Appropriations panel reverses health cuts, transit fare hikes

Despite fiscal constraints, the Appropriations Committee restored funding Thursday for health care for the poor and the University of Connecticut Health Center, canceled a second wave of transit fare hikes and rejected several agency mergers sought by Gov. Dannel P. Malloy’s administration.

The plan the Democratic-controlled committee adopted in a 34-15 vote along party lines also restored two crucial posts for the state’s top elections watchdogs and preserved separate grants for more than a dozen of the state’s top tourism attractions. Republicans tried unsuccessfully to amend the committee proposal with their own plan, which would spend about $340 million less, but offer modest income and sales tax cuts.

The $20.73 billion committee plan shaves just over $936,000 off the bottom line Malloy proposed in February for the fiscal year that begins July 1 — a minute difference of 1/221st of 1 percent. But the administration raised concerns Thursday that the panel budget doesn’t include funds to continue the conversion of state finances to Generally Accepted Accounting Principles.

The committee’s proposal would maintain existing benefits and eligibility in a Medicaid program that serves poor adults without minor children, a contrast to the Malloy administration’s plan to reduce benefits and restrict eligibility to save $22.5 million in the coming fiscal year.

Instead, the committee proposal would save $20 million in Medicaid by increasing efforts to recover funds from insurance companies that also cover some clients in the program. The proposal would fund two positions in the state Office of the Healthcare Advocate to seek payments from insurers that cover people served by Medicaid and could be responsible for paying for the care the patients receive. The efforts are likely to focus on behavioral health services.

“What we’ve tried to do is stabilize the budget,” Sen. Toni N. Harp, D-New Haven, co-chairwoman of the Appropriations Committee, said during a midday press conference, noting that lawmakers were skeptical that federal Medicaid regulators would allow some of the changes sought by the governor.

“One of the things we wanted to do is not have a budget that was full of surprises,” added the panel’s other co-chairwoman, Rep. Toni E. Walker, D-New Haven.

The committee proposal would also cut in half Malloy’s projected savings from changing the way medication is administered to home care patients in Medicaid. Malloy proposed allowing nurses to delegate responsibility for administering medication to unlicensed workers in some cases, as well as using assistive technology to help some clients get their medications, and reducing the rates paid to nurses for administering medication. Altogether, that was projected to save $20.6 million. The committee reduced the savings to $10.3 million.

Fare hikes, consolidations rejected

The Appropriations panel recommended scrapping the 2013 hikes aimed at rail and bus service, as well as for transit programs serving the disabled. This move would save consumers more than $4.6 million next fiscal year.

Another $900,000 was added to the budget to support bus service linking the New Haven train station with Southern Connecticut State University.

Lawmakers also reduced from $7 million to $5 million funding for Malloy’s Pay-As-You-Go program, which uses operating cash to fund road and bridge maintenance and roadside tree-trimming.

The panel balked at several consolidations the Democratic governor recommended in his most recent budget. During a public hearing earlier this month, several committee members noted that based on the administration’s own numbers, these mergers save very little money in the coming fiscal year.

One of the merger plans that the budget panel passed on involved moving the Chief State Medical Examiner’s Office under the auspices of the UConn, given that the examiner’s office is located at the UConn Health Center campus in Farmington.

Malloy has proposed moving all the state’s affordable housing into the Department of Economic and Community Development. The committee rejected that proposal and the Department of Children and Families $6.4 million will keep its housing subsidy program that helps the agency avoid taking children away from their parents because they are homeless.

The committee also opposed moving the Workers Compensation Commission into the Labor Department, though it did back Malloy’s proposal to close the commission’s Middletown office, one of eight WCC regional branches.

Lawmakers backed a Malloy merger plan last year that brought 81 departments and agencies to 57, but Walker said the half-dozen new consolidations the governor sought this year weren’t essential right now.

“We found out that many of them we did last year still are not working,” she said, adding that when it came to the new proposals, “there was no savings, no real reason to make those consolidations.”

Other mergers that the committee recommended against involved moving:

  • The Teachers’ Retirement Board into the comptroller’s office;
  • The Department of Construction Services into the Department of Administrative Services;
  • The Commission on Human Rights and Opportunities and the Office of Protection and Advocacy for Persons with Disabilities into a new joint agency.

Legislators also declined to back Malloy’s proposal to scrap separate arts and culture promotion accounts and move the $1.6 million they would receive into the statewide tourism marketing effort. Instead the committee proposed taking an extra $1.5 million from statewide marketing, while adding $470,000 in promotion funds for select tourism sites and creating a new $500,000 grant to promote community theaters.

“We’re in that situation where committees do what committee do and five weeks out we’ve got a lot of work to do,” the governor responded Thursday. “That won’t be the final budget.”

Still, Malloy added that “there are a few things in there that are non-starters, quite frankly,” citing the lack of GAAP conversion funds as one example. “Any changes with respect to the ability of my administration to administer the budget will be opposed quite vigorously, including all tools at our command.”

GAAP rules are a series of common financial guidelines established by the Government Accounting Standards Board to emphasize transparency. Unlike the modified cash basis that state government has long used, GAAP rules require that funds be on hand to cover expenses as they are incurred.

State government would need another $1.7 billion in its coffers to cover all its obligations under GAAP rules. And that differential grows annually with inflation. The governor pledged to use the first $75 million of any surplus this fiscal year, and another $50 million in 2012-13, to cover that inflationary cost and stop the GAAP differential from growing.

Health center, election watchdogs, DCF get extra money

One of the largest funding increases recommended by the budget panel involves adding $11.85 million for the UConn Health Center to ensure its 2012-13 funding matches current levels.

The State Elections Enforcement Commission, which warned lawmakers twice this past winter that it could not properly monitor the public financing program for state elections this summer and fall without additional staff, was another of the few winners in the committee plan, albeit not a big one. The commission would receive $126,000 to fund two new auditor posts. But the budget panel would pay for those posts by reducing “other expense” accounts by a total matching amount from the SEEC and eight other watchdog agencies.

The committee restored $13 million in proposed cuts to the Department of Children and Families. Malloy had recommended raiding the $24.4 million the department will save from the major changes they have implemented over the last year. This money was saved by removing fewer children from their families and moving children back home from costly out-of-state facilities and large group homes.

Department of Children and Families Commissioner Joette Katz told the committee last month that she needed to keep a portion of those savings so that she can move forward with paying for more community-based services and other supports to keep the state’s 4,700 abused and neglected children in state custody in the most appropriate living situation.

The committee signed off on the governor’s plan to create a new position in the state’s Office of the Healthcare Advocate so that the state can begin appealing the decisions of a child’s private insurance company to deny covering mental health benefits.

DCF reports that one of every five children that the state is picking up the tab for their mental health benefits has private insurance, and without coverage they could potentially end up in the state’s mental hospitals. Malloy’s budget did not bank on any immediate savings by appealing insurance denial, but the committee was a bit more optimistic, estimating it will save $2.5 million during the upcoming year.

The committee also maintained funds in several other health and social service programs that Malloy proposed cutting, including:

  • Uncompensated care grants for hospitals and community health centers. Malloy proposed cutting the grants by $2.89 million, while the committee would cut $944,263.
  • The LifeStar helicopter program, which is run by Hartford Hospital and receives a state subsidy. Malloy proposed cutting $600,000 from the subsidy, but the committee did not propose any cut.
  • Alzheimer’s respite and outreach for the HUSKY program, both of which Malloy proposed cutting by 10 percent.
  • The Children’s Trust Fund (Malloy proposed a $2.34 million cut) and the Jobs First Employment Services pilot program (Malloy proposed a $150,000 cut; the program hasn’t started. The committee declined to cut it).

In addition, the committee proposed reversing a change made last year that increased what seniors must pay to participate in the Connecticut Home Care Program for Elders. Lawmakers last year increased the cost sharing requirement from 6 percent to 7 percent, a move that critics say made the program unaffordable to some and posed a hardship for others. The committee’s proposal would spend $626,400 to reduce the cost sharing to 6 percent. The committee would also add $2.5 million to the budget by increasing the asset limit for seniors to qualify for the program.

The committee also proposed spending $750,000 to provide 300 more Rental Assistance Program vouchers, which help poor families pay for housing in the private market. The program has a waiting list. Half of the new vouchers would cover scattered site supportive housing.

Very little fiscal wiggle room

The committee had little room to maneuver with its spending plan given two challenges presented by Malloy’s proposal.

The governor’s plan fell fell just $5.9 million under the cap, based on administration numbers, a cushion of just 1/35th of 1 percent. And Malloy has insisted he will not seek to legally exceed the cap as his predecessors have done, though he is seeking a new exemption to cover increased contributions to the state employee  and teachers’ pension funds.

The governor’s proposal also has raised concerns among some lawmakers from both parties because the administration’s own projections show it to be in balance only for one year.

In 2013-14, that package would run $424 million in the red, and $650 million over the spending cap. But Malloy officials have been quick to note that there is plenty of time to address that problem in the regular 2013 session, which begins next January.

Other changes recommended Thursday by the Appropriations Committee include:

  • Reducing the debt service by $30 million to reflect improved interest rates secured in bond financing.
  • Cutting $250,000 Malloy sought to assist his business tax study task force.
  • Restoring $2 million for Operation Fuel, a winter heating assistance program for low-income households.
  • Restoring $39,153 the governor would reduce from grants to regional training schools for fire departments.