OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sHB-5327

AN ACT CONCERNING THE STATE BUDGET.

AMENDMENT

LCO No.: 5749

File Copy No.: 564

House Calendar No.: 376


OFA Fiscal Note

See Fiscal Note Details

Revisions to the enacted FY 19 budget in this amendment provide for an operating surplus of $1.0 million in the General Fund and $1.2 million across the General Fund and Special Transportation Fund.

Revised FY 19 Balance

Fund

Revenue $

Appropriations $

Surplus/
(Deficit) $

General Fund

18,979.7

18,978.6

1.0

Special Transportation Fund

1,646.5

1,646.3

0.2

TOTAL

20,418.7

20,624.9

1.2

The amendment revises appropriations in the General Fund and the Special Transportation Fund. Appropriations for all appropriated funds total $20.9 billion in FY 19 as summarized in the table below.

Revised FY 19 Appropriations

Fund

Original Appropriation FY 19

Governor Revised
FY 19

Revised Appropriation
FY 19

Revised - Governor

Revised- Original

General Fund

19,885,371,203

18,870,506,700

18,993,125,378

122,103,678

(892,245,825)

Special Transportation Fund

1,640,068,939

1,631,817,521

1,658,282,343

26,464,822

18,213,404

Banking Fund

27,386,848

27,756,956

27,386,848

(370,108)

-

Insurance Fund

95,035,932

91,566,573

95,035,932

3,469,359

-

Consumer Counsel and Public Utility Control Fund

25,571,954

25,664,830

25,571,954

(92,876)

-

Workers' Compensation Fund

24,940,502

26,113,195

24,940,502

(1,172,693)

-

Mashantucket Pequot and Mohegan Fund

49,942,796

49,692,232

49,942,796

250,564

-

Regional Market Operation Fund

1,067,306

1,067,306

1,067,306

-

-

Criminal Injuries Compensation Fund

2,934,088

2,934,088

2,934,088

-

-

Passport to the Parks Fund

-

11,837,325

-

(11,837,325)

-

Tourism Fund

12,644,988

16,282,076

12,644,988

(3,637,088)

-

Total Gross Appropriations

21,764,964,556

20,755,238,802

20,890,932,135

135,178,333

(874,032,421)

 

General Fund Lapses

 

 

 

 

 

Unallocated Lapse

(51,765,570)

(9,515,570)

(9,515,570)

-

42,250,000

Unallocated Lapse - Legislative

(1,000,000)

-

-

-

1,000,000

Unallocated Lapse - Judicial

(8,000,000)

(5,000,000)

(5,000,000)

-

3,000,000

Statewide Hiring Reduction - Executive

(7,000,000)

-

-

-

7,000,000

Targeted Savings

(150,878,179)

-

-

-

150,878,179

Achieve Labor Concessions

(867,600,000)

-

-

-

867,600,000

Municipal Aid Savings

(8,500,000)

-

-

-

8,500,000

General Fund Total Lapses

(1,094,743,749)

(14,515,570)

(14,515,570)

-

1,080,228,179

Special Transportation Fund Lapses

 

 

 

 

 

Unallocated Lapse

(12,000,000)

(12,000,000)

(12,000,000)

-

-

Special Transportation Fund Total Lapses

(12,000,000)

(12,000,000)

(12,000,000)

-

-

 

General Fund

18,790,627,454

18,855,991,130

18,978,609,808

122,103,678

187,982,354

Special Transportation Fund

1,628,068,939

1,619,817,521

1,646,282,343

26,464,822

18,213,404

Banking Fund

27,386,848

27,756,956

27,386,848

(370,108)

-

Insurance Fund

95,035,932

91,566,573

95,035,932

3,469,359

-

Consumer Counsel and Public Utility Control Fund

25,571,954

25,664,830

25,571,954

(92,876)

-

Workers' Compensation Fund

24,940,502

26,113,195

24,940,502

(1,172,693)

-

Mashantucket Pequot and Mohegan Fund

49,942,796

49,692,232

49,942,796

250,564

-

Regional Market Operation Fund

1,067,306

1,067,306

1,067,306

-

-

Criminal Injuries Compensation Fund

2,934,088

2,934,088

2,934,088

-

-

Passport to the Parks Fund

-

11,837,325

-

(11,837,325)

-

Tourism Fund

12,644,988

16,282,076

12,644,988

(3,637,088)

-

Total Net Appropriations

20,658,220,807

20,728,723,232

20,864,416,565

135,178,333

206,195,758

Spending Cap

The revised budget in the amendment is under the spending cap by $734.4 million in FY 18 and $17.5 million in FY 19.

The revised FY 19 budget growth rate in the amendment for the General Fund and Special Transportation Fund is 2.1% over FY 18 original appropriations. See table below for details.

Growth Rates of Appropriations ($ in millions)

 

Original Appropriation
FY 18

Original Appropriation
FY 19

Revised Appropriation
FY 19

Change From
Orig. FY 18 to
Revised
FY 19

Change From
Orig. FY 19 to
Revised
FY 19

General Fund

18,690.1

18,790.6

18,978.6

288.5

1.5%

188.0

1.0%

Transportation Fund

1,510.9

1,628.1

1,646.3

135.4

9.0%

18.2

1.1%

TOTAL

20,201.0

20,418.7

20,624.9

423.9

2.1%

205.7

1.0%

The following provides a description of provisions related to the revised FY 19 budget.

Sec. 3(a) eliminates the labor management lapse of $867,600,000 to reflect the allocation into agency budgets.

Sec. 3(b) states that any reductions to allotments related to labor management savings that are applicable to Connecticut State Colleges and Universities, The University of Connecticut and The University of Connecticut Health Center shall be credited to the General Fund. This is not expected to result in a fiscal impact.

Sec. 4(a) reduces the unallocated lapse amount to the executive branch from $45,000,000 to $9,515,570 to reflect the allocation into agency budgets.

Sec. 4(b) eliminates the unallocated lapse amount to the legislative branch of $1,000,000 to reflect the allocation into agency budgets.

Sec. 4(c) reduces the unallocated lapse amount to the judicial branch from $8,000,000 to $5,000,000 to reflect the allocation into agency budgets.

Sec. 5 eliminates the targeted savings lapse of $150,878,179 to reflect the allocation into agency budgets.

Sec. 6 eliminates the hard hiring freeze lapse of $7,000,000 to reflect the allocation into agency budgets.

Sec. 7 and 8 authorize the carry forward of FY 18 appropriations into FY 19, in the total amount of $320.2 million. Of this, $299.2 million will fund supplemental hospital payments and $21 million will support Medicaid expenditures in FY 19. Carried forward funds are not counted as year-end lapses that contribute to a surplus; thus, these sections reduce the anticipated FY 18 year-end deposit into the Budget Reserve Fund by $320.2 million.

Sec. 9 and 33 specify that the Office of Policy and Management may not achieve any unallocated FY 19 General Fund lapses in PA 17-2, the FY 18 and FY 19 budget, or PA 17-4 by reducing 1) municipal aid, 2) grants to the Connecticut Children's Medical Center or the Justice Education Center, or 3) funding for the Youth Employment Program or the Youth Violence Prevention Initiative. This precludes any reduction in these grant programs in FY 19 that would have been achieved through a lapse.

Sec. 10 specifies that the state appropriation for the TRB health plan be allotted 50% on July first and 50% before December first.  Allotting 50% of the appropriation in the first quarter is intended to alleviate potential cash flow issues since the health insurance premium account fund balance typically reaches a low point in September. 

Sec. 11, 42 authorizes the Public Utilities Regulatory Authority (PURA) to disburse $53.5 million in each of FY 18 and FY 19, from the Energy Conservation and Load Management Fund (ECLMF).  It requires disbursements to occur proportionately based on receipts received by each of the funds.   Sweeps, previously identified in the amount of $63.5 million, identified in Sec. 683 of PA 17-2, the FY 18 and FY 19 biennial budget, have not yet been authorized.

Sec. 12 restores Medicare Savings Program (MSP) income eligibility levels to a range of 211% FPL to 246% FPL on July 1, 2018, which results in a Medicaid cost of $61.5 million and an associated federal revenue loss of $68.5 million. Section 1 of the amendment provides funding for this change.

Sec. 13 authorizes disbursements in the amount of $700,000 in total, or $100,000 each to the following entities, to be paid by the Department of Energy and Environmental Protection from the Passport to the Parks account: (1) The Connecticut River Coastal Conservation District, (2) the Eastern Conservation District, (3) the North Central Conservation District, (4) the Northwest Conservation District, (5) the Southwest Conservation District, (6) the Connecticut Environmental Review Team, and (7) the Connecticut Council on Water and Soil Conservation, beginning in FY 18 and annually thereafter.

Sec. 14 designates $1.5 million appropriated in Talent Development for the purposes of the teacher education and mentoring program.

Sec. 15 allocates up to $16.2 million in General Fund support for the community college system to subsidize the cost of fringe benefits for non-General Fund supported employees at the institutions within the Office of the State Comptroller fringe benefit (OSC-FB) accounts beginning in FY 19 and for each fiscal year thereafter. Section 1 reflects funding of $16.2 million in FY 19 for the community college system within OSC- FB. 

Sec. 16 adds four additional cities – Danbury, Waterbury, West Haven, and Meriden, to the list of cities that receive a grant from the Judicial Department Youth Violence Initiative.  Currently Bridgeport, Hartford, and New Haven receive grants.  As the appropriation to this account is not increased, this results in a revenue loss to the current cities.  The FY 19 Revised Budget includes an appropriation of $1,203,303 for this account, with each city receiving approximately $171,900 in FY 19.

Sec. 17 specifies that $2 million is appropriated in section 1 of this amendment to the Department of Veterans Affairs personal services account for the purpose of attaining a dual licensure for the Connecticut Veterans Home and Hospital.  The dual licensure shall be a chronic disease hospital and a skilled nursing facility and will be implemented no later than January 1, 2021.

Sec. 18 appropriates total funding of $1.5 million to provide assistance to persons residing in the state who were displaced by Hurricane Maria. Funding is appropriated as follows: (1) $400,000 to the State Department of Education for Bilingual Education, (2) $600,000 to the Department of Housing for Housing/Homeless Services, and (3) $500,000 to the Department of Social Services for Human Resource Development-Hispanic Programs.

Sec. 19 puts a growth factor on the newly established “volatility cap” which permanently limits the projected total amount of Estimated and Final (E&F) revenues available to the General Fund at $3.15 billion.

Specifically, the amendment would allow the volatility cap to grow each fiscal year at the compound annual rate of growth in personal income over the previous five calendar years. The revised (per the amendment) volatility cap would increase the amounts of E&F revenues available to formulate General Fund budgets while reducing the amounts set aside in consensus revenue projections for year-end transfers to the Budget Reserve Fund.

The table below reflects the estimated General Fund (+) and Budget Reserve Fund (-) changes. For instance, the impact in FY 19 increases General Fund revenues by $46.8 million while reducing the set aside for the Budget Reserve Fund in the same amount.

Impact of the “Volatility Cap” Revision ($ in millions)

 

FY 18

FY 19

FY 20

FY 21

FY 22

FY 22

Growth rate

-

1.5%

2.6%

2.5%

2.6%

3.0%

Revised Volatility Cap

3,150.0

3,196.8

3,278.8

3,362.4

3,449.4

3,551.4

Change

-

46.8

82.0

83.6

87.0

102.0

Change Cumulative

46.8

128.8

212.4

299.4

401.4

Sec. 20 codifies that changes in the amendment to the volatility cap (via Sec. 19) will be included in the bond covenant.

Sec. 21 transfers $16 million from the Budget Reserve Fund to the retired teachers' health insurance premium account. This transfer, when combined with the appropriation in the retirees health service cost account of $14.6 million, provides a state contribution totaling $30.6 million for the TRB retiree health plan.   This reflects approximately 33% of the TRB retiree health basic plan estimated expenditure for FY 19.

Sec. 22 – 23 grant approximately $30.7 million in funding to towns that lose funding as a result of the motor vehicle mill rate cap. It also changes the Car Tax Grant formula so that it is calculated using current mill rates, rather than FY 15 mill rates. This results in an increase in grant funding of about $15.7 million over the original FY 19 appropriation.

Sections 24 – 25 result in a revenue impact to the Special Transportation Fund (STF) and a revenue loss to the General Fund (GF) by accelerating the schedule of sales tax phase in of a revenue diversion to the STF of sales and use tax revenue from motor vehicle sales.

The table below provides a comparison of the transfer estimates under current law, the transfer estimates under the amendment, and the net revenue increase to the STF. There would be an equal decrease in revenue to the GF.

Motor Vehicle Sales Tax Transfer Comparison

 

FY 19

FY 20

FY 21

FY 22

FY 23

% Current Law Transfer

-

-

20%

40%

60%

Current Law Transfer Amount

-

-

66.9

145.6

221.6

% Transfer in Amendment

15.0%

33.0%

56.0%

75.0%

100.0%

Amendment Transfer Amount

55.0

120.1

204.8

275.7

369.4

STF Net Impact

55.0

120.1

137.9

130.1

147.7

GF Net Impact

(55.0)

(120.1)

(137.9)

(130.1)

(147.7)

Sec. 26 – 31 reflect the appropriated fund revenue estimates for FY 19 as adjusted by this amendment.

FY 19 REVENUE IMPACTS

The following table outlines the various sections of the amendment that have a revenue impact.

Section #

Policy

FY 19

Fund

1

Reflect Federal Match for I/DD Private Provider Increase

General Fund

10.8

11, 32

Reduce Transfer from the Conservation & Load Management Fund

General Fund

(10.0)

12

Restore Medicare Savings Program Eligibility

General Fund

(68.5)

19

Index the Volatility Cap

General Fund

46.8

24, 25

Accelerate Car Sales Tax Diversion to STF

General Fund

(55.0)

24, 25

Accelerate Car Sales Tax Diversion to STF

Special Transportation Fund

55.0

34

Restore $ 1 Million to Support CT-N

General Fund

(1.0)

Sec. 32 precludes revenue gain of approximately $4.5 million in FY 19 from the Probate Court Administration Fund to the General Fund by suspending the transfer of any amount in balance over 15% of the Probate Court Administration operating costs.

Sec. 35 carries forward the unexpended balance of funds that were carried forward into FY 18 in the Department of Administrative Services in Other Expenses for the Office of the Claims Commissioner.  These funds will be carried forward into FY 19 and will not exceed $82,600. This will reduce the anticipated FY 18 year end deposit into the Budget Reserve Fund by up to $82,600.

Sec. 36 – 39, the FY 18 deficiency provisions, result in no net impact to the General Fund or the Transportation Fund. General Fund increases of $47 million are offset by reductions in appropriations. Transportation Fund increases of $37.2 million are offset by reductions in appropriations.

General Fund and Transportation Fund Expenditure Account Changes (in millions)

Agency

FY 18 $

Section 36 General Fund Increases:

Division of Criminal Justice

0.3

Dept. of Energy & Environmental Protection

1.8

Office of the Chief Medical Examiner

.2

Dept. of Developmental Services

5.5

Dept. of Mental Health & Addiction Services

7.0

Connecticut State Colleges & Universities

0.3

Dept. of Correction

4.5

Dept. of Children & Families

9.2

Workers' Comp. Claims – Administrative Services

1.8

Total - General Fund Increases

30.5

 

Section 37 General Fund Reductions:

State Comptroller – Fringe Benefits

(30.5)

Total - General Fund Reductions

(30.5)

NET General Fund Impact

-

 

Section 38 Transportation Fund Increases:

Dept. of Transportation

33.6

State Comptroller – Fringe Benefits

3.6

Total – Transportation Fund Increases

37.2

 

Section 39 Transportation Fund Reductions:

Dept. of Motor Vehicles

(2.0)

Debt Service – State Treasurer

(31.4)

State Comptroller – Fringe Benefits

(3.8)

Total – Transportation Fund Reductions

(37.2)

NET Transportation Fund Impact

-

Sec. 40 increases income eligibility for HUSKY A adults from 138% to 155% FPL (inclusive of the 5% disregard), resulting in a cost of approximately $11.3 million in FY 19. Section 1 of the amendment provides funding for this change.

Sec. 41 authorizes the carry forward of FY 18 appropriations into FY 19, in the amount of $16.5 million from the Retired State Employees' Health Service Cost account within the Office of the State Comptroller – Fringe Benefits.  Section 1 of the amendment reflects a reduction in FY 19 to the Retired State Employees' Health Service Cost account of $16.5 million to reflect these carried forward funds.  This will reduce the anticipated FY 18 year-end deposit into the Budget Reserve Fund by $16.5 million.

OUT YEARS

The table below compares the revenue estimates to the projected expenditures for FY 20 – FY 23 based on modifications to the FY 19 budget contained in this amendment.

Fund

FY 20 $

FY 21 $

Revenue

Approp.

Surplus/

Revenue

Approp.

Surplus/

(Deficit)

(Deficit)

General

17,356.7

19,840.4

(2,483.7)

17,432.4

20,514.2

(3,081.8)

Special Transportation

1,749.7

1,704.1

45.6

1,873.7

1,806.8

66.9

TOTAL

19,106.4

21,544.5

(2,438.1)

19,306.1

22,321.0

(3,014.9)

 

Fund

FY 22 $

FY 23 $

Revenue

Approp.

Surplus/

Revenue

Approp.

Surplus/

(Deficit)

(Deficit)

General

17,577.2

20,945.2

(3,368.0)

17,871.7

21,688.2

(3,814.5)

Special Transportation

1,974.6

1,874.0

100.6

2,103.9

2,005.6

98.3

TOTAL

19,551.8

22,819.2

(3,267.4)

19,975.6

23,691.8

(3,716.2)

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.