OLR Research Report

March 20, 2008




By: Rute Pinhel, Research Analyst

You asked for a brief summary of bills the Higher Education and Employment Advancement Committee favorably reported to the Finance Committee.

sSB 466 — AA Establishing the Learn Here, Live Here Program

The bill requires the Department of Economic and Community Development (DECD) commissioner, in consultation with the Department of Revenue Services commissioner, to establish a program that permits individuals who graduate from a public or private higher education institution or regional vocational-technical school in the state to choose to have their income tax liability segregated and deposited into a fund to purchase their first home. The bill limits the contributions to $4,000 for single filers and $8,000 for joint filers per year for 10 years after graduation. It establishes the Connecticut First-Time Homebuyers Fund to hold the segregated tax dollars.

The individuals may use their amount contribution if they purchase a home in a distressed municipality. If not, they may use 75% of the total amount; the remaining balance is transferred to the General Fund.

The bill requires the DECD commissioner to develop, within available appropriations, a comprehensive public education program about the program that includes information concerning lifetime savings plans and buying a house.

The DECD commissioner must report by January 1, 2010 to the Commerce and Housing committees on the program and include recommendations for statutory changes.

EFFECTIVE DATE: July 1, 2008

sHB 5049 — AA Establishing a Connecticut Higher Education Perpetual Trust Fund

The bill establishes the Higher Education Perpetual Trust Fund within the Short Term Investment Fund, to be administered by the treasurer. The new fund is capitalized by the interest earned on the Budget Reserve Fund.

Under the bill, beginning in fiscal year 2010, 62.5% of the fund's investment earnings are credited to the Connecticut Aid to Public College Students Grant Program. For any fiscal year in which no investment earnings are credited to the fund, or the earnings are not sufficient to cover the appropriation requested by the Board of Governors of Higher Education, the General Assembly may appropriate investment earnings that were credited to the fund in any previous fiscal year.

EFFECTIVE DATE: July 1, 2008

HB 5047 — AAC Tax Deductions for College Savings Programs

The bill allows Connecticut taxpayers to deduct up to $ 5,000 (for single filers) or $10,000 (for joint filers) in annual contributions to any qualified college savings plan, not just CHET.

EFFECTIVE DATE: Upon passage, and applicable to taxable years starting on or after January 1, 2008

sHB 5265 — AAC the Deduction from the Income Tax For Donations to CHET

The bill eliminates the annual limits on state income tax deductions for contributions to CHET. Current law limits annual CHET deductions to $5,000 for single filers and $10,000 for joint filers.

It allows taxpayers to carry forward any unused deductions for the five following years.

EFFECTIVE DATE: Upon passage, and applicable to taxable years starting on or after January 1, 2008

HB 5611 — AAC Municipal Bonding to Permit Towns to Fund Scholarship Funds for Residents

The bill authorizes towns to issue bonds, notes, or other debt obligations to fund scholarships for town residents or their children attending state public higher education institutions. It requires any town that issues scholarship bonds to create a fund for such purposes.

The town's budget-making authority may direct the state treasurer to invest a portion of the town fund. The treasurer may invest up to 40% of the fund in equity securities and the remaining amount in a range of government obligations. The treasurer must annually submit a detailed report of the fund's condition to various town officials. The report must be included in the town's annual report.

The bill allows the fund to be discontinued upon the chief executive officer and budget-making authority's recommendation and approval. Once it is discontinued, the remaining money must be (1) converted or added to a sinking fund to retire the town's debt or (2) if the town has no debt, transferred to the town's general fund.

EFFECTIVE DATE: July 1, 2008