OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 ↓ (860) 240-0200

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

EMERGENCY CERTIFICATION

SB-1502

AN ACT CONCERNING THE STATE BUDGET FOR THE BIENNIUM ENDING JUNE 30, 2019, MAKING APPROPRIATIONS THEREFOR, AUTHORIZING AND ADJUSTING BONDS OF THE STATE AND IMPLEMENTING PROVISIONS OF THE BUDGET.

OFA Fiscal Note

State Impact: See Below

Municipal Impact: See Below

Explanation

The bill includes: 1) General Fund appropriations of $18.7 billion in FY 18 and $18.9 billion in FY 19, 2) appropriations in nine funds totaling $20.5 billion in FY 18, and appropriations in ten funds totaling $20.8 billion in FY 19, 3) revenue estimates adopted by the Finance Committee on 10/25/17, as adjusted to reflect new policies in this amendment; and 4) various other provisions. The table below compares the revenue estimates to the appropriations included in the amendment.

Comparison of FY 18 and FY 19 Appropriations to Revenue Estimates

Appropriations

Sections 1 – 10 include appropriations by agency and line items totaling $20.5 billion in FY 18 and $20.8 billion in FY 19.

Fund Summary of FY 18 and FY 19 Appropriations

Spending Cap

The bill is under the spending cap by $785.8 million in FY 18 and $198.5 million in FY 19.  Pursuant to section 709 of the bill, these calculations reflect: 1) an allowable growth rate based on the greater of the five-year average growth in personal income on a calendar year basis or the 12-month increase in the Consumer Price Index for All Urban Consumers, All Items Less Food and Energy on a December-over-December basis, 2) the elimination of the current exemption for certain grants to distressed municipalities, 3) that appropriations for the unfunded liabilities of the State Employees' Retirement System, Judges, Family Support Magistrates and Compensation Commissioners Retirement System, and Teachers' Retirement System are exempt from being counted as general budget expenditures under the spending cap for the current biennium, 4) that appropriations of federal funds are exempt from being counted as general budget expenditures under the spending cap, and 5) the requirement that a base adjustment be made under certain enumerated circumstances.

Growth Rate

The FY 18 growth rate for the General Fund is 4.9% over the FY 17 appropriation. The FY 19 General Fund growth rate is 0.9% over FY 18. See the table below for details on other funds.

FY 18 and FY 19 Budget Growth Rates (by fund – $ in millions)

Fiscal Impact of Sections 11 - 731 are identified below.

Section 11 provides $400,000 for soil and water conservation districts and $253,000 for environmental review teams (ERT's) in both FY 18 and FY 19 from the Passport to the Parks account.

Section 12(a) states that the Office of Policy and Management (OPM) shall recommend reductions in the General Fund in order to reduce labor-management expenditures by $700,000,000 in FY 18 and by $867,600,000 in FY 19.

Section 12(b) requires any allotment reduction to a higher education constituent unit to be credited to the General Fund, which results in a revenue gain to the General Fund and an equivalent revenue loss to the constituent unit(s).

Section 13(a) states that OPM shall recommend reductions in executive branch expenditures in FY 18 by $42,250,000 and by $51,765,570 in FY 19.

Section 13(b) states that OPM shall recommend reductions in legislative branch expenditures for FY 18 and FY 19 by $1 million.

Section 13(c) states that OPM shall recommend reductions in judicial branch expenditures FY 18 by $3,000,000 and by $8,000,000 in FY 19.

Section 14 states that OPM shall recommend reductions in expenditures to achieve targeted savings in FY 18 by $111,814,090 and FY 19 by $150,878,179.

Section 15 states that OPM may make increases in allotments in any budgeted agency of the state in order to reflect budgetary costs associated with the delay in the passage of the budget in the General Fund of $7.5 million for the fiscal year ending June 30, 2018.

Section 16 states that OPM shall recommend reductions in expenditures in the Special Transportation Fund for FY 18 and FY 19 by $12 million.

Section 17 exempts appropriations authorized for purposes of complying with Generally Accepted Accounting Principles (GAAP) from the quarterly allotment process pursuant to Section 4-85 of the Connecticut General Statutes.  This provision has no fiscal impact since these funds are non-programmatic and are only used to close out the end of the fiscal year in accordance with GAAP.

Section 18(a) allows OPM to transfer amounts from Personal Services accounts in any appropriated fund to the RSA account to reflect the impact of collective bargaining related costs.

Section 18(b) allows OPM to transfer amounts from the RSA account into any agency to give effect of salary increases and accrued payments. The appropriations in the General Fund RSA account are $317,050,763 in FY 18 and $484,497,698 in FY 19.

Section 19(a) allows for the unexpended funds for collective bargaining costs to be carried forward from FY 17 into FY 18 and FY 19. It is estimated up to $33,462,326 in the General Fund and up to $11,667,593 in the Special Transportation Fund will be carried forward.

Section 19(b) allows for the unexpended funds for collective bargaining costs to be carried forward from FY 18 into FY 19.

Section 20 allows for the transfer of funds between agencies via the use of Finance Advisory Committee (FAC) to maximize federal matching funds. This allows any General Fund appropriation to be transferred between agencies to maximize federal funding with FAC approval. Funds generated through transfer may be used to reimburse GF expenditures or expand programs as determined by the Governor and with FAC approval.

Section 21(a)(b) allows for adjustments to appropriations, with the approval of FAC, to maximize federal funding available to the state. This allows any General Fund appropriation to be adjusted by the Governor with FAC approval in order to maximize federal funding. The Governor shall present a plan for any such transfer.

Section 22 allows any appropriation made to the University of Connecticut Health Center (UCHC) in section 1 of the amendment to be transferred to the Medicaid account within the Department of Social Services (DSS) for the purpose of maximizing federal reimbursement.

Section 23 directs DSS to make Disproportionate Share (DSH) payments to hospitals in the Department of Mental Health and Addiction Services (DMHAS) for operating expense and related fringes. This allows the state to receive revenue as anticipated in the budget.

Section 24 allows any appropriation made to the Department of Veterans Affairs (DVA) in section 1 of the amendment to be transferred to the Medicaid account within DSS for the purpose of maximizing federal reimbursement.

Section 25 transfers $1 million in both FY 18 and FY 19 of Part B IDEA (federal funds) from SDE to the Office of Early Childhood (OEC) for the Birth-to-Three Program.

Section 26 suspends the DCF Single Cost Accounting System (SCAS), which results in savings of approximately $3.6 million in FY 18 and approximately $4.6 million in FY 19 to DCF. Pursuant to CGS Sec. 17a-17 and agency regulations, SCAS determines the per diem payment rates for in-state, private residential treatment centers. Under SCAS, increases in the allowable residential care components over the previous year rates are limited to the increase in the consumer price index plus 2%, or the actual increase in allowable costs, whichever is less.

Section 27(a)(b) requires that the Department of Developmental Services (DDS) and DMHAS receive 100% of reimbursement (or an alternative amount identified by the agency and approved by OPM) for private providers where their actual expenditures are less than the amount received by the departments for both FY 18 and FY 19. This gives the agencies discretion to allow providers to retain funds, which could reduce state savings.

Section 28 allows OPM to recommend reductions in expenditures to achieve a statewide hiring savings in FY 18 by $6.5 million and FY 19 by $7 million.

Section 29 allows Hartford to issue requests for proposals for the purchase of the XL center.

Section 30 transfers $750,000 in both FY 18 and FY 19 from the Tobacco and Health Trust Fund to the Department of Social Services to implement recommendations of an autism study conducted pursuant to PA 11-6.

Section 31 transfers $1 million in both FY 18 and FY 19 from the Tobacco and Health Trust Fund to the University of Connecticut Health Center to support the Connecticut Institute for Clinical and Translational Science (CICTS).

Section 32 integrates Even Start into the state-wide two-generational initiative of the Office of Early Childhood.

Section 33(a)(b)(c) requires any municipality operating more than one family resource center (FRC) to close one location. This may result in revenue loss to municipalities, as the FRC grant is currently $103,000 per center, and will be lowered to $100,000 in FY 18 and FY 19. Additionally, Section 33(c) makes the family resource center a non-lapsing account and allows municipalities to apply for a grant for any funds that are appropriated but not expended. This may result in a revenue increase to municipalities applying for the grant.

Sections 34 and 35 increase, from $4.5 million to $7.5 million, the amount of funding required to be deposited into the newly created Municipal Gaming Account. The sections also require funding of $3 million from the account to be used, beginning in FY 20, to make grants of $750,000 each to Bridgeport, New Haven, Norwalk, and Waterbury. This results in a revenue gain to those four towns, beginning in FY 20, and a corresponding reduction in the available balance of the Municipal Gaming Account.

Section 36 does not result in a fiscal impact to the state. It requires OPM to inform the Department of Insurance, by November 1, 2017 of the amount to be assessed through the Health and Welfare Fee. The Health and Welfare Fee assessment supports the Department of Public Health's Immunization Services account.

Section 37 allows OPM, with the approval of the Finance Advisory Committee to transfer appropriations between any budgeted agency in FY 18. This will not result in a fiscal impact.

Section 38 allows the Department of Social Services (DSS) and Department of Children and Families (DCF) to establish an account to allow for the receipt of reimbursement anticipated from the federal government. This allows the state to receive revenue as anticipated in the budget.

Section 39 establishes an urgent care licensure category under the Department of Public Health (DPH) and a $1,000 fee for the licensing and inspection, every three years, of these centers. Funding of $126,995 in FY 18 and $137,534 in FY 19 is provided to DPH for a full-time Health Program Associate, a half-time Supervising Nurse Consultant, and a half-time Processing Technician to implement this licensure category.

Section 40 freezes rate increases for the Temporary Family Assistance (TFA) and State Administered General Assistance (SAGA) programs, resulting in savings to the Department of Social Services (DSS) of $1.3 million in FY 18 and $3.7 million in FY 19.

Sections 41 - 44 limit increases in rates paid to certain facilities with exceptions, which is anticipated to result in savings of approximately $1.5 million in FY 18 and $3.0 million in FY 19 in DSS.

Section 45 limits increases in nursing home rates with certain exceptions, which is anticipated to result in savings of approximately $27.3 million in FY 18 and $42.5 million in FY 19 in DSS.

Section 46 makes a technical change that conforms to current practice and has no fiscal impact.

Section 47 limits increases in rates paid to intermediate care facilities for individuals with intellectual disabilities (ICF-IDs) with certain exceptions, which is anticipated to result in savings of approximately $1.1 million in FY 18 and $2.3 million in FY 19.

Section 48 suspends the Department of Children and Families (DCF) Single Cost Accounting System (SCAS), which results in savings of approximately $3.6 million in FY 18 and approximately $4.6 million in FY 19 to DCF. Pursuant to CGS Sec. 17a-17 and agency regulations, SCAS determines the per diem payment rates for in-state, private residential treatment centers. Under SCAS, increases in the allowable residential care components over the previous year rates are limited to the increase in the consumer price index plus 2%, or the actual increase in allowable costs, whichever is less.

Section 49 establishes a cap, with exceptions, on DSS payments for nonemergency dental services for individual adults on Medicaid of $1,000, resulting in savings of approximately $2.0 million in FY 18 and $2.5 million in FY 19.

Section 50 reduces eligibility for the Medicare Savings Program (MSP), which is anticipated to result in savings of $20.4 million in FY 18 and $61.5 million in FY 19, with a corresponding revenue gain of $33.4 million in FY 18 and $68.5 million in FY 19.

Sections 51 - 54 require local and regional boards of education to enroll as Medicaid providers to participate in the School Based Child Health program. This could result in an annualized revenue gain of up to $3.2 million to various local and regional boards of education not currently participating and a corresponding revenue gain to the state.

Section 55 eliminates the transfer from the Transportation Fund to the DSS to reflect supporting the transportation for employment independence program in the Department of Transportation (DOT) instead of DSS, as reflected in the budget.

Section 56 allows the DAS Commissioner to extend any candidate list scheduled to expire on June 7, 2017 to a date not later than December 31, 2018.  This will not result in a fiscal impact.

Section 57 states that the Legislative Commissioners' Office shall make technical changes as necessary to carry out the provisions in this act.  This has no fiscal impact.

Section 58 does not result in a fiscal impact as it eliminates a requirement for the Department of Transportation to complete an assessment for certain transportation projects that are classified as maintaining the state's infrastructure in good repair or are less than $150 million.

Section 59 establishes a Teachers' Retirement System Viability Commission and requires either the Office of Policy and Management, within available appropriations, or the Office of Legislative Management to pay for a global consulting firm to assist the Commission in developing a plan to maintain the financial viability of the Teachers' Retirement System.  While the cost of such a consultant is not known, the Teachers' Retirement Board paid its actuarial consultant approximately $100,000 in FY 17. The amendment does not appropriate funds for this purpose.

Section 60, which requires the University of Connecticut Health Center to seek public-private partnerships and report to the legislature on those efforts by April 1, 2018, results in no fiscal impact.  The Health Center has sufficient staff and expertise to implement this requirement.

Sections 61 allows for continued payment of magnet schools, Sheff magnet schools, and enrollment caps to stay within budget and extend tuition prohibition.

Sections 62 - 67, 83 and 236 make changes to statutory school construction requirements. There is the potential for both savings and increased future costs within these changes. For instance, calculating municipal reimbursement rates based on three-year rolling averages will have specific increased or decreased costs for individual projects and municipalities, but overall state contributions, along with aggregate municipal costs, are expected to be unchanged.

Section 68 specifies that one Teachers' Retirement Board member, appointed by the Governor, be a mayor, first selectman or chief elected municipal official and has no fiscal impact.

Section 69 provides any youth service bureau that applied for a grant during FY 17, with prior approval of the town's contribution, shall receive a grant. This could result in a revenue gain for municipalities that applied for a new youth service bureau in FY 17, and a corresponding revenue loss to existing youth service bureaus, as the grant would be provided within available appropriations, and the existing youth service bureaus with be prorated accordingly.

Section 70 establishes a task force to conduct a feasibility study on a state special education predictable cost cooperative, which is anticipated to result in a cost to SDE of $250,000-$500,000. The cost is attributed to hiring a consulting firm to conduct a feasibility study, and the estimate is based on similar studies that have been completed in other states. As the taskforce must report its findings by January 1, 2019, the costs mentioned above could be incurred in FY 18, FY 19, or both but will not be reoccurring. There may be a cost of less than $1,000 to those agencies participating in the task force to reimburse legislators and agency staff for mileage expenses, currently at 53.5 cents/mile.

Section 71 establishes the Connecticut Achievement and Resource Equity in Schools Commission. It is anticipated that there may be a cost of less than $1,000 to those agencies participating in the task force to reimburse legislators and agency staff for mileage expenses, currently at 53.5 cents/mile.

Sections 72 - 82 make procedural, technical and clarifying changes to the Technical Education and Career System, are not anticipated to result in a fiscal impact.

Section 83. Refer to Section 62 – 67.

Section 84 reduces various reporting requirements for local and regional school districts, which could result in a minimal savings.

Section 85 establishes a task force within the legislative branch to examine the use of body-worn recording equipment by state and municipal police.  This will not result in a fiscal impact.

Sections 86 - 99 implement the transfer of the Abuse Investigations Division of the Office of Protection and Advocacy from Department of Rehabilitation Services (DORS) to the Department of Developmental Services (DDS).  The amendment reflects the associated transfer of 12 positions and $1.0 million in both FY 18 and FY 19.

Sections 100 - 105 transfer the Criminal Justice Information System from the Office of Policy and Management to the Department of Emergency Services and Public Protection. This results in no net fiscal impact to the general fund, as all funds associated with the administration of CJIS are transferred to DESPP from OPM.

Sections 106 - 107 make technical corrections to the responsibilities of the Connecticut Advisory Commission on Intergovernmental Relations that will not result in a fiscal impact.

Section 108 delays, until February 15, 2020, the date by which the Department of Revenue Services must complete the next biennial tax incidence report.  This results in a one-time savings of approximately $200,000 in FY 19.

Section 109 may result in a potential cost of up to $50,000 to complete a sensitivity analysis and stress test for the Teachers' Retirement System and the State Employees' Retirement System annually.  In accordance with past practice, the cost could be borne by either the Office of Policy and Management, the Teachers' Retirement Board and the State Employees' Retirement Fund.

Section 110 allows municipalities to consolidate assessors' offices. To the extent that municipalities do not currently share assessment services, there is a potential savings that will vary based on the terms of any assessment sharing agreement.

Section 111 expands the local option admissions tax to include certain places of entertainment. To the extent that municipalities implement this tax, there is a minimal revenue gain.

Sections 112 - 113, 165 require that the Health Information Technology Officer (HITO), funded under the Department of Insurance, seek funding for, administer, and maintain the all-payer claims database (APCD), which does not result in a fiscal impact to the state or municipalities.  Section 165 repeals CGS Sec. 38a-1091 associated with the HITO assuming the responsibilities of the APCD.  

Sections 114 establishes a consumer health information website which is to be maintained by the HITO, and is not anticipated to result in a fiscal impact. Section 596 repeals CGS Sec. 38a-1084a associated with the HITO assuming the responsibilities of the consumer health information website.

Sections 115 - 124 make conforming and technical changes that are not anticipated to result in a fiscal impact to the state or municipalities.

Sections 125 - 127 make clarifying changes to HITO responsibilities, and the State Health Information Technology Advisory Council, that are not anticipated to result in a fiscal impact.

Section 128 is not anticipated to result in a fiscal impact to the state as it requires the Office of Policy and Management (OPM) in collaboration with the Health Information Technology Officer (HITO) and other parties to assist with development of a program to expedite the State-wide Health Information Exchange, which is within the expertise of the entities.  In addition, this section allows the HITO and OPM to establish or incorporate an entity to implement the program establish.  Any entity created is not a state entity and therefore not anticipated to result in a fiscal impact to the state. 

Section 129 conforms to federal requirements and is not anticipated to result in a fiscal impact.

Section 130 requires Connecticut Innovations, a quasi-public state agency, to provide a grant-in-aid of $350,000 in FY 18 and 19 to the Women's Business Development Council in Stamford. This shifts the cost of the grant from General Fund appropriations to the Resources of Connecticut Innovations.

Section 131 makes a technical clarifying change that does not result in any fiscal impact.

Section 132, which establishes a working group to develop a plan to advance the state's position as a microbiome sub-sector leader, results in no fiscal impact to the state. 

Section 133, which removes the requirement that the University of Connecticut construction assurance director be full-time, may result in potential savings to the university in salary and fringe costs, if the position becomes part-time.  The full-time director position's current salary is approximately $124,500 and benefits total $79,600.

Section 134, which establishes a Higher Education Entrepreneurship Advisory committee within Connecticut Innovations, Inc.'s CTNext, results in no fiscal impact to the state.

Sections 135 - 137 have no fiscal impact.

Section 138 reduces income eligibility for HUSKY A adults, resulting in savings of $500,000 in FY 18 and $11.3 million in FY 19.

Section 139 requires DSS to review Medicaid eligibility for certain HUKSY A adults before terminating coverage, which has no fiscal impact.

Section 140 eliminates a reporting requirement of the Office of Policy and Management and has no fiscal impact.

Section 141 makes the two-generational pilot program under the Department of Labor an initiative under the Office of Early Childhood (OEC). The budget includes associated funding of $750,000 in FY 18 and FY 19 in OEC.

Section 142 requires the Office of Policy and Management to conduct a recidivism report. This has no fiscal impact.

Sections 143 - 149 makes various changes to statutes related to the Department of Children and Families and are not anticipated to result in a fiscal impact.

Sections 150 and 151 are in the revenue table.

Sections 152 - 157 provide mandate relief for local and regional boards of education. The sections make various procedural changes that could result in a savings to various local and regional school districts. The scope of the savings will be dependent upon the size of the district, the extent to which the mandate relief policies are utilized, and a school district's ability to implement the efficient policies. For some districts the savings could be significant. The sections also make various procedural and technical changes that are not anticipated to result in a fiscal impact.

Section 158 has a potentially significant savings. This amendment shields 15% of any town's reserve fund balance from consideration for payment resulting from an arbitration decision with municipal employees. The savings associated with the amendment would vary depending on the municipality's ability to pay such award based on other financial and labor factors an arbitration panel must take into consideration. The amendment is expected to shield municipalities to the extent that arbitration awards are often significant sums (about 2% of wages on average), and the amendment removes a significant factor from a municipality's ability to pay.

Section 159 does not result in a fiscal impact to the state or municipalities. The section requires the Commissioner of DSS to annually provide the committees of cognizance with notice of any Medicaid state plan amendments or waivers which may result in a savings to the state or are related to the Recommended Budget being submitted, each December. DSS is currently required to provide all state plan amendments and waivers to the committees of cognizance for consideration.

Sections 160 - 162 provide mandate relief for local and regional boards of education. The sections make various procedural changes that could result in a savings to various local and regional school districts. The scope of the savings will be dependent upon the size of the district, the extent to which the mandate relief policies are utilized, and a school district's ability to implement the efficient policies. For some districts the savings will be significant.

Section 163 renames a bridge. There is no fiscal impact as the sign has not been created and funding was already provided.

Section 164 establishes a new Office of Health Strategy (OHS). Five positions and associated Insurance Fund support of $3,115,486 for the State Innovation Model Initiative are transferred from the Office of the Healthcare Advocate to OHS in FY 19. One position and associated Insurance Fund support of $262,978 are transferred from the Department of Insurance to OHS in FY 19. Twenty-three positions and associated General Fund support of $1,975,432 for OHCA is transferred to OHS in FY 19. A total of 29 positions and $5,353,896 is transferred to OHS in FY 19.

Section 165. Refer to Section 112.

Section 166 could result in a cost and/or revenue loss associated with limiting the ability of the Department of Social Services to extrapolate overpayments and make determinations related to certain audits occurring from November 1, 2017 to April 30, 2018.

Section 167 specifies that the Cold Case Unit account and the Shooting Taskforce account will remain in separate accounts and does not result in a fiscal impact.

Sections 168 - 169 result in potential revenue losses to the state and various municipalities by providing various tax credits, exemptions and property tax assessment freezes under the “7/7 program.” The actual revenue loss to the state is uncertain but may be significant. Because such tax benefits are not available until a business begins on the remediated property, any revenue loss is not anticipated until FY 19 at the earliest.

Sections 170 - 173 cap various state grants within available appropriation. This results in a potential significant savings to the state and corresponding revenue loss to municipalities who otherwise would have eligible to receive state funding.

Sections 174 - 177 result in a cost of $100,000 to the Office of Early Childhood (plus fringe of $38,080) in both FY 18 and FY 19 associated with two staff to support comprehensive background checks for child care providers, as reflected in the budget.

Section 178 states that the DAS Commissioner may designate other state agencies to establish policies and procedures for the certain use of parking areas under their supervision.  Anyone in violation may be fined not more than $75.  To the extent any such violations occur, it would result in a potential minimal revenue gain in both FY 18 and FY 19.

Section 179 does not result in a cost to the Office of Policy and Management or the Department of Administrative Services to provide a report with recommendation on potential savings measure for the state's workers' compensation program as it is within the agencies' expertise.

Section 180 establishes the Connecticut Pension Sustainability Commission to study the feasibility of placing state capital assets into a trust for the sole benefit of the state pension system (assumed to be the State Employees' Retirement System (SERS)) and requires the commission to report to the General Assembly no later than January 1, 2019.  To the extent SERS actuarial expertise is required to support the commission any expenditures would require the approval of the State Retirement Commission which governs expenditures from the State Employees' Retirement System Fund. 

Section 181, which updates certain annual reporting requirements of hospitals, hospital systems, and group practices comprised of 30 or more physicians, is not anticipated to result in a fiscal impact to the state or municipalities. Reports are filed with the Attorney General and the Commissioner of Public Health.

Sections 182 – 184 make changes to the Department of Public Health's (DPH) Office of Health Care Access' Certificate Of Need (CON) system. Two Health Care Analysts are provided to accommodate the changes under the bill. The annualized DPH cost of $144,407 and associated State Comptroller fringe benefits cost of $54,990 will be recouped as General Fund revenue through a hospital assessment. Per CGS Sec. 19a-631 and 632, each hospital annually pays to DPH, for deposit in the General Fund, an amount equal to its share of the actual expenditures made by OHCA during each fiscal year, including the cost of fringe benefits for office personnel as estimated by the Comptroller.

Sections 185 and 186 allow DSS to disclose asset information upon the death of certain beneficiaries, which has no fiscal impact.

Sections 187 - 199 authorize a new professional licensure category under the Department of Public Health (DPH) for Behavior Analysts and establish a separate, non-lapsing account to contain licensure fee revenue ($350 for the initial license and $175 for annual renewal) sufficient to cover costs to DPH for staff and equipment necessary to implement licensure. There is no fiscal impact to the General Fund from these sections of the bill.

Sections 200, 570 and 571 allow the Department of Social Services (DSS) to revise the reimbursement methodology and professional dispensing fees for certain drugs to comply with federal regulations, which is anticipated to result in a cost of $4.9 million in FY 18 and $5.1 million FY 19.

Section 201 prohibits certain cost sharing, which could limit the ability of DSS to achieve future savings.

Sections 202 - 203 are not anticipated to result in a fiscal impact to the state as the state health plan is a self-insured plan and does not provide coverage of the services being repealed.  In addition, these sections are not anticipated to have a fiscal impact on the state, pursuant to the ACA, or to fully insured municipal plans as the coverage provisions being repealed are not anticipated to materially change the scope of benefits currently provided.

Section 204, which alters the duration of permits for certain raffles, does not result in any fiscal impact.

Section 205 is anticipated to result in savings to the Department of Correction (DOC) as a result of changes to pretrial detention laws.  The budget contains savings in DOC related to the closure of prison units and a prison facility totaling $14.9 million in FY 18 and $16.4 million in FY 19. The changes are anticipated to reduce the pre-trial population and assist in efforts to close units and a facility.

Section 206 allows the Office of Policy and Management to proportionately reduce payments under the Elderly Circuit Breaker program in the event that payments exceed FY 18 or FY 19 appropriations. To the extent that the cost of the program exceeds appropriations, this results in a General Fund savings in each fiscal year.

Section 207 results in a revenue loss to various municipalities in FY 19 by extending for one year a waiver of property tax payments required for certain housing authorities. This is an extension of PA 15-5 JSS and PA 16-3 of the May Special Session, which prohibited municipalities from requiring an authority to make these payments to municipalities in FY 16 – 18.

Section 208 awards grants to various organizations from the Youth Services Prevention account, totaling approximately $3.1 million in FY 18 and FY 19.

Section 209 increases, from $175 to $500, the additional compensation paid to arbitrators of the State Board of Mediation and Arbitration for preparing a written decision.  This results in a cost of approximately $30,000 in FY 18 and $40,000 annually thereafter.

Section 210 allows the state to retain use of the Litchfield County Courthouse, land and associated building, unless the heirs of the lease-holders produce sufficient documentation of their rights to the land, provided such documentation was affirmed in the last forty years. The parcel of land is assessed at approximately $1 million. This provision could preclude the loss of this asset to the state.

Section 211 allows COGs to enter revenue sharing agreements. The impact of this would vary based on the terms of such agreements.

Section 212 establishes a joint bipartisan subcommittee on performance-based budgeting to identify one or more budgeted agencies to submit certain program information for consideration in developing their biennial budget. This has no fiscal impact.

Section 213 allows the state to fund certain family planning services if federal funding is restricted, which could result in a cost to the state. The federal share of FY 17 related expenditures was $5.7 million.

Section 214 enacts a two-year moratorium on the requirement that the State Bond Commission (SBC) allocate 1% of any new state building project cost for the purchase of artwork. This results in savings to General Obligation bond funds and subsequently to the General Fund in debt service costs. Historically, the 1% artwork allocation ranges from $350,000 to $1.5 million per year, dependent upon the number and cost of projects approved by the SBC each year.

Section 215 requires the Office of the State Comptroller (OSC) to report to the Governor and the General Assembly on any labor management savings realized from the agreement filed with the General Assembly on July 21, 2017 between the state and the State Employees' Bargaining Agent Coalition (SEBAC) and any related agreement, as specified in the bill, for the period FY 18 to FY 27.  The report shall be provided beginning December 1, 2018, and each December 1^st thereafter, until December 1, 2027.  The report shall report on savings realized in the prior fiscal year.  The report may result in a cost to the OSC to the extent actuaries and outside consultants are required on an ad hoc basis in a manner outside of the scope of their current contract with OSC, to provide analysis as to the savings to the state employee and retiree health plans.  Any costs associated with evaluation of savings to the State Employees' Retirement System (SERS) are anticipated to be borne by the SERS fund in accordance with current practice.  

Section 216 requires legislative committees, under certain circumstances, to hold a public hearing on Auditors of Public Accounts' audit reports. This will not result in a fiscal impact.

Section 217 requires Judges, Family Support Magistrates, and Compensation Commissioners appointed on or after January 1, 2018 to contribute 6% of salary to the Judges', Family Support Magistrates', and Compensation Commissioners' Retirement System (JRS).   The impact of the 1% increase for new appointees will be reflected in the actuarial valuation for JRS as of June 30, 2018 which will establish the state's contribution to JRS for FY 20 and FY 21.   There is no impact in FY 18 or FY 19 as the state's contribution was established pursuant to the JRS valuation as of June 30, 2016. 

Section 218 eliminates retirement COLAs and the inclusion of overtime from the retirement benefit formula from collective bargaining, including arbitrated awards after July 1, 2027.  The fiscal impact to the state is reflected in section's 158 and 159 which make modifications for the retirement formula for employees of the State Employees' Retirement System as of July 1, 2027.  In addition, this section limits contract terms to four years which does not result in a fiscal impact. 

Sections 219 - 220 remove the requirement that a portion of the E-911 fund within the Department of Emergency Services and Public Protection (DESPP) be diverted into the Firefighters Cancer Relief Fund. There is no fiscal impact to the General Fund, however there is expected to be a revenue gain to the E-911 fund resulting from this section, as a portion of those funds are no longer being diverted to the cancer relief fund.

Section 221 allows the state to modify the terms of a contract if it serves a legitimate public purpose and the contract is impaired substantially.  The fiscal impact is indeterminate as it is unknown what contract provisions may be renegotiated.

Section 222 requires the Intellectual Disability Partnership to form an intellectual disability advisory committee and has no fiscal impact.

Section 223 requires the School Building Projects Advisory Council,

which is staffed by DAS, to perform a study regarding the use of prototype blueprints and the possibility of cost savings associated with such measures. This section does not result in a fiscal impact.

Sections 224 - 230 adjust the Education Cost Sharing (ECS) formula and yield town grants totaling approximately $1.99 billion in FY 18 and $2.02 billion in FY 19.  The formula's changes include: (1) additional student weights of 15 percent for English Language Learners, 30 percent for students eligible for Free or Reduced Price Lunch (FRPL) which is unchanged, and an additional 5 percent for all students that put a town above 75 percent FRPL eligibility; (2) the property portion of the state aid ratio is weighted at 70 percent and the income portion at 30 percent; and (3) a statewide guaranteed wealth level of 1.35.  In addition, the state aid ratio is adjusted upward by between three and six percentage points, for towns with a Public Investment Community (PIC) index above 300, based on the town's precise index.

Changes to ECS grants are made as follows: (1) for FY 18, Alliance district towns receive the same grants as in FY 17 actual (post-MORE Commission lapse) and all other districts are reduced five percent from FY 17; and (2) in FY 19, implementation of the new ECS formula begins.  In FY 19: (1) towns that need additional money to reach full funding from FY 17 actual receive a grant equal to FY 17 plus 4.1 percent of the additional money needed to reach full funding (from FY 17), and (2) towns that received more in FY 17 than the new formula calculates receive a grant equal to FY 17 minus 25 percent of the difference between FY 17 and full funding.  Increases and reductions are phased in gradually until full funding is reached for all towns in FY 28. Any Alliance district town that has a lower full funding amount than FY 17 grant will continue to receive the FY 17 grant amount throughout.

Sections 231 - 235 are included in the revenue table.

Sections 236. Refer to Section 62-67.

Section 237 approves a total of $519.0 million in state grant commitments for school construction projects, including: (1) $517.9 million for 50 projects on the education commissioner's project priority list and (2) $1.1 million for three previously-authorized projects that have changed substantially (more than 10%) in cost or scope.

These grants-in-aid will be financed through the issuance of General Obligation (GO) bonds, which will be authorized in future fiscal years. No new bonds are authorized in these sections. Debt service is expected to increase in future years to the extent that projects are completed and reimbursements are sought by municipalities.

Sections 238 – 246 notwithstand certain aspects of the underlying school construction projects and reimbursement statutes. Two projects were included or altered in the priority list, with those potential impacts reflected in the school construction priority list. Seven projects are described with a collective potential cost up to $10.3 million. As with projects on the priority list, there is no change in bond authorization level, but future costs are expected to be financed through GO bonds. There is also likely a reduction in potential future costs, as the scope of a project previously approved for reimbursement in New London was narrowed, with the overall project costs expected to decline by up to $17 million.

Section 247 expands the Results First Program to additional programs, which could result in future savings or efficiencies.

Section 248 requires the Department of Correction (DOC) and the Secretary of the Office of Policy and Management to submit a progress report on the request for information regarding DOC inmate medical services, resulting in no fiscal impact to the state.  The budget assumes $8 million in savings in FY 19 due to competitively bidding out the DOC inmate medical services.

Section 249 reduces payments to full-time municipal health departments and health districts, pursuant to CGS Sections 19a-202 and 19a-245, on a pro rata basis in an aggregate amount equal to $921,020 in FY 19.

Section 250 establishes a commission on fiscal stability and economic growth which shall develop and recommend policies to achieve state government fiscal stability and promote economic growth and competitiveness within the state. This will have no fiscal impact.

Section 251 states that $1 million appropriated in FY 18 to the Labor Department for the Connecticut's Youth Employment Program shall be distributed as follows: $150,000 to the City of Hartford Department of Families, Children, Youth and Recreation, $350,000 to the Capital Region Workforce Investment Board, and $500,000 to the Wilson-Gray YMCA. 

Sections 252 - 253 establish a minimum budget requirement (MBR) for FY 18 and FY 19. This results in a potential savings to municipalities as allowances as made for reductions in education equalization aid “ECS.”

Sections 254 – 257 delays raises for judges until FY 20 and results in savings of approximately $1.1 million in FY 18 and $1.5 million FY 19.

Section 258 requires the Materials Innovation and Recycling Authority (MIRA) to make a $1 million payment to the City of Hartford, in lieu of taxes, no later than December 1, 2017.  This results in a $1 million revenue gain to the City of Hartford and a cost of $1 million to MIRA, which is a quasi-public entity.   

Sections 259 and 260 require the Office of Policy and Management to determine the distribution of $2.8 million in FY 18 and $5 million in FY 19 appropriated for regional councils of government (COGs) and provides stipulations under which COGs may receive the money. The bill also allows COGs to enter revenue sharing agreements.

Sections 261 - 262 allow DSS to establish a twelve month pilot project with a Torrington community action agency. Section 262 appropriates funding of $100,000 in FY 18 to support rental and overhead expenses associated with relocating DSS staff from the Torrington regional office to the community action agency and for additional costs related to service delivery.

Section 263 allows Department of Consumer Protection (DCP) inspection of alcoholic liquor wholesaler or manufacturer premises, books, and records, which has no fiscal impact as DCP may already perform such inspections. Inspection is to ensure compliance with this section's wholesaler and manufacturer inventory and product unloading requirements, which are also in regulation.

Section 264 requires certain electric distribution companies (EDC's) to conduct a procurement for electricity and renewable energy credits from a combined heat and power system located in certain municipalities.  It then allows, after reviewing any proposals submitted after procurement, the EDC to enter into a purchase agreement with a thermal energy distribution company for the purchase of electricity and renewable energy credits for not more than twenty years.  Additionally, it requires the Public Utilities Regulatory Authority (PURA) to review and approve agreements under certain conditions.  To the extent PURA currently has the expertise for this type of review, consultants may need to be retained by the agency for this purpose.  The cost of any consultants, if any, may be paid for by the EDC. 

Sections 265 and 266 permit towns to adjust their budgets and tax bills in response to a significant change in state aid. The revenue impact to a town will vary. For example, a town with a significant increase in state aid will experience a corresponding loss in property tax revenue as a result of a reduced mill rate.

Section 267 provides mandate relief for local and regional boards of education, which could result in a potential savings. The scope of the savings will be dependent upon the size of the district, the extent to which the mandate relief policies are utilized, and a school district's ability to implement the efficient policies.

Sections 268 - 269 and 271 - 272 reduce candidate grants based on when applications are submitted.  While this may result in savings to the Citizens' Election Fund (CEF), it is anticipated that the majority of candidates will file applications earlier to receive the full grant amount, increasing the State Elections Enforcement Commission (SEEC) staff workload.  Overtime costs may be incurred.  Currently, the SEEC receives grant applications over a multi month period.

Section 270 and 273 suspends Consumer Price Index adjustments to CEF grants in FY 18, resulting in one-time revenue savings of approximately $1.4 million.

Section 274 requires the SEEC to issue a decision or dismiss a written complaint within one year of receiving it. Under current law, SEEC has no timeframe in which to complete an investigation.  Under the amendment, investigations must be completed in one year.  Potential costs may be incurred if the SEEC needs additional staff to meet the time deadlines.

Section 275 which requires the State Elections Enforcement Commission to conduct an audit after an election or primary through a weighted lottery process has no fiscal impact on the Citizens' Election Fund.

Section 276 adjusts individual and aggregate contribution ranges to reflect Consumer Price Index (CPI) adjustments, as well as increases individual contribution limits to two-hundred and fifty dollars.  Under the amendment, individual contribution limits for legislative candidates will be adjusted effective December 1, 2017, and statewide candidates effective January 1, 2019.  Potential costs may be incurred if increases to individual contribution limits significantly affect candidate grant qualification rates.

Section 277 requires the Teachers' Retirement Board (TRB) to conduct a study of the impact of potential changes in actuarial assumptions that may result in a cost for actuarial consulting to the agency. It also requires the TRB to submit a summary of the study and recommendations for changes to the General Assembly.

Sections 278 - 319 and 596 consolidate the state Department on Aging (SDA) with DSS, establish the Office of the Long-Term Care Ombudsman within OPM, and make various technical and conforming changes. The budget transfers $10,306,794 in both FY 18 and FY 19 from SDA to DSS and reflects Personal Services savings of $185,094 associated with the consolidation.

Section 320 implements the savings in the budget by reducing the state's share of the Teachers' Retirement Board retiree health service cost from 33% to the FY 17 level and by reducing the state's share of the municipal retiree health insurance from 33% to the 25% level. This results in a reduction of $19.3 million in FY 18 and $24.2 million in FY 19 in the retiree health service cost account and a reduction of $1.5 million in both FY 18 and FY 19 in the municipal retiree health insurance account. The reduction in the state payment is offset by a corresponding increase in the amount paid by the retired teachers' health insurance premium account. The retired teacher share of the TRB health plan remains unchanged.

Sections 321 – 323 transfers juvenile justice responsibilities from DCF to the Judicial Branch's Court Support Services Division (CSSD) in FY 19. Funding for contracts totaling $8.8 million in FY 18 and $17.7 million in FY 19 is transferred from DCF to CSSD.

Section 324 requires $1.5 million of the funds in the Connecticut Airport and Aviation account in FY 18 and FY 19 to be used for the operation of Tweed-New Haven Airport.

Sections 325 – 331 establish the Passport to the State Parks program through creation of a separate, nonlapsing account, effective January 1, 2018.   It requires the Department of Motor Vehicles (DMV) to collect a supplemental fee of $10 biennially, on certain registrations, generating an estimated $8.0 million in FY 18 and $16.0 million in FY 19.   After the estimated surplus of $2.6 million in FY 18 and $5.0 million in FY 19 is transferred to the General Fund, the Passport to Parks account contains revenue of approximately $6.1 million in FY 18 and $13.9 million in FY 19.  The account would contain expenses of approximately $6.1 million in FY 18 and $11.8 million in FY 19.  Therefore, the balance in the account, after the transfer of surplus to the General Fund, is estimated to be approximately $16,000 in FY 18 and $2.1 million in FY 19.   There would also be a General Fund revenue loss of approximately $700,000 in FY 18 and $2.9 million in FY 19, associated with out-of-state residents no longer remitting fees at state parks.

Section 332 states that an agreement or award is deemed approved if it is called for consideration in a chamber within 30 days of the filing of the agreement.  If a chamber fails to call the agreement for consideration it is rejected.  The fiscal impact of a rejected contract is indeterminate pending the terms of the new contract.

Section 333 states that OPM and the Office of Fiscal Analysis do not have to produce a Fiscal Accountability Report in 2017. This has no fiscal impact.

Sections 334 and 335 establish a Crumbling Foundations Assistance Fund resulting in no fiscal impact to the state.  The account will contain moneys required by law and any voluntary contributions.  Money in the account will be used to incorporate the captive insurance company, established by section 336 of this act.  Voluntary contributions will be used for providing financial assistance to homeowners affected by deteriorating pyrrhotite in their foundations.  The bonding section of this bill authorizes $20 million in bonding for FY 18 through FY 22 to fund the Crumbling Foundations Assistance Fund.

Section 336 a captive insurance company will be established by the incorporators as a not-for-profit entity for the purpose of providing various assistance and services to owners of concrete foundations affected by pyrrhotite.  Employees of the captive insurance company are not state employees and the captive insurance company will not be required to pay a license fee or renewal fee.  The captive insurance company shall continue until June 30, 2022 and then will terminate and all of its rights and properties shall pass to the state of Connecticut.

Section 337 has no fiscal impact by requiring the Connecticut Housing Finance Authority (CHFA), a quasi-public state agency, to administer a Collapsing Foundations Credit Enhancements Program, the purpose of which is to assist impacted homeowners obtain necessary funding for replacement or repair of concrete foundations.

As CHFA is primarily tasked with (1) seeking participation of lenders to participate in providing qualifying loans and (2) developing the terms of the program, there is no fiscal impact to the agency. CHFA has expertise with administering home loan programs and therefore can develop this program with existing resources.

Section 338 prohibits construction use of recycled material known to contain pyrrhotite unless a specified standard is met, and makes such use a violation of the Connecticut Unfair Trade Practices Act (CUTPA). As it is anticipated that there will be few, if any, violations, the Department of Consumer Protection has sufficient personnel to enforce this section, and no additional revenue is anticipated. A CUTPA violation can yield a fine of up to $25,000 per instance.

Section 339 would not allow town building officials to collect educational or application fees for buildings that contain pyrrhotite. To the extent that towns would have otherwise charged such fees, there is a revenue loss to towns resulting from the amendment. There is also a revenue loss to the general fund, as a portion of the educational fee is remitted to the state.

Section 340 requires the Department of Consumer Protection (DCP) to adjust residential disclosure report regulations to include property foundation questions and an advisory related to foundation inspection.  As DCP has sufficient expertise to revise regulations in this way, no fiscal impact is anticipated.

Section 341 specifies various insurance company practices and results in no fiscal impact to the state.

Section 342 establishes a deduction against the state income tax for financial assistance received from the Crumbling Foundations Assistance program established under the bill.  To the extent such assistance is received by state income tax filers, this result in a General Fund revenue loss as early as FY 18.

Section 343 permits municipalities to bond for repairs to properties affected by pyrrhotite. To the extent a town opts to borrow for such repairs, there are associated costs.

Section 344 would permit municipalities and regional school districts to jointly finance repairs to homes with crumbling foundations. To the extent towns opt to join together to finance such projects, there is a cost to such initiatives.

To the extent municipalities opt to participate in programs that provide assistance to homeowners with crumbling foundations, there is an avoidance of a grand list reduction from the amendment. In the absence of any assistance, homes with crumbling foundations would lose assessment value, and therefore reduce the amount of taxable property within a given municipality.

Sections 345 establishes a working group to develop a model quality control plan for quarries and study the workforce of contractors undertaking crumbling foundation repair and replacement.  This results in no fiscal impact to the state.

Section 346 requires that if a State Building Code standard is established for the presence of pyrrhotite in concrete, a concrete seller will provide the purchaser a notice of compliance with the standard, which results in no fiscal impact to the state.

Section 347 establishes a special homeowner advocate within the Department of Housing (DOH) to provide advice and assistance and coordinate state programs related to the crumbling foundations issue. Section 1 of the bill provides funding for one position under DOH to support crumbling foundation activities.

Section 348 requires the Department of Consumer Protection (DCP), in consultation with the Department of Labor, to establish a training program for contractors who work on crumbling foundations. This is anticipated to have a cost of approximately $25,000 in FY 18.

Sections 349 to 376 allow certain financially distressed municipalities to enter into contract assistance with the state. The impact of this would vary based on the provisions of the contract.

The bill results in an annualized cost of up to $276,000 for the Office of Policy and Management to staff the Municipal Accountability Review Board ($200,000 for salaries and $76,000 for fringe benefits). It is anticipated that staff will be needed to review and approve the budgets, bond ordinances, and collective bargaining agreements of the most financially distressed municipalities, and carry out several other duties as required by the bill.

The bill results in a potentially significant savings to some municipalities. For example, it allows the most financially distressed municipalities to request that the Municipal Accountability Review Board approve or disapprove their budgets and bond ordinances. If the Board approved a budget that significantly reduced spending, such municipalities would correspondingly achieve significant savings.

Sections 377 - 553 make the following adjustments to bond authorizations in the biennium:

In total, $276.5 million of bond funds previously authorized that were set to become effective in the biennium are delayed until after FY 19. $141 million of new authorizations are added with effective dates after the biennium.

Notable authorization changes with effective dates after the biennium include: an extension of the UConn 2000 bond program for three additional years (through FY 27); an extension and $4 million increase to authorizations to the Bioscience Innovation Fund (through FY 24); extension and $16 million increase for the Connecticut State Colleges and University 2020 program (through FY 20).

A total of $100 million is authorized for the Crumbling Foundations Assistance Fund, $60 million of which is effective after FY 19 ($20 million per year for FY 18 through FY 22). A total of $100 million is authorized for the capital grants to hospitals, $60 million of which is effective after FY 19 ($20 million per year for FY 18 through FY 22).

To the extent that these authorized funds are allocated by the State Bond Commission and issued by the Treasurer, the is a potential increase in future debt service payments for the General Fund (GO bonds) and Special Transportation Fund (STO bonds).

Section 554 requires gas companies to propose rates in its application for certain qualified manufacturers.  This has no fiscal impact to the state or municipalities as ratepayers.

Section 555 establishes a working group to study broadband internet access service consumer data privacy. This has no fiscal impact.

Section 556 establishes a procedure by which local tax assessors may receive certain identifying information about motor vehicles registered in other states from the Department of Motor Vehicles (DMV) in order to add such vehicles to a municipality's grand list.  To the extent that municipalities are able to use information provided by the DMV add motor vehicles to their grand list, there is a grand list expansion. This expansion will vary based on the number of vehicles affected, and their value. A grand list expansion results in a revenue gain, given a constant mill rate.

Section 557. See section 11.

Section 558 allows DSS to eliminate home health care add-on payments in FY 18 and FY 19. The budget assumes related savings of $2.1 million in FY 18 and $1.7 million in FY 19.

Section 559 specifies that on and after FY 20, the TRB in the actuarial determination of the annual required contribution shall assume that the regular mandatory contribution is 6% instead of 7%.  This will increase the state contribution on and after FY 20 by the amount of the 1% contribution.

Section 560 requires the Department of Transportation to review certain types of permits within ninety days and does not result in a fiscal impact.

Sections 561 and 562 requires the Departments of Energy and Environmental Protection (DEEP) and the Department of Agriculture (DoAg) to review and make final determinations on certain regulated activities no later than 90 days.  This requirement is not anticipated to result in a fiscal impact to DEEP or DoAg.

Sections 563 to 565 require towns to pay a portion of the cost associated with the state Renters' Rebate program. The FY 18 and FY 19 budget reduces the program by $14.6 million in FY 18 and $13.6 million in FY 19, and allows renters to apply to their towns for the portion of the rebate they will no longer collect from the state.

Sections 566 - 567 increase the public works prevailing wage threshold from $400,000 to $1 million for new construction projects and from $100,000 to $500,000 for renovation and remodeling projects. This results in a significant savings to the state and municipalities primarily in bond funds (debt service payments) for new construction and renovation projects valued below these thresholds.

Section 568. Refer to Section 32.

Section 569 applies any federal cost of living adjustments (COLAs) to offset the cost of care for individuals in the Old Age Assistance, Aid to the Blind, and Aid to the Disabled (also referred to as supplemental assistance) programs, resulting in savings to DSS of $1.2 million in FY 18 and $2.6 million in FY 19. Section 569 also freezes rate increases for the supplemental assistance programs, resulting in additional savings of $261,200 in FY 18 and $751,000 in FY 19.

Section 570 and 571. Refer to Section 200.

Section 572. Refer to Section 558

Section 573 ensures that money appropriated for the Priority School District grant, in FY 18 and FY 19 is spent in the appropriate year, and through the appropriate sub-grant. This allows eligible school districts to receive funding. The funding for both FY 18 and FY 19 totals $38.1 million.

Section 574(a) provides up to $40,000 in both FY 18 and FY 19 to the State Department of Education (SDE) for the Bridge Family Center in West Hartford.

Section 574(b) provides up to $80,000 in both FY 18 and FY 19 to SDE for the New Haven Reads program.

Section 574(c) provides up to $125,000 in both FY 18 and FY 19 to SDE for the Career Pathways TECH Collaborative at Eli Whitney Technical High School in New Haven.

Section 574(d) provides $915,000 in both FY 18 and FY 19 to SDE for a magnet school reimbursement grant to East Hartford.

Section 574(e) provides up to $463,479 in both FY 18 and FY 19 for Project Oceanology.

Sections 575 - 582 cap various statutory grants, through FY 19, which results in a savings to the state and a potential revenue loss to various towns.

Section 583 increases the state per pupil reimbursement for charter school students from $11,000 to $11,250. This results in an additional cost to the state of approximately $2.6 million.

Sections 584 - 585 allow for continued payment of magnet schools, Sheff magnet schools, and enrollment caps to stay within budget and extend tuition prohibition.

Section 586 increases the teachers' mandatory regular contribution by 1% from 6% to 7% on and after January 1, 2018. The teachers' mandatory contributions are deposited to the Teachers' Retirement Fund.

Section 587 requires the Teachers' Retirement Board to: (1) request a revised actuarial valuation establishing the state's annual required contribution for the fiscal years ending June 30, 2018, and June 30, 2019 based on the 1% increase in the mandatory contribution required in Section 586 and (2) certify to the General Assembly the revised retirement contribution for FY 18 and FY 19. Savings of $18 million in FY 18 and $38 million in FY 19 associated with this provision have been reflected in the budgeted targeted savings.

Sections 588 - 592 specify the distribution of municipal grant funding of $302.3 million in FY 18 and $279.5 million in FY 19 across five grants: 1) the State Property PILOT, 2) the College & Hospital PILOT, 3) Pequot Fund grants, 4) Revenue Sharing grants, and 5) Municipal Stabilization grants.

Section 594 results in a minimal savings to the Department of Transportation by repealing language to name a bridge the “Veterans of Foreign Wars Memorial Bridge".  

Section 596 makes technical and conforming changes that have no fiscal impact.

Section 601 – 617. Refer to revenue table.

Sections 618, 620 to 621: (1) require the Department of Social Services (DSS) to establish at least four hospital supplemental payment pools from which payments will be distributed in accordance with a methodology determined by DSS in consultation with the Connecticut Hospital Association, (2) requires the total amount of the supplemental payments made to hospitals be $598,440,138 in FY 18 and $496,348,138 in FY 19 , (3) in general, requires the supplemental payments to be made on a quarterly basis on or before the last day of the quarter and allows the DSS commissioner to advance all or a portion of a supplemental payment to a distressed hospital in FY 18, and (4) prohibits the Governor from reducing any allotment for the Hospital Supplemental Payment account in FY 18 and FY 19.  The budget assumes $598.4 million in FY 18 and $496.3 million in FY 19 in the Hospital Supplemental Payment account.  Lastly, section 618 eliminates reference to blended inpatient hospital rates which does not result in a fiscal impact in accordance with current practice. 

Section 619 requires DSS to increase hospital inpatient and outpatient Medicaid rates as of January 1, 2018 which will result in an annualized aggregate rate increase of $175.1 million. In addition, section 619 requires hospital rates for hospitals subject to the hospital tax to be maintained at a rate not less than the rate in effect as of January 1, 2018. The budget assumes $73 million in FY 18 (partial year funding) and $175.1 million in FY 19 for hospital Medicaid rate increases. 

Section 622 – 698. Refer to revenue table.

Sections 701 – 703 establish programs by which holders of certain stranded tax credits may utilize said credits.  This results in a potentially significant revenue loss in the out years, anticipated to be less than $50 million in the aggregate.

Sections 704 - 708 implement limitations on the amount of General Fund and Special Transportation Fund revenue that may be utilized for unrestricted general budget expenditures, establish a bond covenant requirement, and makes various definitional changes to the statutory spending cap. To the extent sections 704-708 result in (1) additional contributions, in excess of the state's annual actuarially determined employer contribution for the State Employees' Retirement System (SERS) or the Teachers' Retirement System (TRS) and/or (2) paying down outstanding debt obligations, there will be a savings to the state. Any savings to either SERS or TRS will be reflected in future actuarial valuations.

Section 704 specifies that, beginning in FY 18, any revenue from Estimated and Final payments under the Personal Income Tax in excess of $3.15 billion be diverted to the Budget Reserve Fund.  This reduces General Fund revenue and increases Budget Reserve Fund revenue by approximately $64.6 million, $128.9 million, and $194.5 million in FY 20, FY 21, and FY 22, respectively (to the extent that actual revenue exceeds $3.15 billion in FY 18 and FY 19, there is a potential impact within the biennium).  This section also increases the cap on the Budget Reserve Fund from 10% to 15% of net General Fund appropriations.

Additionally, Section 705 caps General Fund and Special Transportation Fund expenditures at a specified percentage of estimated revenues according to the following schedule:

This reduces revenue available for General Fund appropriations by $88.9 million, $134.1 million, and $180.1 million in FY 20, FY 21, and FY 22, respectively, and for Special Transportation Fund appropriations by $8.7 million, $14.0 million, and $20.0 million in FY 20, FY 21, and FY 22, respectively.

Section 706 requires that certain bonds issued after May 15, 2018, and prior to July 1, 2020, include a covenant requiring the state to comply with the provisions of section 705 of the amendment.

Sections 707 - 708 make various conforming changes to implement the above provisions.

Section 709. See Spending Cap section above.

Sections 710 - 712 limit GO bond allocations to two billion dollars (beginning in CY 17), issuances to $1.9 billion (beginning in FY 19), and spending to $1.9 billion (beginning in FY 19), with some exemptions. All limits are to be adjusted based on a specified consumer price index factor going forward. Taken together, it is expected that the costs of debt repayment will be lesser in future years than if use of bonding is not limited. The overall costs, and any associated savings, will be dependent on actual use of bond funds, changes in market conditions, and changes in factors that impact the state's own costs of borrowing.

The Governor is required to limit bond allotments and to publish a capital bond fund expenditure budget. The Treasurer is required to produce a list of projects with allocated but unissued bonds.

Section 713 does not result in a fiscal impact to the state or municipalities.  These sections require the Office of the State Comptroller to provide an analysis of the monthly statements prepared by the Office of Policy and Management, which is within the agency's expertise. 

Sections 714 - 716 authorize the Office of the State Treasurer to issue bonds backed by revenue generated from the withholding portion of the State Income Tax in lieu of General Obligation (GO) bonds. Similar initiatives in other jurisdictions have lowered borrowing costs.

These sections direct any savings from the initiative to the Budget Reserve Fund, which should help to improve Connecticut's credit rating and market attractiveness over time, thus reducing borrowing costs in the long-term. In addition, indications are that the new type of borrowing authorized in the bill may be viewed more favorably in bond markets because it is linked directly to a large and relatively stable revenue source. If such is the case, then near-term debt service savings could be achieved.

While the state should realize a significant decrease in the costs of borrowing, and therefore debt repayment, these savings would not necessarily reduce expenditures in the General Fund in any given year unless the requirements to access the balance of the Budget Reserve Fund are met.

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation, the bond market, and changes in the state's credit rating and use of bond borrowing. It is anticipated that the state would discontinue use of the new credit revenue bonds in favor of General Obligation bonds at such time as the state's overall credit rating has improved and stabilized.

Sections 717 – 727 reflect the appropriated fund revenue estimates for FY 18 and FY 19, as adopted by the Finance, Revenue and Bonding Committee on October 25, 2017.

Section 727 precludes revenue gain of $6 million in FY 18 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.

Section 730 repeals section 62 of PA17-202 which made DORS the successor agency to the Office of Protection and Advocacy with respect to the investigation of abuse and neglect due to the transfer to DDS.

REVENUE IMPACTS

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

The Out Years

With the exception of the one-time policies noted above, the annualized ongoing fiscal impacts identified above would continue into the future subject to inflation.

The table below compares the revenue estimates to the projected expenditures for FY 20 – FY 22 based on the FY 18 and FY 19 budget.

FY 20 – FY 22 Fund Balance (in millions)

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.