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OFA FISCAL NOTE AND OLR BILL ANALYSIS

SHB-5715

AN ACT CONCERNING STATE-WIDE TRANSPORTATION IMPROVEMENTS.

OFA SUMMARY IMPACT:

State Impact:

Note: TF=Transportation Fund; GF=General Fund

Municipal Impact:

Special Tax Obligation (STO) Bond Provisions

Sections 1 thorough 9 authorize $ 344 million in STO bonds between 7/1/06 and 7/1/12 for several transportation initiatives. The interest cost to bond this amount over 20 years is $ 255. 8 million, assuming a 6% interest rate. The projects will have a future fiscal impact on the Transportation Fund because they will require operating funds when they are completed.

Section 19 authorizes $ 2. 5 billion in STO bonds between 7/1/07 and 7/1/16 for Transportation Strategy Board projects. The interest cost to bond this amount over 20 years is $ 1. 86 billion, assuming a 6% interest rate.

Section 12 permits the use of previously authorized Urban Action Program bonds for transit-oriented projects. This has no immediate fiscal impact because no additional GO bonds are authorized but it may increase future debt service costs if it causes bond funds to be expended more rapidly than they otherwise would have been.

Tax Provisions

The table below provides a schedule of the rate changes and revenue gains associated with increasing the quarterly gross earnings tax on companies that distribute certain petroleum products in Connecticut. It is assumed that this revenue will be used to pay the additional debt service costs identified for the STO bonds authorized by this bill.

Motor Vehicle Fine Provisions

Diverting revenues generated by fines imposed for certain motor vehicle violations from the Special Transportation Fund (STF) to various municipalities will result in an estimated revenue loss to the STF/revenue gain to municipalities of $ 6. 5 million per year. The Judicial Department (JD) will incur a one-time cost of less than $ 50,000 to modify its computer and accounting systems in order to implement the change. The ongoing annual cost to JD of processing of payments to municipalities can be accommodated within budgeted resources.

Undersecretary of Transit and Growth

The new Undersecretary of Transit and Growth in the Office of Policy and Management (OPM) established by the bill has a salary of $ 87,361 - $ 133,320, plus associated other expenses and equipment of $ 10,000. If additional staff, administrative support or consultant services is required, OPM costs could be significantly more. It is uncertain whether funding in the budget bill, sHB 5007, as favorably reported by the Appropriations Committee on March 30, 2006, would be used for this purpose. The bill also requires preparation of a state-wide build out analysis and stipulates that adequate funds be appropriated from the STF in FY 07 for the appropriate planning tools. The level of funding required is unknown.

Department of Transportation (DOT) Provisions

The cost to DOT for the studies mandated in the bill is estimated to be approximately $ 5 million. It is projected that each study will take at least 18 months to complete once the consultants begin work. (The bill requires each study to be completed by January 1, 2007. ) DOT will need to hire 4 staff engineers (annual salary of $ 75,000 plus fringes) to meet the ongoing reporting requirements for these provisions.

DOT will be able to accommodate any additional administrative functions associated with the Hartford-New Haven-Springfield rail service provisions within its anticipated budgetary resources.

OLR SUMMARY:

This bill:

EFFECTIVE DATE: July 1, 2006, except for the provisions for remitting certain motor vehicle fines to municipalities, which are effective October 1, 2006.

§§ 1 – 9 STO BONDING FOR STRATEGIC TRANSPORTATION PROJECTS

OFA FISCAL IMPACT

The bill authorizes $ 344 million in STO bonds between 7/1/06 and 7/1/12 for several transportation initiatives. The interest cost to bond this amount over 20 years is $ 255. 8 million, assuming a 6% interest rate. (The table below provides a breakout of bond authorizations and interest cost by project. ) These bonds may be used to leverage federal highway funding to the degree that Connecticut's federal allocation is not being used for other transportation projects. The projects will have a future fiscal impact on the Transportation Fund because they will require operating funds when they are completed.

OLR ANALYSIS

The bill authorizes the $ 344 million in STO bonds in the following annual amounts:

It authorizes this bonding to be used for the following strategic transportation projects, including value engineering, environmental assessment, planning, and right-of-way and property acquisition:

The bill defines these projects as strategic transportation projects. It determines the issuance of these bonds to be in furtherance of one or more of the purposes authorized for the use of STO bonds. It declares them to be special obligations of the state and thus payable only from the revenues pledged by law for repayment of STO bonds.

The State Bond Commission may authorize the bonds only after it finds that (1) a request for authorization signed by the appropriate state officer department or agency has been filed with it and (2) any capital development impact statement, human services facility colocation statement, advisory report regarding the state conservation and development policies plan, and statement regarding farmland that are required by law have been filed with it. The commission may authorize the bonds without finding that all the required reports and statements have been filed with it, if it has authorized its secretary to accept any required reports and statements on its behalf.

Any request for issuance of bonds must identify the project for which the bond proceeds are to be used and the recommendation of the person signing the request as to the extent to which federal, private, or other money currently or soon to be available for the project should be added to the bond proceeds. Any bond proceeds in excess of the aggregate costs of all authorized projects must be used in accordance with existing statutory requirements for such excess proceeds.

The bill allows DOT to solicit bids or qualifications for equipment, materials, or services for these projects at any time in the fiscal year even if all of the required funds may not be available until later in the same or succeeding fiscal year.

THE OUT YEARS

The annualized ongoing fiscal impact for the principal and interest payments over 20 years is $ 30. 0 million per year between in FY 08 and FY 27 if all of the bonds were issued on 7/1/06 at a 6% interest rate.

The projects will have a future fiscal impact on the Transportation Fund because they will require operating funds when they are completed.

§ 10 – REQUIREMENTS AND AUTHORIZATIONS FOR TRANSPORTATION COMMISSIONER REGARDING HARTFORD-NEW HAVEN-SPRINGFIELD RAIL SERVICE

OFA FISCAL IMPACT

The Department of Transportation will be able to accommodate any additional administrative functions resulting from passage of this section within their anticipated budgetary resources.

OLR ANALYSIS

The bill requires the transportation commissioner, in consultation with the OPM secretary with the governor's approval (1) to enter into agreements with (a) Amtrak or its successor that are necessary to operate rail passenger service on the New Haven-Hartford-Springfield line and (b) Massachusetts or any entity acting on its behalf that are necessary for participation in the New Haven-Hartford-Springfield rail service and (2) to select, through a competitive process, one or more entities to operate the New Haven-Hartford-Springfield rail service.

THE OUT YEARS

There is no annualized ongoing fiscal impact.

§§ 11, 13–18, 25, 31 & 32 – UNDERSECRETARY OF TRANSIT AND GROWTH

OFA FISCAL IMPACT

The bill establishes a new Undersecretary of Transit and Growth in the Office of Policy and Management (OPM), with a salary of $ 87,361 - $ 133,320, plus associated other expenses and equipment of $ 10,000. It is unknown whether the newly created position would require additional staff, administrative support or use of consultant services, if so, costs to OPM could be significantly more. The budget bill, sHB 5007, as favorably reported by the Appropriations Committee on March 30, 2006 contains funding of $ 335,000 for additional positions; it is uncertain whether funds would be used for this purpose. Additionally, the bill requires the Undersecretary of Transit and Growth to prepare a state-wide build out analysis, and the bill requires that adequate funds be appropriated from the Special Transportation Fund for FY 07 to acquire the appropriate planning tools including digital photography, and geographic information system mapping equipment. The level of funds required is unknown.

OLR ANALYSIS

The bill requires an undersecretary in OPM to be designated as the undersecretary of transit and growth. It adds the undersecretary of transit and growth to the membership of the Transportation Strategy Board (TSB) and designates him as its executive director. It makes him responsible for the TSB's work, including overseeing implementation of its initiatives. It makes the undersecretary, rather than the entire TSB, responsible for several things the law requires including (1) submission of certain required reports to the governor and legislative committees; (2) coordination and preparation of the performance reports required for TSB projects that require accompanying economic development plans; (3) monitoring, planning, and implementation of TSB projects; and (4) preparing an analysis of the short- and long-term effects of the transportation strategy on mobility, economic development, and the environment of the state. The undersecretary must consult with agencies represented on the TSB when performing his duties, but he must report to the OPM secretary.

The bill requires the undersecretary of transit and growth to (1) make recommendations that foster regional commuter and freight initiatives with neighboring northeastern states and identify potential public-private partnerships with respect to TSB projects; (2) prepare a statewide “build-out” analysis to refine TSB projects and provide technical assistance and capacity building to municipalities and regional agencies to help them establish plans that comply with the state plan of conservation and development; and (3) submit an annual report, beginning on or before January 1, 2007, to the governor and the legislature's Transportation, Finance, and Planning and Development committees on the implementation status of TSB projects. The required report must include recommended revisions to projects, an explanation of any obstacles to their completion, and the anticipated advantages and disadvantages of completing them. When the committees receive the report, they must hold a joint public hearing to evaluate the progress or lack thereof on implementing the TSB projects. The undersecretary and the transportation, environmental protection, economic and community development, and public safety commissioners, and the policy and management secretary, all of whom are members of the TSB, must all attend the public hearing.

The bill requires funds to be appropriated to OPM from the STF for FY 07 for the undersecretary to acquire appropriate planning tools, including digital aerial photography and geographic information system mapping equipment, to complete the required statewide build-out analysis. The amount of the appropriation is not specified. The analysis must be finished by January 1, 2007.

Currently, the DOT, OPM, and Department of Economic and Community Development are required to provide staff assistance to the TSB. The bill requires this to be done at the direction of the undersecretary of transit and growth. The bill also gives the undersecretary, instead of the OPM secretary, the authority to approve hiring of consultants for the TSB within available appropriations, although the undersecretary must consult with the secretary in this regard.

The bill provides the TSB with authority to develop and implement additional projects as directed by the undersecretary of transit and growth after consulting with the TSB.

THE OUT YEARS

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

§ 12 – URBAN ACTION BONDING FOR TRANSIT-ORIENTED DEVELOPMENT

OFA FISCAL IMPACT

Permitting the use of previously authorized Urban Action Program bonds for transit-oriented projects has no immediate fiscal impact because no additional GO bonds are authorized. However, it may increase future debt service costs if the provision causes bond funds to be expended more rapidly than they otherwise would have been.

OLR ANALYSIS

The bill permits the use of previously authorized general obligation bonds available under the Urban Action Program to be used with the State Bond Commission's approval for transit-oriented development projects in any municipality.

THE OUT YEARS

The provision may increase future debt service costs if it causes bond funds to be expended more rapidly than they otherwise would have been.

§ 19 – STO BOND AUTHORIZATIONS FOR TRANSPORTATION PROJECTS

OFA FISCAL IMPACT

The bill authorizes $ 2. 5 billion in STO bonds between 7/1/07 and 7/1/16 for Transportation Strategy Board projects. The interest cost to bond this amount over 20 years is $ 1. 86 billion, assuming a 6% interest rate. These bonds may be used to leverage federal highway funding to the degree that Connecticut's federal allocation is not being used for other transportation projects.

OLR ANALYSIS

The bill authorizes the State Bond Commission to issue $ 2. 5 billion in STO bonds in annual amounts of $ 250 million for 10 years beginning in FY 08 and ending in FY 17. It allows such additional amounts of bonds to be authorized as are required to fund any debt service and reserve account in accordance with bond proceedings authorizing the bonds and the costs of issuance, capitalized interest, if any, and the initial costs and expenses of the administration account. In computing the total amount of bonds that may be outstanding at any time, the bill requires the principal amount of any refunding bonds to be excluded.

The bill states that it is the General Assembly's finding that it is an essential governmental function to (1) improve personal mobility and the movement of goods and freight in and through Connecticut; (2) integrate transportation and economic development, land use, environmental and quality of life issues; (3) integrate the state economy with regional, national, and global economies; and (4) provide adequate and reliable funding for a quality multimodal transportation system. Financing traffic improvements is deemed to be in the public interest, will achieve the public purpose of reducing overall costs due to traffic congestion and delays, and will foster and promote economic growth, provide employment opportunities and help companies reduce their costs of doing business in the state.

The bill authorizes use of the bonds for the purposes specified in Sec. 13b-57h of the general statutes, which identifies specific projects recommended by the TSB in each of the five transportation investment areas established by law as part of the process for developing and implementing a state transportation strategy. It requires all of these projects to be initiated by the DOT in consultation with the TSB and the undersecretary of transit and growth no later than July 1, 2016.

THE OUT YEARS

For every year in which $ 250 million in STO bonds is issued, the annualized ongoing fiscal impact for the principal and interest payments is $ 21. 8 million per year for 20 years, assuming a 6% interest rate.

§§ 20 & 21 – PETROLEUM PRODUCTS GROSS RECEIPTS TAX INCREASES AND FUND TRANSFERS

OFA FISCAL IMPACT

The table below provides a schedule of the rate changes and revenue gains associated with increasing the quarterly gross earnings tax on companies that distribute certain petroleum products in Connecticut.

The bill specifies that the revenue gain associated with the tax increase will be deposited into the General Fund and transferred to the Transportation Strategy Board projects account in the Special Transportation Fund. It is assumed that the revenue will be used to pay the additional debt service costs identified for the STO bonds authorized by this bill.

OLR ANALYSIS

Tax Rate Increases

Currently, the petroleum products gross receipts tax, which is paid by companies that distribute certain products in Connecticut that contain or are made from petroleum or petroleum derivatives, is 5. 8% for FY 06, 6. 3% for FY 07, 7% for FY 08, 7. 5% for FY 09 through FY 13, and 8. 1% for FY 14 and thereafter. The bill changes this schedule as shown in the table below.

Tax Revenue Transfers

Currently, each calendar quarter, the revenue services commissioner must deposit into the STF a specific amount of the revenue generated from the petroleum products tax. The bill requires additional quarterly transfers of revenue from the tax into the TSB projects account in the STF. The required quarterly transfers are shown in the following table.

As is the case for the deposits made into the STF under the current law, if in any calendar quarter the receipts from the petroleum products tax are less than the amount required to be transferred to the TSB projects account under the bill, the revenue services commissioner must certify the amount of the shortfall to the state treasurer who must then transfer an amount equal to the shortfall from the General Fund.

THE OUT YEARS

The tables above summarize the revenue gains and transfers for the out years.

§§ 22 – 24 REMITTANCE OF CERTAIN MOTOR VEHICLE FINES TO MUNICIPALITIES

OFA FISCAL IMPACT

The bill diverts revenues generated by fines imposed for certain motor vehicle violations from the state's Transportation Fund to various municipalities, provided the violations occur on public roads that are owned and controlled by municipalities. It is estimated that $ 6. 5 million could be diverted each year under this provision.

It is unknown to what extent, if any, this provision would result in an increase in enforcement actions by local police departments yielding a revenue increase for the state and municipalities from the additional fines and associated surcharges imposed. It is anticipated that any such revenue increase to the Transportation Fund would not be sufficient to offset the revenue loss under the bill. The state General Fund and Criminal Injuries Compensation Fund could each experience an indeterminate revenue gain if this provision results in additional fines being imposed since revenues from the surcharges are deposited into these funds.

The Judicial Department would incur a one-time minimal cost (i. e. , less than $ 50,000) to modify its computer and accounting systems in order to implement these Sections. The ongoing processing of remittances to municipalities could be accommodated by the Judicial Department within budgeted resources.

OLR ANALYSIS

The bill requires the fines collected for certain specific motor vehicle violations that occur on roads under municipal jurisdiction to be remitted by the court to the municipality in which they occurred. Currently, all such fines go to the STF. Under the bill, these fines must be remitted to the municipalities instead by the appropriate court officials on a quarterly basis.

The following table identifies the violations for which fines must be remitted to municipalities and the current fine.

THE OUT YEARS

Provided that enforcement levels remain constant, the estimated $ 6. 5 million revenue loss to the Transportation Fund and corresponding revenue gain to municipalities will remain constant into the future.

§§ 26 – 30 STUDY AND OTHER REQUIREMENTS APPLICABLE TO DOT

OFA FISCAL IMPACT

State Impact:

Note: TF=Transportation Fund

Explanation

There is a combined cost to the Department of Transportation in excess of $ 5 million for sections 26 through 30 of this bill. It is estimated each study would cost at least $ 1 million and take at least 18 months to complete once the consultant(s) begin work. The bill requires each study is to be completed by January 1, 2007.

The Department of Transportation will require four additional staff engineers at a $ 75,000 plus fringes, on going, to meet the reporting requirements for these provisions.

OLR ANALYSIS

The bill requires the transportation commissioner to recommend to the railroads operating in Connecticut that rail service between New Haven and New London expand its hours of operation by initiating reverse commute service and adding or expanding weekend service. Currently, Amtrak provides commuter service under contract to the state between New Haven and New London through the Shoreline East commuter service.

The bill also requires DOT, in conjunction with the TSB, to develop a plan to initiate ongoing formal discussions with Massachusetts and New York regarding opportunities to enhance regional commuter and freight mobility. The plan must include, among other things, (1) recommendations on how best to involve the governors, legislative leaders and other governmental officials of each jurisdiction in the discussions; (2) a list of regional transportation issues with indication of sources and availability of funding to address each issue; and (3) lists of other public and private entities in each jurisdiction that should be included in discussions. DOT must report its plan and implementation recommendations to the Transportation Committee by January 1, 2007.

The bill also requires DOT, in conjunction with the TSB, to study the feasibility of (1) creating a bi-state Bradley International Airport Authority, (2) building a fuel cell power station to generate power for the New Haven Line, and (3) creating a commuter rail line from New London to Worcester, Massachusetts. DOT must report its findings and recommendations to the transportation Committee by January 1, 2007. The DOT and TSB must consult with the Bradley International Airport Board of directors in the course of its study of a bi-state airport authority. The fuel cell power station study must consider, at least, a plan for generating a large percentage of the line's peak power needs, as well as having the station serve as a backup in emergencies.

THE OUT YEARS

State Impact:

Note: TF=Transportation Fund

BACKGROUND

Related Bills

Two bills sHB 5657 (File 123) and SB 537 (File 139) also provide municipalities with money for certain motor vehicle violations. sHB 5657 imposes a 20% surcharge on the base fine assessed for certain violations payable to the municipality in which the arrest was made, regardless of the agency that makes the arrest. SB 537 imposes a $ 10 surcharge on 35 specified violations and remits them to the municipalities in which they occurred. The lists of violations differ in all three bills.

COMMITTEE ACTION

Transportation Committee

Joint Favorable Substitute Change of Reference

Finance, Revenue and Bonding Committee

Joint Favorable Substitute