From Gaffney, Bennett & Associates
February 18, 2013 – February 22, 2013
The Appropriations Committee is wrapping up its two weeks of hearings on the Governor’s proposed budget tonight, Friday, February 22, 2013. To say some of the hearings have hit a nerve with committee members and the public often times because of the weighty subjects, would be an understatement. These are truly unprecedented times for Connecticut. Tonight, the final night, features the Department of Social Services, one of the major social safety agencies, which oversees Medicaid and Medicare programs, and is a major financier of the state’s hospitals, which have sustained hundreds of millions of cuts in the proposed two-year budget. It may be a big sleepover, but not the kind featuring movies and popcorn.
The Question is How We Do No Harm: Connecticut’s private-sector healthcare industry, despite facing hundreds of millions in cuts and enormous changes as a result of federal reforms, some of which take effect October 1, 2013, continues to focus on reducing costs, increasing access to health care and improving the quality of delivery. The oath of hospitals and doctors has not changed: Do No Harm.
State reform efforts must work together with federal initiatives in order to allow our private-sector healthcare system to provide high-quality medical care at reasonable prices. Controlling the costs of healthcare, while improving its quality and increasing access to it, is still the primary goal we need to meet, that is a paraphrase from the state’s business and industry association.
Administration’s Budget Secretary Takes the Bullets: Ben Barnes, the Secretary of the Office and Policy and Management, this week presented the Governor’s proposed Budget and Tax Plan to the Legislature’s Finance, Revenue and Bonding Committee. The key areas discussed were:
Funding our unfunded liabilities; borrowing to partially fund GAAP accounting,; maintaining our current tax revenue base; and the proposed elimination of the municipal property tax on motor vehicles. Barnes also presented committee members with economic comparisons of the most recent 2007-2010 recession with the 2001-2004 recession. He told committee members that this recession has been deeper and longer lasting than the previous recession. To date we have not reached the same level of activity that was occurring before the recession began in 2007. Barnes believes that we are not in a normal economic recovery.
Committee members’ questions focused on the proposed borrowing of $750 million to fund GAAP and the funding of economic development initiatives. Some raised concerns about the borrowing and how it would affect Connecticut’s bond rating. Barnes assured legislators that this could improve our standing with rating agencies by committing us to fund our GAAP liability and put us on a firmer financial position.
Legislators also questioned how the state’s proposal to auction off utility customers who have not chosen a new electric supplier would work. Revenue of $80 million is built into the Governor’s revenue package.
Ben Barnes also strongly defended the proposal made in the Governor’s budget concerning municipal funding which includes eliminating state PILOT grants and transferring the money into education funding and the proposed elimination of the motor vehicle property tax. Certain legislators stated that some of these changes were not equitable and would result in increases in taxes on the local level. Barnes said that the changes will enhance municipal funding and require local governments to view state funding in new ways.
Committee members also questioned whether the Governor’s growth estimates that underlie the revenue projections are too rosy given some of the comments made recently by Connecticut economists. They have stated that the job growth numbers may be optimistic given our current level of economic activity. Barnes pointed out that the revenue estimates are based upon a consensus forecast between the Governor’s budget office (OPM) and the legislators’ budget office (OFA). He also stated that they use a national economic forecasting firm to assist them in formulating their economic growth estimates.
Improving Energy Policy and Our State’s Costs: Building Upon the landmark energy bill passed last year, Governor Malloy this week released a Comprehensive Energy Strategy (CES). Among other things, it calls for a more diverse portfolio of fuels along with expanded consumer access and choice (particularly for natural gas).
It also moves away from state- or ratepayer-subsidized energy efficiency and clean energy initiatives to a finance model in which the state’s role is to encourage more private-sector investment.
The final version of the plan emphasizes cyber security, natural gas capacity and infrastructure, virtual net metering, and sub-metering policies. The next challenge will be to put into action key components of the CES that will help manufacturers and other businesses in the state gain continuous access to a diverse portfolio of affordable energy sources. Public hearings on the various legislative proposals dealing with the plan are expected in the first week of March before the Energy and Technology Committee.
Highlights of hearings in the the week ahead:
Monday, Feb. 25 at 10:30 am
Room 2D, LOB
Subjects include: Various pesticide use and medication disposal measures
Monday, Feb. 25 at 10:30am
Room 1E, LOB
Subjects include: Tolls and red light cameras
Government Administration and Elections Committee
Monday, Feb. 25, 11 am
Room 2A, LOB
Subjects include: Governor’s bills regarding state agency administration
Insurance and Real Estate Committee
Tuesday, Feb. 26, 1 pm
Room 2D, LOB
Subjects: Various health, life and auto insurance measures
Tuesday, Feb 26 at 3 pm
Room: 1E, LOB
Subjects include: Workers’ Compensation, Unemployment Compensation, and general labor matters
Public Health Committee
Wednesday, Feb. 27, 10:30 am
Room 1D, LOB
Subjects: Children’s care, hospitals, and services for people with disabilities
Thursday, Feb 28 at 10:15 am
Room 1D, LOB
Subjects include: Bioscience funds, Sales and Use Tax, Benefit Corporations, and other DECD and CII related bills
General Law Committee
Tuesday, Feb. 26, 1 pm
Room 2E, LOB
Subjects include: CUPTA, and various measures regarding liquor laws
You may view the entire legislative calendar for the week by going to our website: www.gbact.com and scrolling to “Happenings at the Capitol” for times and locations.