OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

EMERGENCY CERTIFICATION

SB-2000

AN ACT CONCERNING THE AUTHORIZATION OF SPECIAL TAX OBLIGATION BONDS OF THE STATE FOR CERTAIN TRANSPORTATION PURPOSES.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 06 $

FY 07 $

Treasurer, Debt Serv.

TF - Cost

See Below

See Below

Note: TF=Transportation Fund

Municipal Impact:

Municipalities

Effect

FY 06 $

FY 07 $

Various Municipalities

Revenue Gain

See Below

See Below

Explanation

The bill:

(1) authorizes Special Tax Obligation (STO) bonds for the Transportation Infrastructure Program in FY 06 and FY 07. The fiscal impact to the Special Transportation Fund is stated in the table below. These bonds will be used to leverage $574. 3 million in federal highway funding in FY 06 and $399. 4 million in FY 07.

STO Bonds Authorized for the

Transportation Infrastructure Program

 

($ Millions)

 

GO Bonds

Debt Service 1

FY 06

136. 9

101. 8

FY 07

193. 6

144. 0

1 The debt service figures assume a 6. 0% interest

rate and a 20 year term of issuance.

(2) requires the Department of Transportation (DOT) to provide an annual report to the Finance, Revenue and Bonding Committee and the Appropriations Committee, beginning February 1, 2006. This is not expected to result in a cost because the agency has indicated that it can accommodate any workload increase within its anticipated budgetary resources.

(3) authorizes STO bond for certain transportation projects. The fiscal impact is as follows:

STO Bonds Authorized for Certain Transportation Projects

Purpose

($ Millions)

STO Bonds

Debt Service 1

Rail Cars and Maintenance Facility

485. 7

361. 2

I-95 Improvements

187. 0

256. 2

I-84 & I-91 Improvements

150. 0

New Buses

7. 5

Reduction in bonding for TSB2 projects

-264. 0

-196. 3

Net Total

566. 2

421. 1

1 The debt service figures assume a 6. 0% interest rate and a 20 year term of issuance.

2 Transportation Strategy Board

(4) levies a $1 surcharge for travel on the New Haven Line from January 1, 2008 through June 2015. This is expected to result in a revenue gain to the New Haven Line Revitalization Account of approximately $10 million in FY 08 (partial year) and $20 million per year in FY 09 through FY 15.

(5) increases the petroleum products gross receipts tax rate and the revenue transfer to the Special Transportation Fund (STF). This is expected to result in a revenue increase ranging between $22. 5 million in FY 06 and $98. 4 million in FY 14 (see below for further information. )

Further Explanation

Rail Car and Maintenance Facility Plan

The table below summarizes the proposed funding plan for the purchase of rail cars for the New Haven Line and the construction of maintenance facilities for those cars.

Summary of Funding for the Rail Car and Maintenance Facility Plan

($ Millions)

 

Provisions Contained in bill

   

Fiscal

Year

TSB Funds1

$1 Ticket Surcharge

STO Bonds

Total in

the bill

Additional Resources2

Total

Funding

FY 05

5. 0

-

0. 0

5. 0

17. 0

22. 0

FY 06

20. 0

-

26. 5

46. 5

5. 0

51. 5

FY 07

15. 0

-

32. 8

47. 8

5. 0

52. 8

FY 08

15. 0

8. 0

49. 4

72. 4

5. 0

77. 4

FY 09

15. 0

14. 8

55. 0

84. 8

27. 7

112. 5

FY 10

15. 0

26. 5

55. 0

96. 5

44. 5

141. 0

FY 11

15. 0

4. 0

54. 0

73. 0

24. 0

97. 0

FY 12

15. 0

7. 5

54. 0

76. 5

14. 5

91. 0

FY 13

15. 0

9. 6

54. 0

78. 6

14. 0

92. 6

FY 14

15. 0

25. 5

54. 0

94. 5

5. 0

99. 5

FY 15

15. 0

53. 7

51. 0

119. 7

10. 0

129. 7

Total

160. 0

149. 6

485. 7

795. 3

171. 7

967. 0

1 Transportation Strategy Board (TSB) account funds are transferred to the New Haven Line Revitalization account in the bill.

2 The Office of Policy and Management has indicated that the proposed sources of additional resources may include a portion of DOT’s annual $200 million on STO bonds or federal funds.

Special Tax Obligation Bonding

The bill authorizes $485. 65 million in Special Tax Obligation (STO) bonds over the period from July 1, 2005 through July 1, 2014 for rail rolling stock and maintenance facilities, including rights-of-way, other property acquisition, and related projects. The interest cost to the Transportation Fund to bond this amount for twenty years at 6. 0% is $361. 2 million. These bonds could be used to leverage in federal highway funding depending on the availability of such funds.

The bill authorizes $344. 5 million in Special Tax Obligation (STO) bonds for the period from July 1, 2005 through July 1, 2009 to be used as follows: $187 million for operational improvements to Interstate 95 between Greenwich and North Stonington, $150 million for interstate and intrastate highway projects on roads other than I-95, and $7. 5 million for purchase of buses. The interest cost to the Transportation Fund to bond to bond this amount for twenty years at 6. 0% is $256. 2 million. These bonds could be used to leverage in federal highway funding depending on the availability of such funds. The following table provides a summary of the proposed use of these bonds.

Summary of Proposed use of STO Bond Funds1

($ Millions)

Fiscal Year

I-95 Improvements

I-84 & I-91
Improvements

New Buses

Total

FY 06

12. 5

10. 0

4. 0

26. 5

FY 07

24. 5

20. 0

3. 5

48. 0

FY 08

50. 0

20. 0

0. 0

70. 0

FY 09

50. 0

50. 0

0. 0

100. 0

FY 10

50. 0

50. 0

0. 0

100. 0

Total

187. 0

150. 0

7. 5

344. 5

1 The information was provided by the Office of Policy and Management.

The bill make revisions to TSB projects account, including the cancellation of $264 million in Special Tax Obligation (STO) bond authorizations. This will result in a saving to the Special Transportation Fund of $196. 3 million in debt service payments over 20 years, assuming a 6% interest rate.

Revenue Changes

The bill imposes a surcharge of $1 per trip on each ticket for travel on the New Haven Line and its branches that either originates or terminates in Connecticut for the seven-and-one-half year period beginning on January 1, 2008 and ending on July 1, 2015. It is anticipated that the surcharge will result in a revenue gain to the New Haven Line Revitalization account of $20 million per year beginning in FY 08. The table below shows the anticipated usage of this revenue for the purchase of rail cars and construction of the maintenance facilities associated with them:

Anticipated Utilization of Revenue from the $1 Ticket Surcharge1

Fiscal Year

$ Millions

FY 08

8. 0

FY 09

14. 8

FY 10

26. 5

FY 11

4. 0

FY 12

7. 5

FY 13

9. 6

FY 14

25. 5

FY 15

53. 7

1 Based on the funding plan provided by the Office of Policy and Management.

The bill increases the quarterly gross earnings tax on companies that distribute certain products in Connecticut that contain or are made from petroleum or a petroleum derivative from the current 5% as indicated in the table below:

Petroleum Products Gross Receipts Tax

Tax Rates and Revenue Gains by Fiscal Year

Fiscal Year

Effective Date

Current Law

New Rate

Revenue Gain1

($ Millions)

FY 06

7/1/05

5. 0%

5. 8%

22. 5

FY 07

7/1/06

5. 8%

6. 3%

40. 0

FY 08

7/1/07

6. 3%

7. 0%

63. 0

FY 09

7/1/08

7. 0%

7. 5%

80. 0

FY 10

-

7. 5%

-

80. 0

FY 11

-

7. 5%

-

80. 0

FY 12

-

7. 5%

-

80. 0

FY 13

-

7. 5%

-

80. 0

FY 14

7/1/13

7. 5%

8. 1%

98. 4

1 The revenue increase from the tax increase will be deposited into the General Fund and transferred to the Special Transportation Fund under the provisions of the bill.

Fund Transfers

The bill requires a specific amount of funding to be transferred annually from the Special Transportation Fund (STF) to the Transportation Strategy Board (TSB) projects account and further direct specified amounts of funding from the TSB projects account to be included in the annual financing plan and spent on the New Haven Line Revitalization Program and the Dial-a-Ride Program. The table below summarizes the impact on these funds.

Effect of the bill on Fund Transfers

($ Millions)

 

TSB1

Effect of the bill

Fiscal Year

Current Law

TSB

Dial-a-Ride2

STF3

NHLR4

Total

FY 05

31. 0

26. 0

0. 0

0. 0

5. 0

31. 0

FY 06

29. 3

0. 3

5. 0

4. 0

20. 0

29. 3

FY 07

24. 3

0. 3

5. 0

4. 0

15. 0

24. 3

FY 08 to FY 15

24. 3

0. 3

0. 0

9. 0

15. 0

24. 3

1 Transportation Strategy Board account

2 Elderly and Disabled Demand Responsive Transportation Program

3 Special Transportation Fund

4 New Haven Line Revitalization account

Implementing Provisions

The bill contains the following implementing provisions:

(1) it allows the DOT to solicit bids or qualifications for equipment, materials, or service for any project funded under the amendment at any time in the fiscal year, even if all the required funds may not be available for expenditure until later in the same or a succeeding fiscal year. The provision enables DOT to implement the provisions of the amendment.

(2) it requires the transportation commissioner to report annually by September 1 to the governor and the Transportation Committee on the status of the New Haven Line Revitalization Program and the capital needs of the state’s passenger rail services. It is anticipated that the cost to prepare the report will be met within the department’s available resources.

(3) it carries forward unexpended funds of $150,000 and $175,000 respectively from FY 05 to FY 06. Carrying these funds forward prevents them from lapsing at the end of the fiscal year and becoming part of the Special Transportation Fund surplus.

Municipal

DOT has indicated that $0. 2 million of the $2. 0 million in STO authorized in each fiscal year for the development and improvement of general aviation airport facilities will be made available for grants-in-aid to municipalities with airports. The funds are intended to assist towns in obtaining federal funds by providing matching funds.

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.