OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 ¯ (860) 240-0200

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

sHB-5814

AN ACT CONCERNING THE BONDING PROCESS.

As Amended by House "A" (LCO 5308)

House Calendar No. : 366

Senate Calendar No. : 507

OFA Fiscal Note

State Impact:

Note: GF=General Fund

Municipal Impact:

Explanation

The bill as amended requires various agencies, for which the Bond Commission authorizes a bond, to file a statement with the commission as to the full cost of the project or purpose when completed and the estimated operating cost for any structure, equipment or facility to be constructed or acquired. Whereas, most agencies currently prepare such an analysis, most agencies will not incur any costs. The Office of Policy and Management (OPM) may incur costs to develop these cost estimates for changes in private provider rates resulting from non-profit entities receiving bond funds. It is anticipated that OPM will require no more than one half-time staff person with an annual salary of $30,000. It should be noted that HB 5845, the budget bill, as adopted by the House and Senate contains $1. 5 million for additional staff. It is uncertain if these funds would be available for this purpose.

The bill as amended requires OPM to report on all outstanding bond allocations, which results in no fiscal impact on the agency as such information is monitored by the agency. The bill makes a variety of other changes that have no fiscal impact.

§ 501 – TAX DISCLOSURE

The bill as amended may result in a minimal cost (less than $5,000) to DRS to provide data to OFA.

§ 502 – MOBILE MANUFACTURED HOMES

The bill as amended directs Connecticut Housing Finance Financing Authority (CHFA) to provide loans of not less than $2 million for the purchase of mobile manufactured homes to be located in a manufacturing housing community.

CHFA issues bonds under its own authority that are backed by a special capital reserve fund (SCRF). A SCRF extends the state's credit for bonds issued by various quasi-public state bond-issuing authorities such as CHFA. SCRF-backed bonds are a contingent liability or potential financial responsibility of the state that may become a real financial responsibility at some point if the quasi-public agency fails to pay the debt service for SCRF-backed bonds it has issued.

§ 511 – ESTATE TAX PENALTY

This section is anticipated to result in a revenue gain to the extent that penalties are due resulting from failure to pay the estate tax by the due date.

The bill as amended imposes a minimum penalty of $50 for failure to pay estate tax by the due date. Current law imposes a penalty of 10% of the unpaid tax but does not specify any minimum amount. Estate taxes are due and payable nine months after the death date. Unpaid taxes are also subject to interest of 1% per month from the due date to the payment date.

§ 513 – TIME LIMIT FOR ASSESSING TAX ON UNDISCLOSED GIFTS

The provisions will result in a revenue gain to the state to the extent that it enhances DRS's ability to collect revenue.

When a taxpayer fails to file a required gift tax return, the law allows the DRS commissioner to file the return based on the best information available. Except when a taxpayer has filed a fraudulent or willfully false return in an attempt to evade the tax, the time limit for the commissioner to assess additional gift tax is three years from the due date of the original return or the date the return is actually filed, whichever is later. House “A” makes an exception to the three-year time limit to allow the commissioner to impose gift tax at any time if a gift is inadequately disclosed or not disclosed.

§ 518 – PROPERTY TAX AGREEMENTS

The bill as amended allows municipalities under certain conditions to enter into agreements to exempt property taxes or fix property taxes on a parcel. It is assumed that a town would not enter into an agreement that would not be in the town's best interest. Therefore, the bill as amended is anticipated to have positive long term fiscal impact to a town.

§ 519 – SHELTON TRANSPORTATION PROJECT

The bill as amended requires the Department of Transportation to allow the city of Shelton to construct an at grade pedestrian crossing on the Housatonic Railroad's Maybrook Line between Canal Street and Bridge Street. The project shall first be approved by the legislative body of the city of Shelton and the Housatonic Railroad Company and constructed in accordance with the Department of Transportation's recommendations. There is a one-time cost to the town of Shelton for construction of such crossing and an ongoing cost to the town for perpetual maintenance cost and liability for said crossing. It is unknown at this time what the overall cost to construct an at-grade pedestrian crossing would be.

The Department of Transportation will be able to accommodate any additional administrative functions resulting from passage of the bill as amended within its anticipated budgetary resources.

The other sections of the bill as amended are not anticipated to have a fiscal impact.

House “A” (1) requires CHFA to provide mobile manufacturing home loans, (2) allows disclosure of certain tax information to OFA, (3) added various provisions relating to administration of taxes by DRS, (4) modifies the bond process procedures, (5) permits the establishment of a Special Taxing District in Derby, and (6) allows Shelton to construct a pedestrian crossing. The fiscal impact of House “A” are outlined above.

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 House thereof for any purpose.