OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sHB-5600

AN ACT CONCERNING CONNECTICUT GLOBAL WARMING SOLUTIONS.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 09 $

FY 10 $

Department of Environmental Protection

EQ - Cost

601,250

799,500

Department of Environmental Protection

EQ - Revenue Gain

Potential $1. 5M-$3. 3M

Potential $1. 5M-$3. 3M

Treasurer, Debt Serv.

GF - Potential Cost

See Below

See Below

Treasurer, Debt Serv.

TF - Potential Cost

See Below

See Below

Dept. of Administrative Services

GF - Cost

None

70,300

Various State Agencies

GF - Cost

See Below

See Below

Department of Transportation

GF - Cost

See Below

See Below

Various State Agencies

Various - Cost

Potential Significant

Potential Significant

Policy & Mgmt. , Off.

GF - Cost

720,000

741,600

Comptroller Misc. Accounts (Fringe Benefits)1

GF - Cost

182,592

464,800

Note: EQ=Environmental Quality Fund; GF=General Fund; TF=Transportation Fund

Municipal Impact:

Municipalities

Effect

FY 09 $

FY 10 $

All Municipalities

Cost

Uncertain

Uncertain

Explanation

The Department of Environmental Protection's (DEP) Environmental Quality (EQ) Fund would incur costs of about $600,000 in FY 09 and about $800,000 in FY 10. These costs include fringe benefits paid for by the EQ fund of about 25% in FY 09 and about 59% in FY 10. This would result in ten new Environmental Analyst II positions for DEP to adopt, implement and enforce regulations required by the bill. The cost for one Environmental Analyst II is $60,125, including fringe benefits. Actual staff resources could substantially increase in FY 10, if the bill is fully implemented.

The actual EQ Fund balance for FY 07 is $11. 6 million and the estimated fund balance for FY 08 is $10. 5 million. The EQ fund is used to fund a variety of activities in support of environmental quality programs, especially those related to permit issuance, monitoring, and enforcement and is funded mainly through permit and license fees.

DEP could also experience a revenue gain of about $1. 5 million to $3. 5 million as a result of annual auction revenues generated from the program described in Section 4a of the bill. These revenues are intended for use by DEP to fund various state agencies to adopt and implement regulations to reduce Green House Gas (GHG) emissions, for Regional Greenhouse Gas Initiative (RGGI) implementation costs on a statewide and regional basis, and to fund climate change adaptation-related tasks and studies. These requirements for DEP to fund these various initiatives could significantly reduce the amount of revenue retained by DEP.

Section 2 will result in significant costs to the Office of Policy and Management (OPM) to monitor and enforce compliance with the state law and regulations related to the GHG caps.   It is anticipated this will require three additional staff with associated salaries and other expenses of $270,000.

Section 5 will result in a significant cost to OPM. It is anticipated OPM will require two additional positions, with salary and associated other expenses of $180,000 to develop standards and verification protocols to ensure that offsets occur and that such offsets are permanent, enforceable and verifiable. Additionally, it is anticipated that OPM will require one position, with salary and associated other expenses of $90,000 to develop a model municipal smart growth code that municipalities can adopt.

Section 7 requires state agencies conducting a Connecticut Environmental Policy Act (CEPA) impact analysis to include an analysis of the effect of the proposed action on green house gases (GHG) and other air pollutant emissions and the state's economic and safety needs. The cost in additional consultant fees is estimated to be $60,000 for each CEPA impact analysis, including: (1) $10,000 for analyzing GHG and other air pollutant emissions, and (2) $50,000 for analyzing the state's economic and safety needs.

Section 8 requires OPM, in consultation with DEP, to adopt regulations for any new construction or major renovation of state-owned or leased buildings for standards that exceed the standards set forth in the American Society of Heating, Refrigerating and Air Conditioning Engineers Standard 90. 1 by not less than 20 percent.   It is anticipated OPM will require two additional staff with salary and associated expenses of $180,000.

Section 8 also raises energy efficiency standards by at least 20% above the current level for new construction or state-owned or leased space when a major renovation is done. This is expected to result in costs to the General Fund (GF) or Special Transportation Fund (STF) for the following reasons:

New construction projects are financed with bond funds so any increase in construction costs due to increased energy efficiency standards would result in an increase in GF or STF debt service costs.

There would be GF or STF operating budget or debt service costs for the renovation of state-owned space, depending whether the project is financed with operating funds or bond funds;

If the landlord agrees to pay for the energy improvements on leased space it would result in increased GF or STF operating budget costs because costs of tenant improvements are usually included in the cost to lease the space; if the state pays for the cost of the improvements there would be increased GF or STF operating budget costs, and if the landlord refuses to permit the energy improvements or to pay for them there would be a GF or STF operating budget cost to move the state agency to new leased space.

These additional GF and STF costs could be offset by savings in the operations of the new buildings renovated space over their lifetime, especially in heating and ventilation costs.

The bill requires the Department of Administrative Services (DAS) to adopt regulations concerning GHG caps and emission limits by January 1, 2012. DAS does not currently have the technical subject matter expertise to handle this requirement. Therefore, DAS will need to hire a Legislative & Administrative Advisor 1 (MP 59), with a salary of approximately $70,300, to research and write these regulations.

Section 8 requires the State Building Inspector and the Codes and Standards Committee to revise the State Building Code to meet various energy conservation standards. The Committee is currently in the process of revising the Code and as such these changes would result in no additional fiscal impact to the Division of Fire, Emergency, and Building Services within the Department of Public Safety.

This section would also require that any new construction or major renovation of a state-owned or leased building exceed the American Society of Heating, Refrigerating and Air Conditioning Engineers Standard 90. 1 by at least twenty percent. This would result in a potential significant cost to the state as the construction and renovation costs associated with such projects would increase commensurate with the enhanced standard.  

Section 9 requires OPM to develop a training and certification program for the certified energy inspector class. It is anticipated that OPM can perform these duties within normal budgetary resources of the agency.

The Out Years

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

1 The fringe benefit costs for state employees are budgeted centrally in the Miscellaneous Accounts administered by the Comptroller. The first year fringe benefit costs for new positions do not include pension costs. The estimated first year fringe benefit rate as a percentage of payroll is 25. 36%. The state's pension contribution is based upon the prior year's certification by the actuary for the State Employees Retirement System (SERS). The SERS fringe benefit rate is 33. 27%, which when combined with the rate for non-pension fringe benefits totals 58. 63%.