OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

EMERGENCY CERTIFICATION

HB-6801

AN ACT AUTHORIZING ECONOMIC RECOVERY NOTES.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 10 $

FY 11 $

FY 12 $

Treasurer, Debt Serv.

GF - Cost

None

None

See Below

Treasurer

GF - Revenue Gain

See Below

None

None

Note: GF=General Fund

Municipal Impact: None

Explanation

The Economic Recovery Notes (ERNs) will be issued to finance the FY 09 General Fund deficit, which is estimated to be approximately $950 million. Assuming that $1. 045 billion in ERNs is issued ($950 million in principal and $95 million in issuance costs and capitalized interest for FY 10 and FY 11) at a 4. 5% interest rate over a 7 year term, the total amount of debt service (principal and interest) is $1. 190 billion. The table below shows the annual debt service payments between FY 12 and FY 16. It should be noted that the debt service payments will be made from General Fund revenues.

Economic Recovery Note Debt Service Payments1

($ millions)

Fiscal Year

Principal

Interest

Total

FY 10

0

0

0

FY 11

0

0

0

FY 12

191

47

238

FY 13

200

38

238

FY 14

209

29

238

FY 15

218

20

238

FY 16

228

10

238

Total

1,045

145

1,190

1The estimates assume that the same amount of debt service would be paid in each year that the bonds were outstanding.

The Out Years

The projected debt service costs for FY 12 through FY 16 associated with the issuance of $950 million in ERNs is indicated in the table above.

Sources:

Office of the State Treasurer

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 chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.