Enacts various provisions of law necessary to implement savings adjustments to the state financial plan

Summary of provisions

Part A - Modify the Aid and Incentives for Municipalities (AIM) Program.

This bill amends Part 0 of Chapter 56 of the Laws of 2008, which amends the Aid and Incentives for Municipalities (AIM) Program, to increase the amount of AIM funding that the cities of Buffalo, Rochester, Syracuse and Yonkers may opt to receive in June, 2009

rather than in March, 2010, thereby holding those cities harmless in their 2008-09 fiscal year for the proposed reduction in Special Aid added to the SFY 2008-09 Enacted Budget by the Legislature.

Part B - Authorize transfers and miscellaneous capital/debt provisions.

* This bill increases the transfer from the Environmental Protection Fund (EPF) Transfer Account to the General Fund from $125 million to $200 million.

* This bill increases the authority to transfer Federal child support revenue to the General Fund, from $36 million to $136 million, in order to achieve one-time Financial Plan relief of $100 million in SFY 2008-09.

* This bill increases the contribution to the General Fund from the New York Power Authority in 2008-09 from $60 million to $361 million; establishes a $210 million payment in 2009-10; and eliminates a $35 million payment in 2010-11.

* This bill allows any public authority that is authorized to issue Personal Income Tax (PIT) Revenue Bonds to issue debt for any other public authorities' authorized purposes for this program, subject to existing Public Authorities Control Board (PACB) approval requirements. This provision is needed now, more than ever, in response to recent crises in the financial markets that have limited access to the capital markets, and to prevent potential negative impacts to the Financial Plan related to reimbursing bond-financed capital projects spending. In addition this bill amends the related capital reimbursement provisions to permit issuer flexibility without disrupting the existing capital responsibility of authorities.

* This bill authorizes $6.5 million in transfer authority to accommodate a one-time transfer in reserve balance from the Dormitory Authority Corporate Fiduciary Fund to the General Fund.

* Eliminate remaining $45 million member item funding in 2008-09.

Part C - Transfer the undisbursed balances of certain housing programs to the General Fund.

This bill transfers, to the General Fund, the January 1, 2009 undisbursed Mortgage Insurance Fund Reserve balances for the $54 million Mitchell Lama Rehabilitation and Preservation Program and the All Affordable Program, the $15 million Greater Catskills Flood Remediation Program, and the $6 million Housing and Economic Stabilization for Long Island Program (HELP) by March 31, 2009. These programs will be bond financed as this bill also increases the Division of Housing and Community Renewal's bond cap authorization by $31 million, from $2.291 billion to $2.322 billion. These actions would provide an estimated $25 million in SFY 2008-09 General Fund relief without negatively impacting program operations.

Part D - Shift costs associated with Timothy's Law from the General Fund to a Special Revenue Account.

This bill shifts the costs associated with the implementation of Timothy's Law, established by Chapter 748 of the Laws of 2006, from the General Fund to the Insurance Department's Special Revenue Regulation Account. This bill also extends the effective date of Timothy's Law to December 31, 2010.

Part E - Eliminate the Differential for Unified Services in several counties.

This bill eliminates the differential for Unified Services in five counties (Rensselaer, Rockland, Warren, Washington, and Westchester). In the 1970s, the Unified Services initiative began providing additional funding to certain counties to develop a community care system and reduce the use of State inpatient services. Currently, there is a wide range of community-based services throughout the State, and there is no longer justification for this differential. Specifically, this bill achieves savings in 2008-09 totaling $700,000 growing to $2.8 million on a recurring basis.

Part F - Reduce Human Service Cost of Living Adjustment (COLA).

This bill provides for a 1 percent reduction in the 2008-09 human services cost of living adjustment (COLA) effective January 1, 2009. This results in a net 2.2 percent ongoing increase for 2008-09.

Part G . Health Care Savings.

This bill generates State Financial Plan relief by generating additional revenues and reducing spending. Specifically, this bill:

* Amends Public Health Law (PHL) § 272(12) to modify the Preferred Drug Program to eliminate the exemption for anti-depressants (anti-psychotic, anti-retroviral and anti-rejection drugs will remain exempt);

* Amends Social Services Law (SSL) § 367-a(9)(b)(ii) to reduce pharmacy reimbursement levels for brand name prescription drugs from Average Wholesale Price (AWP) minus 16.25 percent to AWP minus 17.25 percent;

* Amends Elder Law § 250(1)(b)(1) to reduce pharmacy reimbursement levels for brand name prescription drugs that are provided through the Elderly Pharmaceutical Insurance Coverage (EPIC) program - from AWP minus 16.25 percent to AWP minus 17.25 percent;

* Adds new PHL § 2807-d(2)(a)(vi) to reinstitute the 0.70 percent hospital assessment;

* Adds new PHL § 2807-c(34) to reflect an across the board reduction in hospital rates;

* Amends Chapter 58 of the Laws of 2008, Part C, § 11, and adds a new provision to achieve savings related to general hospitals, nursing homes, home care and personal care providers by discontinuing remaining trend factors for calendar year 2008 and eliminating the trend factor for calendar year 2009;

* Amends PHL § 2808(2-b) to delay nursing home rebasing until April 2009;

* Adds new PHL §§ 2808(25) and 3614(12) to achieve savings related to across the board reductions in nursing home, home care and personal care reimbursement rates;

* Amends PHL §§ 3614(7) and (7-a) and adds PHL § 3614(2-a) to achieve savings by implementing administrative efficiencies for certified home health agencies (CHHAs) and Long Term Home Health Care Programs (LTHHCPs);

* Amends PHL § 2807-s(6)(a) to increase the amount collected through the Health Care Reform Act (HCRA) Covered lives Assessment;

* Amends PHL§§ 2807-c, 2808, 2807-v and 2807-1 and Chapter 703 of the Laws of 1988 to eliminate HCRA funding for public hospital and public nursing home recruitment and retention grants, non-public hospital grants, and the regional pilot program individual subsidy;

* Amends PHL §§ 2807-v, 2807-1 and 2807-r to shift certain public health care costs and certain HCRA costs to Insurance Assessments;

* Amends PHL § 2807-s to reduce Graduate Medical Education (GME) Professional Education Pool (PEP) funding;

* Amends PHL § 2807-I to eliminate unspent worker retraining funding;

* Amends PHL § 2807-j(2) to increase the HCRA assessments charged to insurers;

* Amends SSL § 367-s to reduce supplemental emergency transportation funding;

* Amends PHL § 2808 to reduce nursing home recruitment and retention grants;

* Amends SSL §364-j-2 to reduce clinic transition payments;

* Amends PHL § 3614 to reduce rural home care payments; and

* Amends SSL § 366-c to conform with Federal requirements regarding spousal impoverishment.

Part H - Transfer up to $6 million from the Banking Department Account to the General Fund.

This bill authorizes the Comptroller, at the request of the Director of the Budget. to transfer up to $6 million from the unencumbered balance of the Banking Department Account (339.A5) to the General Fund in State Fiscal Year 2008-09.

Part I - Transfer up to $4.5 million from the Insurance Department Account to the General Fund.

This bill authorizes the Comptroller, at the request of the Director of the Budget, to transfer up to $4.5 million from the unencumbered

balance of the Insurance Department Account (339.B6) to the General Fund in State Fiscal Year 2008-09.

Part J - Transfer excess revenues from the Department of Law to the General Fund.

This bill authorizes the transfer to the General Fund of excess revenues, resulting from litigation settlements or prosecutions undertaken by the Department of Law, which have accumulated in an account dedicated for that purpose. The ongoing operations of the Department of Law are protected by a second authorization to return funds from the General Fund to the account - up to a total of ten percent of the annual budget in the account - in the event revenue is insufficient. These authorizations will allow swifter recognition of revenues in the General Fund, while also ensuring that the ability of the Department of Law to carry on further investigations and litigation is not threatened.

Part K - Clarify assessments paid by insurance companies to the Workers' Compensation Board.

This legislation would clarify the calculation of assessments collected by the insurance industry and deposited with the Workers' Compensation Board. At present, the basis on which assessments are collected by the insurers currently differs from the basis on which payments are made to the Workers' Compensation Board. As a result, some insures collect a surplus, while others collect insufficient funds. To the extent any insurance company has identified and held such funds as a result of this discrepancy, such funds must be paid to the Board and distributed according to a plan developed by the Chair of the Workers' Compensation Board and approved by the Director of the Budget. Funds in excess of the plan developed by the Chair may be transferred to the General Fund.

Statement in support

Enactment of these provisions is necessary to produce savings to ensure current year budget balance, guard against further revenue reductions and address the projected Budget gaps.

Budgetary implications

Enactment of this bill is necessary to reduce State spending and allow available cash resources to be used to achieve Financial Plan balance in 2008-09 and address the projected budget gaps for 2009-10 and subsequent years.

Effective date

This bill takes effect immediately.