June 2007 Budget Update

I was honored and pleased to be your Representative, as the CT House of Representatives and the Senate negotiated and passed our state budget this past week. It was negotiated with Governor Rell and signed by her.

I was impressed that so many of you wrote and emailed me during this process.

Most of all I heard – “Don’t consider raising income taxes when we have a billion dollar surplus.”  I agreed with you.  In caucus and on the floor I stood against the Governor’s and the Legislature’s proposals for income tax increases.

Here is a brief explanation of the major points of the budget and an impact summary for Simsbury.

No new major taxes, but an 8.6% spending increase….how and why?

The increase in spending is made possible by improvements in our revenue collection, fueled by a healthy economy and stock market.  This means that we not only have a surplus left this year to carry forward, but also that future revenue projections are better as well.  I support this budget.  However, I am always cautious about spending increases and I remain concerned that the growth in our spending, while covered for the next two years, will present problems down the road.

The biggest drivers of our budget growth are education and health care.

• Education:  Years ago the state and towns expected to share the costs of education equally.  In order to balance its own budget, however, the state paid less and less, dropping its share to 38% and leaving a bigger burden to the towns.  As a result towns raised property taxes to cover their growing obligation.  In order to begin to shoulder its fair share, the state needed to make a large “catch up” increase in education cost sharing.  This year we made our state honor its commitment with a dramatic increase.  I supported the state “catch up’ in education funding. This is a correct decision and helps Simsbury directly.

• Health:  To balance the budget in previous years, the state gave no increases in reimbursement to a variety of health care and social service providers.  These have included, in various years, nursing homes, group homes for the mentally retarded, doctors, dentists, and hospitals in Medicaid, etc.  As a result, some of these providers stopped taking state clients or even shut their doors.  Access to essential services suffered.  Perhaps the most egregious example is dentists, who received no Medicaid increase in 14 years for pediatric services and 18 years for adult services..

• Other:  The state also raided its own pension funds and Clean Energy Fund in past years to pay the obligations of the general fund.  Of course, this left these programs under-funded and out of compliance with accounting principles.

These past budget shenanigans are wrong and hurtful. I see this as a problem of “delayed maintenance,” comparable to a home owner neglecting to paint, re-roof or otherwise repair his house for decades.  At some point a graph of his household spending would look like a long flat trend line with a spike up at the end, showing his initial frugality, but ultimate massive investment to keep the house standing.  Since the spike at the end of the graph is inevitable, now is the best time to make up for past under-investments, with the present cushion of a good economy.

I also supported new accountability requirements which are included in the budget.  Educational programs have to report and achieve performance metrics or else the Dept of Education can employ numerous remedies to enforce improvements or even move students to better schools.  Similarly, the various agencies will have to engage in Results Based Accountability, demonstrating the efficacy of their programs or having them cut in the future.  The past practice of spending without evaluation or accountability was wrong- and if this occurs again on my watch- you and my colleagues in the House will hear from me.

Impact on Simsbury

Simsbury’s Education Cost Sharing (ECS) grant is going up 60%, or $1.9 million this year, and next year it will go up another 6% or $310,476.  On a per pupil basis it is going from $636 to $1,030 this year. 

Other state grants (for roads, school buses, etc) are remaining pretty much flat, resulting in an overall increase in total state aid to Simsbury of 50%.

This should help us to keep our own property taxes flat or low in the coming year and into the future.

Other budgetary enhancements,

Most have you have written me regarding a variety of specific concerns or budget items you supported.  So here is a list of items in the budget that I think addresses pretty much all of the topics about which you contacted me.

Social and Health Services:

• Nursing homes are increased 2.9% under Medicaid
• Various private non-profit providers, such as group homes for the mentally retarded are increased 2.9%
• Community living arrangements for the mentally ill etc are increased 2%
• DMR slots for high school graduates are fully funded
• Parents of children in HUSKY may now also enroll in HUSKY
• Medicaid providers are increased:  doctors by 50%, dentists40%, and hospitals 9%
• The CT Home Care Program for Elders is increased $7.7 million
• The Alzheimer’s respite care program is increased $1 million
• The Dept of Mental Retardation, now renamed the Dept of Developmental Services, is to establish an autism division.  (No services for autism were previously available from the state.)
• Uninsured newborns are to be covered under HUSKY for their first 4 months.
• The Charter Oak Health Plan is to be developed, including $11 million in premium subsidies for low income persons to buy individual insurance.
• A comprehensive lead poisoning program is established.
• Dependents will be allowed to stay on their parents’ private insurance through age 25, regardless of college status.
• A plan is to be developed for health information technology adoption, including electronic medical records.
• U Conn Hospital is not funded to expand, but a study is commissioned to look at the issue.

Education

• U Conn funding is increased by $1 million to provide for additional faculty, given that there has been a 40% increase in student enrollment in recent years
• Need-based financial aid is increased for college students who are CT residents
• The state’s cap on special education funding is eliminated, which will result in towns seeing an overall increase of about 16% in special education funds.
• Vo-Ag programs are to be made available to students in every town, whether in the town or in a neighboring town.
• Funding is increased for Project Choice students from $2,000 to $2,500 per pupil.
• The teachers’ pension fund is fully funded, and $300 million of surplus funds are put into the pension fund as a catch up payment

Energy

• Restores funding to the Clean Energy Fund
• Funds and are made available to assist in the purchase of energy efficient air conditioners to replace old AC’s
• Sales tax exemptions are extended for 1 year on energy conservation items.
• Incentives are provided for bio-deisel producers

Other

• Funding is expanded $1.9 million to maintain and staff state parks, many of which have been closed or have fallen into disrepair.
• $10 million in grants are available to incentivize towns to regionalize services with their neighbors
• Funding is provided from surplus for towns to retrofit diesel school buses and to thereby clean up their exhaust fumes
• $136 million of surplus funds are put in the rainy day fund
• Smart growth housing initiatives put forth by HOME CT and 1000 Friends are partially implemented, with incentive grants to towns of $2,000-5,000 per new home built in an incentive housing zone.  These zones are to be greater density, mixed use, near public transportation.
• Children under the age of 18 are to be treated as juveniles in the justice system and corrections system.  Some exceptions can be made for serious offenses.  Currently 16 year olds are put in prison with adults.

Tax changes:

• A study is to be performed of the estate tax and the earned income tax credit.  Although changes to both were sought, neither was included in the budget.
• A study is commissioned on methods for restraining property tax growth, including a tax cap. 
• The cigarette tax is increased by  49 cents per pack
• The conveyance tax is extended one year
• License fees for nurses are doubled