AN ACT CONCERNING DEFICIT MITIGATION.


FY 09 OFA Projected General Fund Deficit as of 11/14/08 ($391. 8 million)
Expenditure Savings:
Reduction to carry forwards (FY 07 surplus appropriation)	$14,515,000
Reduction in FY 09 Appropriation	9,071,137
Other Savings	2,000,000
Subtotal Expenditure Savings	$25,586,137

Increased Revenue:
Tax Amnesty	40,000,000
Transfer from Citizens' Election Fund (CEF)	5,000,000
Money Follows the Person (MFP) Enhanced Revenue	688,000
Transfer from Transportation Strategy Board	559,426
Subtotal Increased Revenue	$46,247,426

TOTAL BILL IMPACT	$71,833,563
OFA Projected Deficit with Bill's Impact ($320. 0 million)

Note: The bill would reduce the OFA projected deficit by $71. 8 million. However, the deficit would further be reduced to $302. 1 million if the Governor successfully negotiates the Other Post Employment Benefits (OPEB) savings ($14. 5 million) and implements the following savings: delay fleet purchase ($1. 2 million); eliminate arena study ($. 3 million); and reduce outside consultants ($2 million).

As a result of reducing FY 09 appropriations, the budget will be under the spending cap by $9. 7 million. Prior to this action, the FY 09 budget was under the cap by $600,000.

Below is a further explanation of the fiscal impact of the bill.

Section 1 reduces funds carried forward to FY 09 by $14,515,000 in various agencies. These funds were appropriated from the FY 07 surplus.

Section 2 directs $4. 65 million in the Department of Economic and Community Development (DECD) from Biofuels to: 1) $3. 65 million for production grants and 2) $1. 0 million for fuel diversification research grants. The $4. 65 million total is the balance of funding available after the reduction in Section 1.

Section 3 reduces the General Fund appropriation for FY 09 by $9,071,137. These reductions are made to various agencies and accounts.

Section 4 requires executive branch agencies to lapse an additional $1. 5 million in aggregate in Other Expenses.

Section 5(a) transfers $5 million from the Citizens' Election Fund (CEF) to the General Fund. This will result in a revenue gain to the General Fund in FY 09 and a corresponding reduction in available resources in the CEF.

Section 5(b) transfers $559,426 from the Transportation Strategy Board (TSB) to the FY 09 General Fund as revenue. Section 61 of PA 07–1 of the June Special Session carried forward the unexpended balance of the TSB into FY 08 and FY 09. The $559,426 is the anticipated balance for the year to date.

Section 6 eliminates a provision, only in FY 09, that the Department of Higher Education (DHE) redistribute unobligated funds from the Connecticut Independent College Student (CICS) Grant to other institutions. This will result in an FY 09 savings of $500,000 in the Connecticut Independent College Student Grant account.

Section 7(a) requires the Department of Social Services (DSS) to expedite the placement of clients under the Money Follows the Person (MFP) program. Assuming that DSS is able to meet this aggressive placement schedule, the state will receive an enhanced Medicaid match for the MFP clients, as well as a potential savings through lower-cost placements. Based on an assumption that MFP placements will cost 15% less than the previous nursing home placements, and that none of the nursing home beds will be refilled (thus reducing Medicaid bed days), it is estimated that FY 09 Medicaid costs will be reduced by $487,000 and the state will receive an additional $688,000 via the enhanced federal match, for a net state impact of $1. 18 million. It should be noted that DSS has not yet placed a MFP client in the community.

Section 7(b) clarifies intent of current statutory language, and has no direct fiscal impact. The original FY 09 appropriation included $4. 7 million for the provision of medical interpretation services.

Sections 8 and 9 require the Department of Revenue Services (DRS) Commissioner to establish a tax amnesty program from May 1, 2009 to June 25, 2009. The program is anticipated to result in a one-time net General Fund revenue gain of $40 million in FY 09 after $1 million in administrative and marketing expenses. However, revenue from accounts receivable is likely to be lower in subsequent years because the program is expected to accelerate the receipt of taxes that would have otherwise been collected in the future.

Sections 10 - 14 requires a distributor selling a beverage container in the state that is subject to the bottle deposit law to report any unclaimed deposits to the Department of Environmental Protection (DEP).

To the extent the bill requires DEP to establish a separate accounting system for certain bottle deposits, meet certain reporting requirements, and adopt regulations the agency could incur costs of about $30,000 in FY 09 for one-time start-up expenses to carryout these provisions.

Sections 15 - 17 eliminate the Office of Business Advocate (the Office) and place the duties and responsibilities associated with it as outlined in CGS 32-725 within the Department of Economic and Community Development (DECD) as of January 1, 2009. These additional duties and responsibilities are similar to those currently performed by DECD, such as: encouraging and promoting the location and development of new business in the state as well as the maintenance and expansion of existing business; and, acting as a clearinghouse and referral agency for information on state and federal programs. Section 16 transfers $80,000 from OPM's Office of Business Advocate account to DECD's Personal Services account for these purposes. Section 17 repeals CGS 32-725 as of January 1, 2009. This will eliminate the Office and its associated personnel within OPM. It should be noted that section 3 of the bill reduces the Office of Business Advocate within OPM by $225,000 in FY 09.

The Out Years

The extent to which any reductions to the FY 09 appropriations result in ongoing savings in the out years is unknown.

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.

Agency Affected	Fund-Effect
Various	GF - See Below