Compromise Budget FY19


Budget Highlights

  • Prohibit the Governor from holding back funding from municipalities.
  • Provide $16 million in additional funding for Retired Teachers’ Healthcare in order to bring the state’s portion of funding to 33%.
  • Reduce Energy Efficiency Fund sweeps by $10 million.
  • Fully restore Medicare Savings Plan to 211% of Federal Poverty Level.
  • Provide $1.5 million in TEAM funding (through the Talent Development account).
  • Provide $16.2 million in funding for Community Colleges to cover fringe benefit costs.
  • Provide $2 million to Department of Veterans’ Affairs for dual licensure of the Veterans’ Home and Hospital.
  • Funding for Hurricane Maria victims – $400k for Bilingual Ed; $600k for Housing; $500k for DSS – Hispanic Human Resource Development.
  • Index the volatility cap to the growth in personal income and reduce the term of bonds with spending and bond cap covenants from 10 years to five years.
  • Continue car tax cap at 45 mills and update the assessment year.
  • Restore HUSKY A health insurance coverage for adults between 138% to 150% of federal poverty level.
  • Accelerate the transfer “new car” sales tax revenue from the General Fund to the Special Transportation Fund resulting in an additional $29 million to the STF in FY 19.
  • 8% in FY 19; 33% in FY 20; 56% in FY 21; 75% in FY 22; and 100% beginning in FY 23.
  • Increase CTN funding from $1.6 million to $2.6 million.

The agreement includes the following changes to appropriations that were in the Democrats’ budget:

  • Adopt hard hiring freeze to save $7 million
  • $5 million for Emergency Placements (DDS)
  • $9.5 million for 1% Private Provider COLA to all private providers not included in the wage increases for DDS group home workers
  • $1.5 million to increase VoAg funding to $1,000 per student
  • $255,715 to remove Vocational holdback
  •  $1.25 million to remove reductions to Grants for Mental Health and Substance Abuse
  •  $1 million for Dairy Farmers
  •  $1 million for Employment and Day Opportunities
  •  $1.4 million for Aid to Disabled (Current Services Adjustment)
  •  $1.8 million for Old Age Assistance (Current Services Adjustment)
  •  $5 million for TANF (Current Services Adjustment)
  •  $2.9 million in ECS for Hurricane Maria victims (not for bilingual education)
  •  $131,000 for Honor Guard
  •  Transfer $7 million in Reserve for Salary Adjustment to Judicial and provide and additional $5.8 million to fund new judges

Outyear Adjustments

  • Eliminate Smart Start revenue diversion for FY 20 – $10 million
  • Delay Gift and Estate Tax phase-in to federal exemption levels in FY 20 (federal exemption level increased from $5 million to $15 million) – $39.5 million
  • Reflect reduction to Hospital Tax in FY 20 and increased Medicaid rates – $305 million
  • Reflect over $300 million in savings next biennium due to the delay of MRSA.

Transportation Funding

Fully fund transportation projects as scheduled – using the following adjustments:

  • $20 million Current Services adjustment
  •  $29 million from the “New Car” sales tax revenue
  •  Provide $250 million in General Obligation bond funding to support transportation projects.
  •  Exempt General Obligation transportation funding from the bond cap.

Fiscal Stability Commission Recommendations

Study on pro-growth rebalancing of state taxes. Enact legislation to create a new private panel, to report by December 1, 2019, to study and make recommendations regarding the Commission’s proposal to rebalance the state’s tax system in order to better stimulate economic growth without raising net new taxes. Should take into account the work of both the Commission and the 2015 Tax Panel.

Study on revenue and expense optimization. Instruct OPM secretary to hire a national consultant to study and present recommendations by February 1, 2019 to save $500 million in the General Fund through efficiency improvements in both revenue collection and expense management, without damaging program quality or the social safety net.

Study on reforming of the Teachers’ Retirement System. Would review a 30-year contribution of lottery net proceeds to TRS pension fund to pay down unfunded liabilities, re-amortization of remaining liabilities in 2025 after current bonds are defeased, creating hybrid DB/DC plan for new teachers with risk sharing on investment returns, and options of maintaining teacher contribution at 7% or raising them to median of neighboring states.

Municipal Volunteerism. Implement language that allows municipalities and schools to have volunteers perform work such as buildings and grounds maintenance. (Prohibit any reduction in municipal workforce as a result of volunteerism).

Documentation

Comparison.Compromise.pdf