OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www. cga. ct. gov/ofa

EMERGENCY CERTIFICATION

SB-501

AN ACT IMPLEMENTING CERTAIN PROVISIONS CONCERNING GOVERNMENT ADMINISTRATION.

OFA Fiscal Note

State Impact: See Below

Municipal Impact: See Below

Explanation

Section 1 gives the advisory committee to the Office of the Child Advocate until July 31, 2012, to submit to the governor a list of candidates for Child Advocate, has no fiscal impact.

Section 2 requires that the Office of Policy and Management (OPM) and the Office of Fiscal Analysis (OFA) to issue a consensus revenue estimate annually by November 10th, instead of October 15th, and clarifies that if a deadline for issuing a consensus revenue estimate falls on a Saturday, Sunday or legal holiday, the estimate will be issued on the next business day. These provisions do not result in a fiscal impact.

Section 3 allows taxpayers in the town of Danbury to request to the Office of Policy and Management (OPM) reconsideration of PILOT MME exemptions.

Sections 4-6 and 8-12 allow taxpayers in seven towns1 to receive property tax exemptions even though they missed the statutory filing deadline for manufacturing machinery and equipment (PILOT MME) exemptions. Each town will be required to reimburse the tax payments made by any such organization in excess of the taxes that would have been payable had their application been filed in a timely manner. The state will collect a late filing fee of $150-$500 from each affected entity in the seven towns.

Section 7 waives a 25% penalty assessed by the town of Brookfield to Rowland & Sons Steel Corp. for failure to file its 2009 personal property tax after all real and personal property taxes owed are paid to the town. This waiver will result in a revenue loss to the town of Brookfield in the amount of $938.

Section 13 makes certain changes to private charter tax exemptions, which have no fiscal impact.

Sections 14 to 28 make various technical and clarifying changes to PA 12-116, An Act Concerning Educational Reform, resulting in no fiscal impact.

Section 29 makes changes to the board of the Connecticut Agricultural Experiment Station and does not result in a fiscal impact.

Sections 30-125 make technical and conforming changes to the statutes as recommended by the Legislative Commissioner's Office and have no fiscal impact.

Sections 126, 127 and 173 make a variety of changes to the statutes concerning the oversight of insurance holding companies. There is no state or municipal fiscal impact.

Section 128 allows the Office of Policy Management to enter into a contract with a private social innovation investment enterprise firm for certain preventive social programs. To the degree that the state contracts for services for this program, the state may realize some future savings.

Section 129 extends the moratorium on affordable housing for the town of Berlin by one year. This has no fiscal impact.

Sections 130-133 permit municipalities to use the premium received on bonds issued to finance sewer projects to be applied to the cost of the project. This is anticipated to result in a municipal cost savings on the cost of the project because it permits the municipality to reduce the size of the bond issuance needed to finance sewer projects.

Sections 134-137 grant an exemption from the insurance statutes for tax-exempt companies organized before 1880. The one company to which this provision applies already falls outside the jurisdiction of the Department of Insurance, as a result there is no state fiscal impact.

These sections also establish a $10 annual filing fee for these companies and increases late filing fees from $100 to $175 per day. This will result in a minimal revenue gain for the state.

Section 138 makes a procedural change with regard to special education training and results in no fiscal impact.

Section 139 is permissive and has no state fiscal impact. It allows the Office of the State Treasurer to execute quit claim deeds to release liens on any projects financed with state General Obligation (GO) bonds at the American School for the Deaf.

Sections 140 – 151 – See table below.

Summary of Fiscal Impact of Sections 140-151

   

FY 13 $

FY 14 $

General Fund

 

Loss of asset value

1,583,600

-

 

Revenue gain

331,600

-

 

Cost - Judicial Department*

62,400

62,400

Transportation Fund

 

Loss of asset value

290,000

-

 

Revenue gain

535,000

-

*Section 143 will result in a General Fund cost of $62,400 cost per year to the Judicial Department for the lease of 80 parking spaces in a garage owned by New Britain due to the loss of parking spaces on the land transferred to New Britain.

 

Impact of by Section

Sec

From

To/Location

Acres

Est. Value $

Use Restriction

Transportation Fund Loss of Asset Value

140

DOT

East Hartford

0. 38

60,000

Open space

141

DOT

East Hartford

0. 44

30,000

Open space

149

DOT

Tolland

3. 2

200,000

Economic

development

Transportation Fund Loss of Asset Value 

290,000

 

 

Transportation Fund Revenue Gain

142

DOT

East Haven

0. 49

535,000

None

Transportation Fund Revenue Gain

535,000

 

 

General Fund Loss of Asset Value

145

DEEP

Bloomfield

36. 05

875,000

Golf course

146

DECD

New Haven

0. 52

73,700

Day care

149

DECD

New Britain

0. 32

39,500

Community park

151

DOC

Enfield – Shaker Pines Fire District 5

10

335,000

Fire fighting education & training

143*

Judicial

New Britain

0. 89

260,400

Economic

development

General Fund Loss of Asset Value

1,583,600

 

 

General Fund Revenue Gain

143*

Judicial

New Britain

0. 89

60,000

Economic development

144

DAS

Windsor

0. 73

271,600

None

General Fund Revenue Gain

331,600

 

*Section 143 transfers a 0. 89 acre parcel with an estimated market value of $320,400 to New Britain for $60,000. This will result in a General Fund revenue gain of $60,000 and a loss of asset value of $260,400.

Section 147 amends Section 1 of SA 08-8, An Act Concerning the Conveyance of Certain Parcels of State Land, to change the use restriction on property conveyed to the Historical Society of Greenwich from parking to the mission of the society. This provision has no state fiscal impact.

Section 148 amends Section 9 of SA 08-8, An Act Concerning the Conveyance of Certain Parcels of State Land, to permit the Regional Refuse Disposal District One, Barkhamsted & New Hartford to exchange a portion of its property with abutting property owners to allow changes to a well water line. This provision has no state fiscal impact.

Section 152 allows the Office of Policy and Management to authorize state agencies to enter into agreements to facilitate the public's utilization of electronic government and services. This provision results in no fiscal impact.

Section 153 validates a referendum held in East Hartford on November 8, 2011 in which voters approved a $7 million appropriation and bond authorization for the town's flood control system.

Section 154 makes certain changes to the Home Energy Solution audits for oil customers. This provision has no fiscal impact.

Section 155 requires electric and electric distribution companies to provide certain utility pole data to municipalities, regional planning agencies, regional council of elected officials, or regional council of governments, and has no fiscal impact on the state or municipalities.

Section 156 makes certain changes to the Combined Heat and Power (CHP) Systems Pilot Program. These changes have no fiscal impact.

Section 157 allows the Clean Energy Finance and Investment Authority (CEFIA) to issue bonds or use other funding sources to finance sustainable energy improvements to qualifying real property, and to levy special assessments against the property after the improvements are made. The assessment is collected as part of the property owner's regular property tax bill and is secured by a lien on the property. This provision has no fiscal impact.

Section 158 permits the Clean Energy Finance and Investment Authority (CEFIA) to issue up to $50 million in bonds backed by a special capital reserve fund (SCRF) account. If the CEFIA was unable to maintain the SCRF at its minimum capital reserve level, the bill requires that the SCRF be refilled from General Fund resources. This would result in: (1) a negative impact on General Fund cash flow and (2) a loss of short-term interest on the amount transferred to the SCRF. The SCRF level for $50 million is the lesser of: (1) one year's principal and interest2 on the bonds or (2) ten percent of the issue ($5 million).

The table below shows the amount of outstanding debt backed by SCRF accounts as of February 1, 2011. The minimum capital reserve is: (1) the amount that must be maintained in the SCRF and (2) the maximum annual General Fund liability for the SCRF if no funds were available from the issuing authority to pay debt service.

SCRF bonds are a contingent liability of the state, which do not count against the state's statutory limit on General Obligation (GO) bonds in CGS Sec. 3-213.

Amount of Debt Backed by Special Capital Reserve Funds and Minimum Capital Reserve Requirements as of February 1, 2012
(in millions)

Issuing Authority

Outstanding SCRF-backed

Debt $

Minimum Capital Reserve Required for SCRF $

Connecticut Development Authority (CDA)

3. 1

1. 5

Connecticut Health and Educational Facilities Authority (CHEFA)

277. 2

29. 3

Connecticut Higher Education Supplemental Loan Authority (CHESLA)

169. 6

19. 4

Connecticut Housing Finance Authority (CHFA)

3,751. 0

277. 7

Connecticut Resource Recovery Authority (CRRA)

26. 9

10. 9

City of Waterbury Special Capital Reserve Fund

30. 1

6. 7

Background

The state permits quasi-public authorities to issue SCRF-backed bonds because the SCRF provides a higher level of repayment security, which results in a lower rate of interest on the bond issuance.

A SCRF is a debt service reserve fund that is set up at the time the bonds are issued, in an amount equal to the lesser of either one year's principal and interest on the bonds or ten percent of the issue. If the borrower makes the scheduled debt service payments, the interest earnings on the reserve fund will pay the interest on the bonds that created it and the principal will go to retire the final maturity of the bond issue. If the borrower is unable to pay all or part of the scheduled debt service payments, the reserve may be drawn upon to pay debt service. The reserve provides up to a year's adjustment time to deal with a revenue shortfall. When the SCRF has been drawn down in part or completely, a draw on the General Fund is authorized and the reserve is fully restored. The draw on the General Fund is deemed to be appropriated and is not subject to the constitutional or statutory appropriations cap. All that is required is a certification by the issuing authority of the amount required. If draws on a SCRF continue, the annual draws on the General Fund required to refill it also continue.

Sections 159 and 160 allow CEFIA to issue revenue bonds. This will not result in a state or municipal liability for the bonds because the language specifies that the debt is not the responsibility of the State of Connecticut or any municipality.

Section 161 expands the state treasurer's procedures for approval of bonds backed by SCRFs to apply to bonds issued by CEFIA. This provision is conforming and has no fiscal impact.

Sections 163 and 164 are technical changes and have no fiscal impact.

Section 162 allows CEFIA to qualify for an allocation of private activity bonds. This has no state fiscal impact because these bonds are not a financial obligation of the state.

Section 165 expands the state treasurer's procedures for approval of bonds backed by SCRFs to apply to bonds issued by CEFIA is conforming and has no fiscal impact.

Section 167 makes minor changes to the Low-Income Energy Advisory Board and has no fiscal impact.

Sections 168-170 allow municipalities to phase in property tax assessment decreases resulting from revaluation under certain criteria. This will result in a change to the municipalities' grand list. However, it is not anticipated to have a fiscal impact as the municipality will adjust their mill rate, given a constant tax levy.

Section 171 extends by 12 months, projects in certain municipalities under Project 150. This provision has no fiscal impact.

Section 172 repeals the following land conveyances:

Land Conveyances repealed in Section 172

From

To

Act/Sec.

Provision

DOT

Windsor Locks

SA 06-10, Sec. 8

Transfer of 20,000 sq ft is repealed

DOT

Marlborough

PA 10-1, JSS, Sec. 6

Transfer of 0. 46 acres is repealed

DOT

Manchester

PA 10-1, JSS, Sec. 7

Transfer of 1. 517 acres is repealed

DOT

Bristol

SA 11-16, Sec. 7

Transfer of 0. 11 acres is repealed

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

1 Bridgeport, Durham, Hartford, Middletown, Seymour, Waterbury, and Windsor

2 The amount of the annual principal and interest payment will depend on the interest rate at which the bonds are issued and the term of issuance.

3 CGS Sec. 3-21 imposes a ceiling on the amount of General Fund-supported debt that the Legislature may authorize that is equal to 1. 6 times net General Fund tax receipts projected by the Finance, Revenue and Bonding Committee for the fiscal year in which the bonds are authorized.