dividends generated by the Fund or from the principal of the Fund itself if interest income and dividends are insufficient in any given year. The current principal of the Fund is approximately $68.2 million. The amendment prohibits the American Legion, which will begin administering the Fund in FY 15, from charging administrative costs to the Fund or the interest income.  The amendment also includes $635,000 for the Department of Veteran's Affairs to cover the cost to the American Legion to administer the Fund.

Sections 36-42 adopt revised revenue estimates for the 2015 fiscal year.  These estimates are the sum total of: 1) April 30, 2014 consensus estimates of current law revenues; and 2) revenue estimates of the various policy changes included in the amendment.

Section 43 eliminates the Earned Income Tax Credit. This results in a revenue gain of approximately $120.7 million in FY 15. Section 35 eliminates a statutory reference to the earned income tax credit.

Section 45 results in the following:

a) Provides funding of $9 million in the Retired Teachers Health Care accounts to restore the state share to the statutory level of 33% for FY 15;

b) Repeals scheduled revenue transfers of $3.5 million from PEGPETIA to the General Fund in FY 15. This results in a General Fund revenue loss of $3.5 million in FY 15; and

c) Repeals the scheduled revenue transfer of $19.2 million from CEFIA to the General Fund in FY 15. This results in a General Fund revenue loss of $19.2 million in FY 15.

The Out Years

The table below compares the estimated revenue and projected expenditures for FY 16 – FY 18 based on the FY 15 revised budget.

FY 16 – FY 18 Fund Balance (in millions)

Fund

FY 16 $

FY 17 $

FY 18 $

Approp.

Revenue

Surplus/

(Deficit)

Approp.

Revenue

Surplus/

(Deficit)

Approp.

Revenue

Surplus/

(Deficit)

General

18,750.5

17,603.0

(1,147.5)

19,607.4

18,274.7

(1,332.7)

20,604.3

19,040.8

(1,563.5)

Special Transportation

1,404.8

1,493.5

88.7

1,475.4

1,503.4

28.0

1,547.0

1,503.6

(43.4)

Other Appropriated

250.2

248.3

(1.9)

254.2

249.8

(4.4)

258.3

254.3

(4.0)

TOTAL

20,405.5

19,344.8

(1,060.7)

21,337.0

20,027.9

(1,309.1)

22,409.5

20,798.7

(1,610.8)

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.