FY 2008-09 GOVERNOR’S MIDTERM BUDGET ADJUSTMENTS

FY 2008-09

GOVERNOR’S MIDTERM BUDGET ADJUSTMENTS

M. JODI RELL, GOVERNORCONNECTICUT

February 6, 2008

2

Introduction – A Time For Caution

• According to the National Association of State Budget Officers 19 states have announced budget and revenue shortfalls in FY 08 and FY 09 including three of CT’s neighbors

• During the latter half of calendar year 2007, economic conditions in the nation began to shift due to the sub prime mortgage meltdown and contraction in credit availability

• Economic indicators point to slowdown such as personal income growth in CT is projected to rise 3.6% FY 09 down from 6.3% and 4.5% growth registered in FY 07 and FY 08 respectively

State Announced Budget GapMassachusetts $1.3 billionNew York $4.3 billionRhode Island $450 million

Neighboring States Budget DeficitsFiscal Year 2009

3

Introduction – A Time for Caution

CT is not in a position to sustain a general fund budget with significant tax cuts or large expenditure increases because:

– The FY 09 revenue forecast starts with FY 08 as the base. So for next year’s budget to remain in balance, income tax collections must grow this year by 10.7% and next year by 5.4%

– The general fund surplus is only $3.3 million in FY 09

Income Tax Collections

$5,600

$6,400

$7,200

$8,000

$8,800

2007 2008 2009

Fiscal Year

Mill

ions

$6,74

$7,59

$7,93

+821

+360

Fiscal Year 2008-09

($30.00)

($20.00)

($10.00)

$0.00

$10.00

Mill

ions

Projected SurplusAmount Below the

ExpenditureCap

$3.3

$20.4

4

The FY 09 Midterm Budget

• The Governor is aware of this nationwide trend and, as such, is proposing a conservative budget that is responsive to the most urgent issues facing our citizens

• Focusing on areas such as rising energy costs, public safety and criminal justice, transportation, and high property taxes

• The Governor’s budget remains $20.4 million below the expenditure cap and grows just 4.8% above FY 08 expenditures

5


General Fund AppropriationsBy Function Of Government

FY 09

Corrections9.5%

Non-Functional

20.7%

All Other Expenses

9.2%Human Services28.8%

Health & Hospitals

10.0%

Education21.8%

6


• Total policy changes in the Governor’s budget are projected to require a net $47.4 million in additional funding

• Expansions totaling $81.2 million are partially offset by $20.6 million in reductions and $13 million of carry-forwards

• Major initiatives include:

– $24.5 million for Criminal Justice Reform and Public Safety

– $9.4 million for Hospitals and Healthcare

– $12.8 million for Human Services

– $5.0 million for Transportation

– $6.0 million for Regional Incentives and Municipal fiscal support

– $3.6 million for a new Cultural Treasures program

– $2.5 million for Energy and Conservation

7


• Today, the Rainy Day Fund balance is $1,382.2 million or 8.1% of net general fund FY 09 appropriations

• Based on current estimates, the Governor’s budget provides for another $242.2 million from the FY 08 surplus to be deposited into the state’s Rainy Day Fund, bringing the total deposit up to $1,624.4 million or 9.5% of the net revised general fund appropriation in FY 09

Rainy Day Fund

$269.7

$446.5$363.9

$242.2

$30.7

- $594.7

$0.0

$1,382.2

$1,112.5

$666.0

$302.2

$0.0

-$700

-$400

-$100

$200

$500

$800

$1,100

$1,400

$1,700

'01 '02 '03 '04 '05 '06 '07 '08

Fiscal Year

Mill

ions

Deposits/(Withdrawals)

Account Balance

10% of FY 2009 Proposed General Fund Expenditures-$1,717.2

$594.7

$1,624.4

8

Criminal Justice Reform

P.A. 08-1 of the January Special Session includes tougher home invasion laws including:

– A 10 year mandatory minimum prison sentence

– An enhanced burglary statute for all burglaries at night

– An improved persistent offender law that makes it easier for prosecutors to seek longer sentences for repeat offenders

– More rights for victims

– Better coordination of services between the courts, DOC and the Board of Pardons and Parole

9


Criminal Justice budgeting for the impact of January Special Session

– 300 new GPS devices and 9 Parole Officers to monitor the offenders

– Service enhancements for victims of crime which added 2 positions

– $125,000 to provide a secure video link between DOC and the Board of Pardons and Parole

– $6.5 million for re-entry and diversionary beds

– $2 million for secure residential treatment facilities for sex offenders

– $750,000 for a state-wide automated victim information and notification system

– $1.7 million to expand re-entry and diversionary services contracted through DOC and the Judicial Department

10


Governor Rell’s New Reforms:

– $107,000 for DMV to issue IDs to all inmates lacking identification who are legal residents

– Funding in DSS to expedite eligibility for SAGA for inmates being released – provides uninterrupted health care services

– 9 probation staff and $414,000 to establish one additional warrant squad to increase the number of warrants served for violation of probation by 50%

– $566,000 for the Connecticut Offender Re-entry Program (CORP) in DMHAS which targets offenders with serious psychiatric disabilities

– 125 additional Correction Officers

– DOC is reconditioning Carl Robinson Correctional Institution in order to increase the total additional capacity by 342 beds

11


Governor Rell’s New Reforms:

– $500,000 to expand Urban Youth Violence Prevention funding

– 3 support positions to the Board of Pardons and Parole to expedite and insure the completion of files prior to review

– Registered sex offenders must obtain a motor vehicle operator’s license or ID card issued by DMV with a designated marking

– $100,000 for a DMHAS pilot to serve individuals who cycle through jail and homelessness, targeting Hartford, Bridgeport and New Haven

– $2.3 million to redirect 55 of the new criminal justice beds to those with mental health needs and provide for the additional cost of more intensive mental health programs

12


Governor Rell’s New Reforms

• Expanded DNA collection from:

– Inmates in correction facilities not yet tested and persons newly incarcerated

– Those charged with Class A and B felonies

– Those convicted of felonies and certain misdemeanors released without being incarcerated must submit to a DNA collection upon disposition of the case

13


• P.A. 08-1 of the January Special Session provides $2 million in FY 09 for a comprehensive, statewide system for the sharing of criminal justice information among the various law enforcement and criminal justice agencies

Governor Rell is proposing:

• Additional funding in DOIT for technology needs related to criminal justice initiatives

– $293,577 for five IT positions and related costs

– $1,550,000 for associated systems costs

• A bond authorization of $8 million to begin the implementation of systems to meet the needs of the criminal justice community as follows:

– Division of Criminal Justice Case Management System

– Criminal Justice Information System (CJIS) Master Plan

– COLLECT System Revisions

14


Correction Officers Compared to Prison Population

4,1044,047

4,0064,0444,049

4,1144,152

4,1224,078

4,229

19,262

17,404 17,461

18,295

19,271

18,837

18,390 18,352

18,841

19,378

3,600

3,800

4,000

4,200

4,400

4,600

FY 00

FY 01

FY 02

FY 03

FY 04

FY 05

FY 06

FY 07

FY 08 E

stim

ated

*FY 0

9 For

ecas

t

Ave

rage

Fill

ed C

orr

ect

ion

Off

ice

rs

14,000

15,200

16,400

17,600

18,800

20,000

Ave

rage

Inc

arc

erat

ed

*FY 09 population forecast based on OPM's Criminal Justice Policy and Planning Division estimate of .6% decline.

15

Public Safety

Highway and Truck Safety

Governor Rell demands improvement in highway safety:

– 100 additional state troopers over the next 5 years for traffic enforcement beginning with 20 in FY 09

– A pilot program for electronic speed cameras aimed at catching and ticketing speeders

– Target companies with vehicles that have a history of failing safety inspections

– $700,000 for the addition of 10 Commercial Vehicle Safety Inspectors within the DMV to enhance inspection squad activity

– DMV will be able to deploy 2 additional truck squads to areas as needed

– Require increased coverage of the Greenwich weigh station, adding three Saturday shifts every month

16

Public Safety

Governor’s Midterm Budget Adjustments provide for:

Infrastructure Assurance:

– 42 Inspectors and maintainers for bridge repair and maintenance - inspections to occur every 2 years

– Additional 50 DOT engineers for more in-house design and oversight of transportation projects

17

Public Safety

Other Safety Initiatives

– Teen Driving- Increased penalties for certain violations

– Ice missiles

– Boating under the influence

– Tougher anti-methamphetamines laws

– Computer crimes against children

– Additional 8 positions at DEMHS to handle critical functions

– State wide Reverse 911 system for emergency notification

18

Health and Human Services

Relieving our crowded emergency rooms

– DMHAS to initiate a pilot emergency assessment or crisis response center

– $100,000 for DSS to conduct an information campaign to encourage HUSKY clients and Medicaid recipients to seek out appropriate primary care providers

– $2 million for DMHAS to purchase three 15-bed high intensity programs for individuals with co-occurring psychiatric and substance abuse disorders, targeted to high users of hospital emergency departments

– $1.5 million for DMHAS to purchase 8 beds in private psychiatric hospitals to facilitate transfers out of hospital emergency departments

– Nearly $1.0 million for DCF to continue the enhancement and expansion of emergency mobile psychiatric services

19

Health and Human ServicesImproving Oversight of Long Term Care Facilities and Enhancing

Community Placements

• 5 new staff for DPH to increase inspections to assure quality care in nursing homes

• 5 new staff for DSS to increase financial oversight of nursing homes

• Efforts to serve more individuals in community settings rather than in long-term care facilities:

– Money Follows the Person: $6.5 million in FY 09 to implement community placements for persons currently served in nursing homes to place 700 persons in the community over the next 5 years

– $1.3 million for an online nursing home placement screening system in DSS to ensure that nursing home placements are appropriate

– Implement Special Needs Trusts to allow persons in Residential Care Homes to remain there when their income changes

– $4.6 million in DSS and DMHAS (annualized at $9.5 million in FY 10) to move individuals with psychiatric disabilities from long term care facilities to community settings – which provides for an additional 230 mentally ill individuals in community settings by FY 11

20


• $8.0 million and additional staff at DDS

– $1,154,000 for 46 additional high school graduates and age outs requiring day and residential services, in addition to $25.1 million already in the FY 09 budget to fund 382 placements and annualization costs

– $5.1 million related to costs of 90 children who entered the DDS system in FY 08 through the Voluntary Services program

– $1.5 million for 60 additional Voluntary Services referrals

– $311,203 for 6 new case management positions to address caseload ratios

• Maintains the commitment to fund 150 placements per year for persons on the waiting list

21


• $28.2 million and additional staff at DMHAS

– 18 positions and $1.3 million for 10 medium security step down beds to address overcrowding at DMHAS’s Whiting Forensic Division

– $12.3 million and 126 positions to improve inpatient services and maintain accreditation at Connecticut Valley Hospital

– $2.6 million to partially annualize costs of 45 young adults transferring from DCF to DMHAS during FY 08

22


• $4.9 million for the DPH for immunizations

– CT has consistently been among the leaders in the nation in terms of the numbers of children that receive age-appropriate immunizations and vaccines

– The additional funds will assure the provision of the pneumococcal conjugate and hepatitis A vaccines for infants

• An increase in staff of 5 at DPH to increase both the number and frequency of inspections of child care facilities, thereby enhancing the quality and safety of child day care

• $11.2 million in new resources for the DCF to continue to make gains in child protection and child welfare

23


Veterans

• Tuition waivers for surviving spouses and dependent children of Connecticut’s military service members killed in action

– Will allow those family members to attend the University of Connecticut, the Connecticut State University System, or Connecticut’s Community-Technical Colleges

• $250,000 for the Department of Veterans’ Affairs to expand support services for returning veterans and their families

• Waive fees for Gold Star Family license plates

24


Maintaining Our Investment in Supportive Housing

• In 2006, Connecticut received a national award for its innovative and cost-effective approach to addressing chronic homelessness through supportive housing

• Governor Rell is proposing to annualize $3 million in supportive housing debt service in order to provide 150 new units of supportive housing through the issuance of $35 million in bonds

• This expansion will bring the total number of units funded under Governor Rell’s Next Step Supportive Housing initiative to 850

25


Increasing Anti-Tobacco Efforts

– Our economic disincentives have been successful in reducing tobacco use. As the cigarette tax has increased cigarette sales have declined by over 28% since 2000

– Our statewide ban on public smoking and targeting youth smoking through policies such as the school health guidelines on tobacco education have resulted in the rate of cigarette smoking among CT high school students dropping from 26% to 17%, well below the national rate of 22%

– CT ranks 4th lowest in the nation in the prevalence of smoking as a percentage of its total population (17%)

– Governor Rell is proposing a substantial increase in the amount of tobacco prevention and control expenditures in CT each year by allowing the Tobacco and Health Trust Fund to disburse up to half of the annual deposit into the trust fund up to a limit of $6 million annually (the fund can only spend approximately $800,000 this year)

26


Estimated Packs of Cigarettes Sold In Connecticut

-51.5%150

200

250

300

350

400

1980 1990 2000 2007

Fiscal Year

Pac

ks S

old

(M

illi

on

s)

-58.4%

-48.4%

-38.4%

-28.4%

-18.4%

-8.4%

1.6%

Red

uct

ion

Sin

ce 1

980

(%)

27


Implementing a Medicaid Hospice Benefit

– Governor Rell proposes a Medicaid hospice benefit no later than February 1, 2009

– Unfortunately, CT will be one of the last states in the nation to cover hospice services under the Medicaid program

– The hospice benefit provides coverage for an individual’s terminal illness

– Hospice services generally involve provision of care in the individual’s home and are geared to helping avoid placement in an institutional setting ultimately improving the quality of life for the individual as well as the family

– Any additional costs of providing hospice services in home and community settings are expected to be offset by reductions in end-of-life inpatient and other institutional care

28

Education

Education Cost Sharing (ECS): Governor Rell’s Investment in the State’s Children

– In the two years of the FY 09 Biennium, the state budgeted $3.7 billion for the ECS grant, the state’s largest municipal grant

– With this investment, the state will have spent $453 million more on ECS than it did in the previous biennium

29

Education

Special Education Growth With No Cap On State Reimbursements

History of State Special Education Funding

$46.8

$61.5

$133.9

$40

$50

$60

$70

$80

$90

$100

$110

$120

$130

$140

2000 2001 2002 2003 2004 2005 2006 2007 2008App

2009App

Fiscal Year

(Mill

ions

)

30

Education

Children from disadvantaged backgrounds who attend a quality preschool are more likely to succeed in school, attend college, and have stable jobs, all of which makes them better and more productive citizens

School Readiness Funding and Slots

5,886 5,7606,127

6,977 6,924

7,925

8,795

10,190

-

2,000

4,000

6,000

8,000

10,000

12,000

'02 '03 '04 '05 '06 '07 '08 Est. '09 App.

School Readiness Funding ($10Thousands) Preschool Slots

31

Economic Development Initiatives

Workforce Development

• Nanotechnology

– Nanotechnology, a multi-disciplinary field, draws upon CT’s strengths in the fields of material sciences, biology and chemistry, and its economic drivers in the manufacturing and biotechnology fields

– $2.5 million is proposed for matching grants to UConn and Yale to finance the acquisition of specialized equipment and to create shared use facilities accessible by industry, faculty, and students

– The Yale center will be oriented towards bioscience while the UConn center will be oriented towards material science leveraging the core competencies of each institution and matching key economic drivers

– $500,000 is proposed for matching grants to support graduate student, university, and industry collaboratives

32


Workforce Development

– $500,000 to support a mostly on-line Alternative Route to Certification for early childhood educators

– $295,000 at Connecticut State University, to increase the annual number of nursing graduates in the state by 24 by the end of FY 09

– $140,000 in operating funds and $520,000 in one-time surplus funds for the Community-Technical Colleges to support an additional 64 nursing students by FY 10

– $300,000 for an engineering loan reimbursement program. The program will offer reimbursements of outstanding student loans to CT engineers who work in the state

– $125,000 in funding for the creation of a “Green Collar Jobs” program to be offered by the states Vocational-Technical Schools to train students in energy efficient building, construction and retrofit work and energy technology

33


Cultural Treasures Program

• Consolidating existing resources and adding $3.6 million of new funding, Governor Rell creates a $10 million Cultural Treasures grant program

– Unprecedented resources for arts, culture and tourism programs

– Not less than 25% of the program’s resources must be spent on smaller programs which play such important roles in our state

• Governor Rell also creates a $20 million capital Cultural Treasures grant program

– Will enhance the state’s impressive and enriching arts, cultural, historic and tourist venues

– New program will provide grant financing, not exceeding 20% of the total cost of the project, to assist with capital improvement projects

34

Responsible Growth

Governor Rell proposes to:

• Statutorily define “Responsible Growth”

• Create a Responsible Growth Cabinet (RGC) which will:

– Advise on Responsible Growth policies and initiatives

– Coordinate and facilitate funding and permitting for “Developments of Regional Significance”

• Establish a “Walk the Walk” program – any development receiving state funds must invest no less than 2% of total project cost to pedestrian and other non-motorized transportation improvements

35

Responsible Growth

On the municipal level Governor Rell proposes:

– Local zoning commission decisions to be consistent with local Plans of Conservation and Development (local option)

– Funding for the drafting of a model Connecticut Responsible Growth Zoning Code

– Statutory changes to allow municipalities and developers to enter into voluntary Community Benefit Agreements

– Improvements to, and continued funding for, the existing Regional Performance Incentive Program

36

Governor’s Property Tax Reform Package

• Nationally, the issue of rising property taxes has been pushed to the forefront by citizens and elected officials looking for solutions

• There has been talk of property tax reform at the state Capitol for years

• Governor Rell knows that a property tax cap, while a critical tool in controlling property tax growth, by itself is not a solution

• The Governor is proposing a multi-pronged system of reforms to address the problem of ever rising property taxes

• These reforms will work together to provide relief to our local taxpayers

37


Mandate Relief

• The Governor proposes a statutory prohibition against new costly unfunded mandates on cities and towns unless such mandates are enacted by a 2/3rds vote of the General Assembly

• The Governor is also proposing immediate relief from some current unfunded mandates. Specifically, her proposal will:

– Increase the threshold covered by prevailing wage requirements to $1 million for new construction projects and $500,000 for repairs or alterations. These increased threshold amounts would also be indexed to inflation

– Amend the Teachers Negotiation Act (TNA) to require fully stipulated awards be considered negotiated agreements and submitted to the local legislative body for review (Program Review and Investigations recommendation)

– Eliminate the requirement that municipalities remove and store the personal property belonging to evicted residential tenants

– Allow a municipality that maintains a website to post certain notices on the municipality’s site in lieu of paying to publish them in the newspaper

38


Municipal Aid

– The Governor understands that property tax relief cannot happen without a commitment from the state

– Governor Rell led a successful effort on education finance reform that resulted in the current biennial budget which includes the largest increase in municipal aid in recent years

– For FY 08, municipal aid increased almost $230 million over FY 07

– Municipal aid will increase at least another $126 million from FY 08 to FY 09

– Total formula grants to municipalities will have increased by over $650 million since the Governor took office (an increase of over 31%)

– Multi-year authorizations for local school construction

39


Actual Actual Estimated Recommended ChangeFY FY FY FY FY 2003-04 to

Grant 2003-04 2006-07 2007-08 2008-09 FY2008-09State-Owned PILOT 67.1$ 81.2$ 82.9$ 82.9$ 15.8$ College & Hospital PILOT 100.9 120.7 122.4 122.4 21.5 Pequot Grant 85.0 91.1 93.0 93.0 8.0 Town Aid Road Grant 12.5 30.0 30.0 30.0 17.5 LoCIP 30.0 30.0 30.0 30.0 - Miscellaneous General 19.1 20.0 20.9 21.6 2.5 Machinery & Equipment 50.7 50.2 53.4 80.0 29.3

Sub-total - General Government 365.3$ 423.2$ 432.6$ 459.9$ 94.6$

Public School Transportation 43.1$ 48.0$ 48.0$ 48.0$ 4.9$ Non-Public School Transportation 3.3 4.0 4.0 4.0 0.7 Adult Education 16.9 18.6 20.6 20.6 3.7 Education Cost Sharing 1,522.7 1,626.9 1,809.2 1,889.2 366.5 Magnet Schools 54.3 98.6 103.8 121.5 67.2 Special Education 61.5 106.6 124.6 133.9 72.4 Miscellaneous Education Grants 100.8 148.6 161.5 154.0 53.2

Sub-total - Education 1,802.6$ 2,051.3$ 2,271.7$ 2,371.2$ 568.6$

Total - Formula Grants 2,167.9$ 2,474.5$ 2,704.3$ 2,831.1$ 663.2$

(In Millions)Estimated Formula Grants to Municipalities

40


Property Tax Limit

• Governor of New York is calling for a commission to study a property tax cap

• Rhode Island, New Jersey and Maine have recently enacted property tax caps

• Connecticut is one of only 7 states without a local tax or expenditure limit

• The simple fact is that when done right, a tax cap works

• Massachusetts instituted a property tax cap in 1982

– Since then, its per capita property tax burden dropped from number one in the nation to eighth

– Its schools are consistently rated among the best in the country

– The ratio of public safety personnel per capita in Massachusetts exceeds that in Connecticut

• On the other hand, California’s Proposition 13, which threw that state’s local tax system into disarray, was not effective

41


Property Tax Increase Percentage Change Per Year

1.97%

3.48% 3.52%

5.31%

6.07%

6.76%

6.02%5.72% 5.69%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

1998 1999 2000 2001 2002 2003 2004 2005 2006

Fiscal Year

42


Property Tax Limit

– Effective July 1, 2009 a municipality’s property tax levy will be limited to no more than 4% above what the municipality levied in the prior year; the limit would be 3.5% July 1, 2010 and 3% July 1, 2011 and thereafter

– Recognizing that one size does not fit all, the Governor allows municipalities to opt out of the cap for two-year periods

– To opt out, a 2/3rds vote of a municipality’s legislative body will be required not later than September 30, 2008 and every other year thereafter together with approval of a simple majority of a municipality’s voters in the following November elections

43


Property Tax Limit

With the approval of the local legislative body, exemptions would be available for:

– Increases by more than 8% over the prior year in employee health insurance, actuarially recommended contributions to pension or other retirement benefits or utility costs

– Regional school district increases above the 4%, 3.5% and 3% cap, plus any new ECS aid over the prior year

– The amount by which certain state formula aid decreased over the prior year

– Debt service increases for capital projects over the FY 09 level

– Expenses related to an emergency, such as a fire, flood, a declared health emergency or natural disaster (which would not be built into levy base)

– One-time costs associated with regional service initiatives (which would not be built into the levy base)

– General overrides, which would require 2/3rds approval of the local legislative body with voters able to reverse any legislative action to override the limit

44


Property Tax Limit

• Personnel costs consistently make up the largest portion of municipal budgets. The Governor’s proposal requires arbitrators to give an irrebuttable presumption that a municipality or district cannot exceed the cap

• To help our municipalities save for the possible economic downturns, arbitrators must also presume that a budget reserve of 10% or less is not

available to pay for any award

45


The Governor’s proposal includes provisions to promote and enhance operational efficiency

– $500,000 in FY 09 for a Municipal Operational Efficiency Study grant

– $500,000 for the Auditors of Public Accounts to review the operating and budget practices of selected municipalities in which total state grants-in-aid in a fiscal year exceed 35% of the municipality’s operating budget and make recommendations for programmatic savings, efficiencies, financial improvements and reforms in the municipality

– OPM will issue best practices guidelines to assist towns in developing 5 year energy conservation and procurement plans

– Provides funding for the adoption of 5 year health cost containment plans, to be developed in consultation with their employee collective bargaining units

– Regional Performance Incentive Program, $5 million will be available for groups of cities and towns seeking to voluntarily join together to provide efficient and cost effective delivery of services

46

Consumer Protections

• The Governor has established $50 million CHFA sub-prime rescue fund for low and moderate income borrowers to refinance into stable mortgage product

• New and more extensive disclosure requirements for certain home loans and elimination of the pre-payment penalty for certain home loan refinances

• Increased criminal penalties for violating the Child Protection Safety Act

• Identification Theft Task Force Recommendations – new privacy protection statute

47

Transportation

Over the last 3 years Governor Rell and the General Assembly have worked together to provide unprecedented funding for transportation enhancements throughout the state. These initiatives include:

– New railcars for Metro North and Shoreline East commuter lines

– Development of the New Haven to Springfield Commuter Line and the Hartford-New Britain Busway

– Numerous congestion mitigating projects along I-95 and the state’s other highways

– Utilizing Responsible Growth principles to create new and renovated rail and intermodal stations so that these significant transit developments can leverage economic development in proximity to the public transportation systems

48

Transportation

• Notwithstanding the continued commitment of thousands of dedicated state employees, the old DOT as an institution has simply become too bureaucratic, too inefficient, and too single minded in its approach to problem solving

• Bold reforms are necessary if the citizens of the state are to obtain the level of service to which they are entitled and if the state is to realize the intended results of the initiatives adopted in the past 3 years

49

Transportation

Transform the Old DOT into Two New Highly Focused Agencies

• Creation of two departments: the Department of Highways and the Department of Public Transportation, Aviation and Ports

• Effective January 1, 2010, this reconfiguration of transportation services will:

– Allow each agency to better focus on its mission and systems that promote its goals

– Enhance the standing of public transportation and explore its ramifications for development and conservation

– Provide for new and more efficient processes to accomplish the initiatives adopted

– Promote more specialized expertise and abilities within each agency

50

Transportation

As recommended by the Governor’s Commission, the Governor is proposing:

– Create a Chief Operating Officer position accountable to the commissioner for the day to day operations of the DOT and the implementation of department wide policies

– Create an Office of Strategic Planning and Evaluation reporting directly to the commissioner of DOT. This office will work closely with the Transportation Strategy Board and other agencies to provide a more long-term, comprehensive and strategic view of transportation

– Add financial positions to enhance DOT financial operations and provide timely federal reporting and audit capacity

– Separation of the Bureau of Engineering and Highways to enable Engineering to operate as a shared service and to develop more engineering capability tailored to public transportation needs

– The implementation of a “511” system to allow the public to telephonically retrieve timely, accurate and reliable travel information

– The establishment of a Citizen Representative to receive day-to-day feedback from the public on transportation issues

51

Transportation

Bradley International Airport Independence

• Review of the operational capacity of Bradley International Airport to run as a separate authority apart from and independent of state agency control

– Will provide Bradley with a more consumer oriented and business-like approach

– The public interest will continue to be protected by a Board of Directors appointed by the Governor and legislative leaders coupled with annual reporting and auditing requirements

52

Energy

State’s Electric Procurement a Success

• More than 900 million kWh of electricity was purchased for Executive, Legislative and Judicial Branch facilities, UConn, state universities, and community colleges using an on-line reverse auction

• Results

– Estimated cost savings of $20.5 million over the life of the contracts; approximately $13 million saved annually

– Contracts include green power that is more than 17% above the state’s Renewable Portfolio Standard

– Electricity prices are “locked in” through the end of FY 09 providing the state with budget certainty

53

Energy

Benefits of On-Line Reverse Auction

• Increased transparency – Bids are submitted through the auction platform and can be seen as they are

submitted

– Paper RFP utilizes “sealed” bids

• Increased competition and reduced price premiums– Real time auction allows for multiple bids by the same party, driving down

prices with each bid

– Paper RFP produces single bid price that must be held for a significant length of time (thereby increasing the bid)

– Avoids risk premium associated with the volatility of fuel prices

• Increased price discovery – If auction does not produce acceptable bids auction can be run another day

(when market conditions are more favorable) at no cost

– Auction discovers cost differential of green power

54

Energy

Electric Procurement Initiative

• Authorizes the Department of Public Utility Control (DPUC) to employ an online reverse auction process to procure in whole or in part electric generation supply for Standard Service

– Pre-qualified electric suppliers bid against other suppliers in real time

– The real time competitive market format results in lower prices because bidders must under bid the competition in order to get the contracts

– The process is completely transparent as the public and bidders can see all of the offers as they are submitted

• If the state realized these savings and policy benefits, it stands to reason that CT’s electric consumers can also benefit from the auction format

55

Energy

AverageEstimated

State Utility SavingsNew Jersey Rockland Electric Company 20%New York Consolidated Edison Company 8%Virginia Delmarva Power & Light Company 14%Texas Austin Energy 4%Michigan Detroit Edison Company 17%

Electric Procurement Initiative

56

Energy

Governor Rell’s Clean and Green Campaign – Green Buildings Tax Credit

– Anti-Idling for Buses

– Residential Solar Panel Program

– Sales Tax Exemption for Energy Star Appliances

– Furnace Replacement Rebate Program

– Expansion of the Energy Conservation Loan Fund

– Municipal Energy Procurement Information

– State Agency Energy and Climate Change Action Plans

– Green Collar Jobs Initiative

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Energy

Enhancing Energy Assistance Programs

– $350,000 to allow households to apply for Connecticut Energy Assistance Program (CEAP) benefits at community sites across the state beginning in mid-August

– $1.9 million to enhance the Weatherization Assistance Program for low-income households participating in CEAP

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Revenue

• Concerned that the state would be facing a period of economic uncertainty, Governor Rell provides targeted and important changes to the state’s revenue structure while conserving the state’s resources should the challenges facing our neighboring states arrive at our doorstep

• The changes to the state’s revenue structure includes:

– The promotion of energy efficiency through sales tax relief

– Saving working farms from the death tax

– The creation of a Green Building Corporation Tax Credit

– The elimination of the $250 Business Entity Tax

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Revenue

Elimination of the Business Entity Tax

• The Business Entity Tax was enacted in 2002 and affects well over 100,000 business enterprises

• The track record of small businesses in being the primary generators of new hiring is unsurpassed

• Governor Rell proposes to cultivate economic growth in CT by no longer requiring that start up businesses pay this tax as she is counting on them to lead our economy into the future

• The elimination of the $250 Business Entity Tax is projected to cost approximately $35 million annually beginning in FY 09

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Capital• Governor Rell’s recommended midterm budget adjustments include an

increase in bond authorizations, in addition to those already enacted, in the amount of $81.8 million for FY 09

• The Governor, with her midterm capital budget adjustments, is recommending bond authorizations which will better position the State of CT with regards to the state’s capital obligations and investments now and in the future

• The Governor’s recommendations includes:– Multi-year authorizations for the local school construction program

– Reconfiguring the Connecticut Juvenile Training School (CJTS)

– Creating a State Parks and Forests Stewardship Program

– Creating a Cultural Treasures capital program

– Additional student loans for higher education through CHESLA

– $8 million for criminal justice information systems

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Capital

CJTS Reconfiguration

– P.A. 07-4 of the June Special Session removed 16 and 17 year old offenders from the adult courts and placed them, effective January 1, 2010, into the juvenile justice system. This change will increase the number of youth under the care of DCF

– The passage of this bill prompted the Governor to evaluate current and future facility needs of DCF with the anticipated increase in juvenile population

– The Governor is recommending an additional authorization of $8 million under DCF to finance the reconfiguration of CJTS into the Connecticut Juvenile Services Complex (CJSC)

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Capital

CJSC Building Renovations

• Provide complete physical and programmatic separation of a 36 bed facility for younger offenders

• Create separate units for:

– A Reception and Diagnostic Unit to assess all newly committed juveniles age 16 and over (18 beds)

– A Respite Unit to provide short-term intervention programs to juveniles in the community at risk of losing their community status (15 beds)

– A Transitional Living Unit to prepare boys who are within 30 days of discharge from CJSC to lower levels of care (15 beds)

• Maintain 120 beds for older offenders

• In addition, the Governor is recommending a $3 million authorization to finance a 12 bed addition to Riverview Hospital to accommodate additional youth who may be in need of psychiatric hospital care

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Capital

State Parks and Forests Stewardship Program

• Did you know that there are 138 state parks and forests scattered through the state?

– Some of these parks have been neglected and are in need of capital repair and improvements

– Governor Rell appreciates these assets and believes that it is a smart investment to preserve these gems and treasures so that they can be enjoyed now and in the future by CT residents and visitors

– The Governor is announcing a new program, the state Parks and Forests Stewardship Program which will provide for the proper preservation of state parks and forests

– An authorization of $15 million is recommended for this program

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Capital

Other significant recommended bond authorizations include:

– $5 million for DPW to finance the design of renovations to the underutilized state-owned office building at 61 Woodland Street in Hartford. Once renovated, the building will help the state reduce its reliance on expensive leased space for state offices in the Hartford area

– $1.7 million for DPW to finance preservation of buildings at the state-owned Seaside property in Waterford while reuse or disposition plans are finalized

– $4 million for the Military Department to leverage $28 million in federal funds to construct a Regional Training Institute at Camp Rell in East Lyme

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Conclusion

• Governor Rell’s budget is based upon fiscally responsible principles

• The Governor sets forth a workable plan necessary to enhance our public safety and criminal justice network

• Governor Rell’s plan provides for the needs of low-income, disabled and vulnerable persons

• The Governor’s property tax reforms will give municipal leaders greater opportunity to control their budgets while ensuring that taxpayers are not confronted with the dramatic increases in property taxes experienced over the last several years

• Governor Rell is proposing changes designed to make the delivery of our transportation services more responsive to the needs of our citizens including

• The Governor has constructed a fiscally responsible budget proposal that is responsive to the needs of our state

FY 2008-09 GOVERNOR’S MIDTERM BUDGET ADJUSTMENTS

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