AN ACT CONCERNING EXPENDITURES AND REVENUE FOR THE BIENNIUM ENDING JUNE 30, 2011

SUMMARY: This act appropriates funds for state agencies and programs for FY 10 and FY 11. Among other things, it:

1. carries forward unspent appropriations from prior years, transfers funds among agencies, and directs funds to be spent for specific purposes;

2. requires the Office of Policy and Management (OPM) secretary to reduce state agency spending for information technology services, and submit a plan to reduce expenses for personal services, other expenses, and contracts and personal service agreements by a total of $120 million in FY 10 and FY 11;

3. extends the requirement to take unpaid furlough days to Superior Court judges and Judicial Branch employees; and

4. limits the governor's unilateral authority to reduce Legislative and Judicial Branch fund allotments.

The act also makes revenue changes affecting FY 09, FY 10, and FY 11. It:

1. increases personal income, corporation, cigarette, and tobacco products taxes and extends the real estate conveyance tax to property foreclosed by sale;

2. reduces estate tax and gift taxes, starting with deaths occurring and gifts given on or after January 1, 2010; and

3. reduces the state's sales and use tax from 6% to 5. 5%, starting January 1, 2010, but only if FY 10 General Fund revenue projections do not fall by more than 1% below the projections the act adopts.

The act raises many state fees by (1) increasing fees under $15 to at least $15, (2) doubling fees under $150, (3) increasing fees between $150 and $1,000 by 25%, and (4) adding $250 to fees of $1,000 or more. It eliminates most of the Department of Environmental Protection's (DEP) special funds and accounts and transfers their revenue to the General Fund.

The act establishes (1) a temporary tax settlement initiative program for those who owe state taxes and (2) “economic” nexus as the basis for subjecting out-of-state business to Connecticut corporation and personal income taxes.

It:

1. transfers funds from the Budget Reserve (“Rainy Day”) Fund to General Fund revenue for FY 10 and FY 11;

2. transfers revenue from various special funds and accounts to the General Fund as revenue for FY 10 and FY 11;

3. requires the state treasurer and the OPM secretary to formulate a plan to finance (“securitize”) up to $1. 3 billion in net state revenue for FY 11, including possibly by borrowing against future state lottery revenue;

4. requires the two officials to formulate a plan to sell state assets to raise up to $15 million in net revenue for FY 10 and up to $45 million in FY 11; and

5. approves settlements between the state and the Mashantucket Pequot and Mohegan tribes concerning slot machine revenue due the state.

The act authorizes state general obligation (GO) bonds for local school construction projects and authorizes the state and municipalities to take advantage of the federal “Build America” Bond program by issuing taxable bonds with federal interest subsidies. It also allows the state to issue special tax obligation bonds to fund the Town Aid Road (TAR) program for local road and bridge projects.

For FY 09 through FY 11, the act exempts Bridgeport from a statutory requirement that it annually contribute the actuarially required amount to a pension plan funded with pension deficit funding bonds.

Finally, the act adopts FY 10 and FY 11 revenue estimates for the General Fund, the Special Transportation Fund, and the eight other appropriated state funds.

EFFECTIVE DATE: Upon passage, unless otherwise noted below.

§§1-20 — FY 10 AND FY 11 APPROPRIATIONS

The act appropriates money from the state's 10 appropriated funds for state agency operations and programs in FY 10 and FY 11. Net total annual appropriations from each fund are shown in Table 1.

§ 21 — BIRTH-TO-THREE PROGRAM

For FY 10 and FY 11, the act requires the State Department of Education (SDE) to annually transfer $1 million of the federal special education funds it receives to the Department of Developmental Services (DDS) for the Birth-to-Three Program to carry out special education-related requirements consistent with the federal special education law.

§ 22 — WACE TECHNICAL TRAINING CENTER

For FY 10 and FY 11, the act exempts WACE Technical Training Center in Waterbury from statutory requirements for adult education grants and allows it to spend up to $300,000 of its grant in each year for technical training.

§ 23 — PRIORITY SCHOOL DISTRICT GRANTS

The act distributes the priority school district grant appropriation to state education programs in the amounts shown in Table 2.

§ 24 — PRIVATE OCCUPATIONAL SCHOOL STUDENT PROTECTION ACCOUNT

Despite statutory restrictions on such spending, the act allows the Department of Higher Education (DHE) to spend $245,000 in FY 10 and $257,000 in FY 11 from the private occupational school student protection account.

§ 25 — CONNECTICUT INDEPENDENT COLLEGE STUDENT GRANT PROGRAM

The law requires independent colleges and universities to award aid to individual students under the Connecticut Independent College Student Grant (CICSG) Program based on the U. S. Department of Education's need analysis system. For FY 10 and FY 11, this act prohibits any independent college or university from receiving its annual CICSG allocation if it (1) meets students' full financial needs and (2) uses a need analysis system that results in determinations of need for individual students that are greater than the federal system.

It requires DHE to redistribute two-thirds of the unallocated CISCG funds in FY 10 and FY 11 to all other eligible independent colleges and universities, using the statutory formula. DHE must set aside the remaining one-third and transfer up to $500,000 per year to Opportunities for Veterinary Medicine in FY 10 and FY 11.

(PA 09-6, September Special Session, (§ 57) eliminates this provision and requires DHE to reduce an independent college or university's CICSG allocation by $500,000 if it returned at least $500,000 of its funding for FY 09. It also requires DHE to compute the CICSG allocation based on the unreduced appropriation. DHE must still transfer up to $500,000 of the set-aside CICSG funds to Opportunities for Veterinary Medicine in FY 10 and FY 11. )

§§ 26-28 & 32-36 — FUNDS CARRIED FORWARD

The act carries forward various unspent balances from prior years' appropriations and requires them to be used for the same purposes in FY 10 or in FY 10 and FY 11, rather than lapsing at the end of FY 09 (see Table 3).

The act also carries forward to FY 10 the unspent balance of an appropriation to OPM for licensing and permitting fees. It transfers the money to the Department of Information Technology to implement a common licensing and permit issuance service for state agencies.

§ 29 — NEIGHBORHOOD YOUTH CENTER GRANTS

The act requires OPM to use its FY 10 and FY 11 appropriation for neighborhood youth centers to provide the following grants:

1. $1. 1 million for the Boys and Girls Clubs of Connecticut, with up to $100,000 to the Boys and Girls Club of Bridgeport, contingent on the organizations providing a 100% cash match for the grants; and

2. $387,000 for the following organizations, contingent on their matching at least 50%, with a cash match of at least 25%, of the grant amount:

a. Centro San Jose, Hill Cooperative Youth Services, Inc. , and Central YMCA in New Haven;

b. up to $87,000 for Trumbull Gardens in Bridgeport;

c. up to $50,000 for the Valley Shore YMCA in Westbrook;

d. up to $25,000 for the Rivera Memorial Foundation, Inc. of Waterbury; and

e. up to $25,000 for the Willow Plaza Neighborhood Revitalization Zone Association in Waterbury.

§ 30 — PILOT ASTHMA AWARENESS PROGRAM

The act transfers $150,000 from the Tobacco and Heath Trust Fund for FY 10 to the Department of Public Health (DPH) for a pilot asthma awareness program.

§ 31 — ENERGY ASSISTANCE PROGRAM

The act requires the unspent balance of an $8. 5 million appropriation to OPM that was carried forward to FY 10 in PA 09-2 for an emergency energy assistance program to be available between July 1, 2009 and June 30, 2010. Under PA 09-2 and this act, the program must help Connecticut households with incomes between 150% and 200% of the applicable federal poverty level that cannot make timely payments on deliverable fuel, electricity, or natural gas bills. The program requires Operation Fuel, a nonprofit organization that serves people ineligible for publicly funded energy assistance, to pay assistance directly to fuel vendors, electric or gas companies, or municipal electric or gas utilities. (PA 09-5, September Special Session (§ 82) specifies that assistance can be provided regardless of whether these fuels are a household's primary or secondary energy sources. )

§ 37 — UNEMPLOYMENT TRUST FUND ALLOCATIONS

For FY 10 and FY 11, the act appropriates $30 million from Connecticut's account in the federal Unemployment Trust Fund to the Labor Department. The money must be spent in accordance with the federal unemployment compensation law. For FY 10, the act allocates up to $12 million of that amount to the department's administrative infrastructure with a maximum of $7 million earmarked for improving its information technology systems. For FY 11, the administrative infrastructure allocation is up to $18 million, with a maximum of $13 million for improving information technology systems.

§ 38 — NEWBORN SCREENING ACCOUNT

For FY 10 and FY 11, the act allocates $800,000 annually, rather than the statutorily required $500,000, to the General Fund's newborn screening account. The funding comes from fees the DPH charges institutions for comprehensive newborn testing, parent counseling, and treatment. DPH must use the money (1) to buy upgraded screening technology and (2) for its testing expenses.

§ 39 — STEM CELL RESEARCH FUND

The act allows the DPH commissioner to use up to $200,000 per year from the Stem Cell Research Fund in FY 10 and FY 11 for administrative expenses.

§ 40 — PRE-TRIAL ALCOHOL SUBSTANCE ABUSE PROGRAM FUNDING

For FY 10 and FY 11, the act earmarks the following annual amounts from the Department of Mental Health and Addiction Services' (DMHAS) appropriations for the Pre-Trial Alcohol Substance Abuse Program:

1. up to $1. 1 million in each year for regional action councils;

2. up to $510,000 in each year for the Governor's Partnership to Protect Connecticut's Workforce;

3. up to $100,000 in each year to fund a nonprofit organization with appropriate expertise in building a community-wide, broad-based, and inter-institutional approach to preventing substance abuse;

4. up to $125,000 in each year for the Regional Youth/Adult Substance Abuse Project in Bridgeport; and

5. up to $125,000 in each year for the RYASAP Regional Action Council in Bridgeport. (PA 09-7, September Special Session (§ 40) eliminates this earmark. )

§ 41 — DSS DISPROPORTIONATE SHARE (DSH) PAYMENTS TO DMHAS HOSPITALS

The act requires DSS to spend money appropriated to it for FY 10 and FY 11 for DMHAS/Medicaid Disproportionate Share payments only when, and in the amounts, OPM specifies. DSS must make payments to DMHAS hospitals for operating expenses and related fringe benefits. Hospitals must reimburse the comptroller from the fringe benefit payments and deposit the other funds to “grants – other than federal accounts. ” Unspent DSH funds in the “grants” account must lapse at the end of each fiscal year.

§§ 42 & 43 — UCONN HEALTH CENTER AND VETERANS' AFFAIRS DSH TRANSFERS

The act allows the OPM secretary to transfer all or part of any FY 10 or FY 11 appropriation for the UConn Health Center or the Department of Veterans' Affairs to DSS' DSH-Medical Emergency Assistance account in order to maximize federal reimbursement.

§ 44 — INFORMATION TECHNOLOGY REDUCTION

The act requires the OPM secretary to reduce agency allotments for information technology systems and services by $30,836,354 for FY 10 and $31,718,598 for FY 11.

§ 45 — NONFORMULARY DRUG APPEAL PROCESS FOR CLIENTS ELIGIBLE FOR BOTH MEDICAID AND MEDICARE PART D

By December 1, 2009, the act requires the DSS commissioner to provide a report to the Appropriations and Human Services committees describing revisions to its nonformulary exception review and appeals process for clients eligible for both Medicaid and Medicare Part D. (Nonformulary drugs are drugs that are not on the list of drugs pre-approved for reimbursement under a Medicaid or Medicare Part D plan. Costs for such drugs may be reimbursed through exceptions after appeals. ) The report must also explain DSS' (1) revised process for determining, before pursuing appeals with private plans, whether a nonformulary drug is medically necessary; (2) conditions for pursuing such appeals; and (3) criteria for making referrals to the Center for Medicaid Advocacy (CMA) for further appeals.

A later act (PA 09-5, September Special Session (§ 83)) requires DSS, within available appropriations, to contract with (1) the CMA to provide assistance with Medicare Part D Plan appeals relating to medically necessary prescription denials and (2) a pharmacy association or pharmacist to help clients choose a Medicare Part D Plan that best meets their needs. In addition, instead of submitting a report, the later act requires the commissioner to provide the committees with a plan concerning its referral process for dually eligible clients. The plan, which must also be submitted by December 1, 2009, must include a means to provide information to clients about appeal rights and assistance available from CMA.

§ 46 — SUPPORTIVE HOUSING FOR FAMILIES PROGRAM

The act requires the Department of Children and Families (DCF) to prioritize enrollment in its Supportive Housing for Families program after October 1, 2009 to maximize (1) the number of families with a child in an out-of-home placement who are likely to be reunified because of their participation in the program or (2) the number of families remaining together. It requires the DCF commissioner to report to the Appropriations and Human Services committees by January 1, 2010, on how the department will use funding for the program. The report must include the number of (1) families the program serves and (2) children expected to be reunited with their families during FY 10 and FY 11 because of efforts to give priority to families with a child placed outside the home that are undergoing reunification.

§ 47 — PERSONAL SERVICES, OTHER EXPENSES, AND STATE CONTRACTS

For FY 10 and FY 11, the act requires the OPM secretary to recommend ways to reduce the following types of spending by the following annual amounts:

1. $14 million for personal services,

2. $11 million for other expenses, and

3. $95 million for contracts and personal service agreements.

It exempts the higher education constituent units from the recommended personal services or other expense expenditure reductions and requires recommended reductions in contracting and personal service agreements to exclude those for providing direct programs and health services to consumers. The secretary must submit a plan detailing the recommended reductions to the Appropriations Committee through the Office of Fiscal Analysis by October 1, 2009.

§ 48 — PERSONAL SERVICES SAVINGS

The act allows the governor to modify or reduce allotment requisitions from FY 10 and FY 11 appropriations to achieve the reductions in personal services costs required by this act, any other public or special act, or any collective bargaining agreement.

§ 49 — GENERAL SERVICES REVOLVING FUND POSITIONS

The act limits to 124 the number of positions the Department of Administrative Services (DAS) may fill from the General Services Revolving Fund. By law, the fund, whose statutory name is the Department of Administrative Services Revolving Fund, is used to pay agencies' costs for supplies, material, equipment, and contractual services before the comptroller finally determines how to allocate the expenses to particular agency accounts (CGS § 4a-75).

§ 50 — TRANSFERS TO MAXIMIZE FEDERAL MATCHING FUNDS

The act allows the governor, with Finance Advisory Committee (FAC) approval, to transfer all or part of an agency's General Fund appropriation, at its request, to another agency to take advantage of federal matching funds, as long as both agencies certify that the receiving agency will spend the money for the original purpose. Federal funds generated from transfers can be used to reimburse General Fund spending, expand services, or both as the governor, with FAC approval, determines.

§ 51 — TRANSFERS TO ALLOW RECEIPT OF FEDERAL STIMULUS FUNDS

The act allows the governor, with FAC approval, to transfer all or part of an agency's General Fund appropriation, at its request, to another agency in order for the state to receive federal stimulus funds under the 2009 federal American Recovery and Reinvestment Act (ARRA).

The governor must present a plan for transferring the funds to the Appropriations Committee and the legislative committee with jurisdiction over the transferring agency. Both committees must approve or reject the plan within 15 days after they receive it. If the committees cannot agree or if they fail to act within the required time, the governor's plan is considered approved. If the governor's plan is approved, the Appropriations Committee must ask the FAC to approve the plan.

§ 52 — FUNDING ADJUSTMENTS TO MAXIMIZE FEDERAL FUNDING

The act allows the governor, with FAC approval, to adjust an agency's General Fund appropriation to maximize federal funding to the state. The governor must present a plan for any adjustment to the Appropriations and Finance, Revenue and Bonding committees.

§ 53 — FEDERAL REIMBURSEMENT FOR DSS DATA WAREHOUSE PROJECT

In compliance with an advanced planning document for developing a data warehouse approved by the federal Department of Health and Human Services, the act authorizes DSS to establish a “receivable” (presumably, a receivable account) for FY 10 and FY 11 for the anticipated reimbursement from the data warehouse project.

§ 54 — AUTHORITY FOR ADVANCE PAYMENTS TO CERTAIN NURSING HOMES

For FY 10 and FY 11, the act allows the DSS commissioner, after consulting the OPM secretary, to provide payments in advance of normal bill payment processing to nursing homes that provide services eligible for payment under the medical assistance program. The nursing facility must ask for the advance payments. The act limits advances to the estimated amounts due the facility for services to eligible recipients over the most recent two months.

The DSS commissioner must recover the advance either by reducing payments due to the facility or through a reimbursement from the facility within 90 days after issuing the advance. The act requires the commissioner to take prudent measures to assure that no advances are made to nursing homes in danger of insolvency or bankruptcy and allows her to execute appropriate agreements to secure repayment.

§ 55 — DCF-LICENSED PRIVATE RESIDENTIAL TREATMENT FACILITIES

For FY 10 and FY 11, the act eliminates per diem and other rate increases, as well as cost of living adjustments, for private residential treatment facilities licensed by DCF.

§ 56 — COMMISSION ON ENHANCING AGENCY OUTCOMES

PA 09-2 established the 17-member commission to determine if there are agency duplications or functional overlaps and make other recommendations it considers appropriate. PA 09-2 required the commission to report its findings and recommendations to the governor, House speaker, and Senate president pro tempore by July 1, 2009 and terminated the commission when it submits its report or on July 1, 2009, whichever is later. This act extends the commission until June 30, 2010, makes its July 1, 2009 report an interim one, and requires it to submit additional reports periodically.

§ 57 — GOVERNOR'S AUTHORITY TO REDUCE LEGISLATIVE AND JUDICIAL ALLOTMENTS

The act bars the governor from unilaterally reducing an allotment of appropriated funds currently in force for, or an allotment of appropriated funds requisitioned by, any Legislative or Judicial Branch agency. Instead, it allows the governor to require an aggregate allotment reduction for the Legislative or Judicial Branch. It requires the Joint Committee on Legislative Management or the chief court administrator to achieve the reduction as the committee or administrator determines and to submit reductions to the governor through the OPM secretary within 15 days after the governor requires the reductions.

Under prior law, the governor, under certain conditions, could unilaterally reduce allotments and allotment requisitions for appropriations to budgeted legislative and judicial branch agencies by a maximum of 5% of any appropriation and 3% of the total appropriations from any fund.

§§ 58 & 59 — PAYMENTS IN LIEU OF TAXES TO CERTAIN TOWNS

The act appropriates money from the General Fund for the following payments to certain towns in FY 10, in addition to statutorily required payments in lieu of taxes (PILOTs) to those towns:

1. $100,000 to East Lyme for the U. S. Navy's Dodge Pond Acoustic Measurement Facility and

2. $400,000 to Mansfield for the Fenton River Watershed for the Mansfield Hollow Dam.

§ 60 — FILLING STATE EMPLOYEE POSITIONS

Unless the governor recommends it and the FAC approves, the act limits the number of positions state agencies may fill to the number recommended by the Appropriations Committee as revised by the General Assembly and set out in the Office of Fiscal Analysis (OFA) report on the FY 2010-11 biennial budget. (PA 09-7, September Special Session (§ 6) excludes the state's higher education constituent units from this requirement. )

§ 61 — CHRONIC GAMBLERS TREATMENT AND REHABILITATION

The act temporarily increases, by $400,000 per year, the annual amount of lottery ticket sales revenue the Connecticut Lottery Corporation must transfer to the chronic gamblers treatment and rehabilitation account. For FY 10 and FY 11, it requires the corporation to transfer $1. 9 million per year rather than $1. 5 million. Starting in FY 12, the act resumes annual transfers of $1. 5 million. The funds in the account are used for preventing chronic gambling and treating and rehabilitating chronic gamblers.

§ 62 — TOBACCO AND HEALTH TRUST FUND

The act allocates $541,982 from the fund in FY 10 and FY 11 for the regional emergency medical services councils.

§ 63 — EASY BREATHING PROGRAM

The act transfers $800,000 annually in FY 10 and FY 11 from the Tobacco and Health Trust Fund to DPH for the Easy Breathing Program. It allocates $300,000 of this amount for the adult asthma program and $500,000 for the children's asthma program.

§ 64 — STATE CONTRIBUTION FOR RETIRED TEACHERS' HEALTH COVERAGE

For FY 10 and FY 11, the act suspends the statutory requirement that the state appropriate (1) one-third of the cost of premiums for the basic health coverage plan the Teachers' Retirement Board (TRB) must offer to retired teachers participating in Medicare and (2) one-third of the cost of the state subsidy for local board of education health plans covering retired teachers not participating in Medicare. Instead, for FY 10 and FY 11, it requires the separate retired teachers' health insurance premium account to pay two-thirds of the cost of the basic TRB plan and the full cost of the health subsidy to local boards. The funds in the account come from active teachers' total annual health contributions in excess of $500,000 and investment earnings on the account balance. Active teachers contribute 1. 25% their annual salary for retired teachers' health insurance coverage.

§ 65 — FUND TRANSFERS RELATING TO INMATE TRANSPORTATION

The act allows the OPM secretary to transfer Department of Corrections' appropriations for FY 10 and FY 11 to the Judicial Branch as necessary to achieve efficiencies in inmate transportation. The secretary may make the transfers without prior FAC approval.

§ 66 — STATE POLICE MEAL ALLOWANCE

The act restores a requirement, eliminated by PA 09-2, that the state pay a meal allowance for state police personnel and repeals a requirement that, beginning April 1, 2009, the state meal allowance be payable only for Department of Public Safety employees covered by a collective bargaining agreement requiring the allowance.

§ 67 — CONNECTICUT HEALTH INFORMATION NETWORK

The act transfers $500,000 each year for FY 10 and FY 11 from the Tobacco and Health Trust Fund to the UConn Health Center for the Connecticut Health Information Network.

§ 68 — GRANT TO AIDS INTERFAITH NETWORK

The act earmarks $100,000 of the DPH's FY 10 General Fund appropriation for AIDS Services for a grant to the AIDS Interfaith Network for audit, capacity building, and technical assistance.

§ 69 — AGRICULTURAL PROGRAM ALLOCATIONS FROM THE COMMUNITY INVESTMENT ACCOUNT

PA 09-229 temporarily increased a fee for each document recorded in municipalities' land records from $30 to $40. This act changes the effective date of the increase from the date of PA 09-229's passage (June 3, 2009) to July 1, 2009. The fee increase is effective until July 1, 2011.

By law, municipalities retain $4 of the fee and must send the balance to the state for deposit to the Community Investment account. Money from the account is distributed quarterly to the Commission on Culture and Tourism, Connecticut Housing Finance Authority, Department of Environmental Protection, and Department of Agriculture (DOAg). These agencies must use the funds for purposes specified in the law. PA 09-229 temporarily altered the distribution of fund revenues among these agencies, increasing DOAg's share from 25% to 40% and reducing those of the other agencies from 25% to 20% each. These shares apply from June 3, 2009 until July 1, 2011.

During the period DOAg is receiving the 40% share of the funding, this act allocates funds to several organizations and also requires DOAg to make the required distributions to the specified agricultural programs quarterly, instead of annually, as shown in Table 4. For the programs already included in PA 09-229, each year's total quarterly allocations under this act are the same as the annual amounts for the same programs specified under PA 09-229.

Table 4: Agriculture Program Allocations

§ 70 — BRIDGEPORT PENSION PLAN FUNDING

For FY 10 and FY 11, the act exempts any municipality (1) with a population greater than 130,000 and (2) that has issued pension deficit funding bonds, from a statutory requirement to appropriate money for, or contribute to, the pension plan funded with the bond proceeds. Only Bridgeport meets these qualifications.

The act requires the city to submit to the OPM secretary and the state treasurer, by August 1, 2010 and August 1, 2011, respectively, a plan acceptable to them for funding the pension plan for FY 10 and FY 11. In each year the secretary and the treasurer fail to approve the city's plans, the city must contribute at least $6 million to the pension plan. (PA 09-8, September Special Session (§§ 14 & 59) changes the reporting dates to April 1, 2010 and April 1, 2011 respectively; allows the state officials to approve, reject, or modify the plan; and reduces the minimum amount the city must contribute in any year when the officials fail to approve a plan to $4 million. )

State law allows municipalities to issue pension deficit funding bonds to fund unfunded past pension obligations. If a municipality issues such bonds, it must ordinarily contribute at least the actuarially required amount to its pension plan in each fiscal year that it has outstanding pension deficit funding bonds for the plan (CGS § 7-364c (c) (3)).

§ 71 — FUNDS TO EXPAND CHARTER SCHOOLS

When distributing grants to expand the number of grades at a state charter school that the education commissioner has determined will assist the state to meet the goals of the 2008 Sheff desegregation stipulation and court order, the act requires the commissioner to use only funds appropriated to SDE for the Sheff settlement.

§ 72 — EDUCATION COST SHARING (ECS) GRANTS TO TOWNS

The act overrides the statutory formula for calculating ECS grants and specifies each town's ECS grant for FY 10 and FY 11. Under the act, each town's grant is the same for both years.

§ 73 — BUDGET RESERVE FUND TRANSFERS TO GENERAL FUND

The act requires the state treasurer to transfer the following amounts from the Budget Reserve (“Rainy Day”) Fund to the General Fund: $1. 062 billion on the September 8, 2009 and $319. 7 million on July 1, 2010. These amounts must be credited to General Fund revenue for FY 10 and FY 11, respectively. The act supersedes statutory requirements that would have allocated the Budget Reserve Fund balance to the General Fund deficit for FY 09. (PA 09-8 September Special Session (§ 42) reduces the FY 10 transfer to $1. 0397 billion and increases the FY 11 transfer to $342 million. )

§ 74 — TRANSFERS FROM SPECIAL FUNDS

Transfers to the General Fund

Table 5: Transfers to the General Fund

Transfers from the Technical Services Revolving Fund

§ 75 — TOBACCO AND HEALTH TRUST FUND DISBURSEMENTS

§ 76 — UNPAID FURLOUGH DAYS FOR SUPERIOR COURT JUDGES

§ 77 — UNPAID FURLOUGH DAYS FOR JUDICIAL BRANCH EMPLOYEES

§ 78 — ADMINISTRATIVE COST LIMITS FOR CERTAIN FUNDS

§ 79 — CONNECTICUT SMALL BUSINESS INNOVATION RESEARCH OFFICE

§ 80 — MAGNET SCHOOL FUNDING CARRYOVER

§ 81 — “MEDICALLY NECESSARY” DEFINITION UNDER MEDICAID

Definition

The act requires DSS, by July 1, 2010, to amend the definition of “medically necessary” services in its Medicaid regulations to reflect savings in the current biennial budget from reducing program administration inefficiencies while maintaining the quality of care provided to Medicaid beneficiaries. It allows the DSS commissioner to implement policies and procedures using the amended definition while in the process of adopting the definition in regulation. He must print notice of intent to publish the regulations in the Connecticut Law Journal within 45 days of implementing them. The policies and procedures are valid until final regulations are adopted.

Medical Necessity Oversight Committee

The act also establishes a committee to (1) advise DSS on the amended definition and its implementation and (2) provide comment to DSS and the legislature on its impact.

The committee consists of 11 members appointed as follows: three by the governor, two each by the House speaker and Senate president pro tempore, and one each by the House and Senate majority and minority leaders. Appointments must be made by October 8, 2009. Vacancies must be filled by the appointing authority, but those not filled after 60 days may be filled by a joint appointment of the House speaker and Senate president pro tempore.

The House speaker and Senate president pro tempore must select the committee's chairpersons from among its members. The chairpersons must schedule the first meeting within 60 days of the act's passage. The Human Services committee staff serves as the oversight committee's administrative staff.

Reporting Requirements

The act requires the committee to submit annual reports on its findings and recommendations for three years beginning by January 1, 2010. The reports go to the governor and the Public Health, Human Services, and Appropriations committees. The act terminates the committee on the date it submits its third report or January 1, 2012, whichever is later. (PA 09-7, September Special Session (§ 107), enacts the same provisions, but gives the oversight committee a different name. )

§ 82 — SURVEY OF STATE-OWNED AND -LEASED PROPERTY

§ 83 — MASHANTUCKET PEQUOT AND MOHEGAN SLOT MACHINE REVENUE SETTLEMENTS

§ 84 — TRANSPORTATION GRANTS FOR FORMER WRIGHT TECH STUDENTS

§ 85 — TERMINATION, REORGANIZATION, OR MODIFICATION OF A PORT DISTRICT OR PORT AUTHORITY

The act eliminates a requirement, enacted in PA 09-186, that a town get the written consent of the transportation commissioner before it:

1. terminates or reorganizes (a) a port district established by its legislative body pursuant to state law or (b) a port authority appointed by the town's chief elected official pursuant to the law;

2. modifies the duties or powers of a port authority; or

3. modifies the property included in the port district.

§ 86 — CITIZENS' ELECTION FUND ADMINISTRATION

§ 87 — COMMERCIAL RECORDING ACCOUNT

The act eliminates the Commercial Recording account as a separate, nonlapsing General Fund account. It also eliminates requirements that (1) the treasurer deposit in the account enough revenue from the secretary of the state's fees for filing and recording documents and (2) the account pay all administrative costs of the Commercial Recording Division within the secretary of the state's office. Instead, the act requires the treasurer to deposit all fees the secretary receives into the General Fund.

§ 88 — PLAN FOR BORROWING AGAINST FUTURE STATE REVENUE

The act requires the state treasurer and the OPM secretary jointly to develop a financing plan to raise up to $1. 3 billion in net general state revenue for FY 11. (PA 09 -7, September Special Session (§ 179) reduces this amount by $93 million to $1. 2907 billion. )

The financing plan can include (1) “securitization” of revenue from the state lottery; (2) issuing bonds and other debt instruments or placing them privately; or (3) the purchase of state debt instruments by public pension and trust funds, such as the state, municipal employees', and teachers' retirement funds. “Securitization” allows the state to borrow against a future revenue stream.

The treasurer and secretary must finish the financing plan and provide it to the chairpersons of the Appropriations and Finance, Revenue and Bonding committees by February 3, 2010.

§ 89 — TAX SETTLEMENT INITIATIVE PROGRAM

The act requires the DRS commissioner to establish a tax settlement initiative program for anyone who owes state taxes (other than motor carrier road tax) for any taxable period for which DRS imposed:

1. interest or penalties for late payment or underreporting of taxes or

2. interest or additional tax because the taxpayer failed to file a return and DRS filed one for him.

The program runs from October 1, 2009 through December 31, 2009.

The act authorizes the commissioner to send written statements to such taxpayers, notifying them of their eligibility for the program. If, within 60 days after receiving the statement, the taxpayer pays all the taxes he or she owes for the applicable tax period, the commissioner must waive (1) civil penalties and (2) 50% of the interest due. By making the required payment, the taxpayer relinquishes all unexpired administrative and judicial appeal rights as of the payment date.

A taxpayer who fails to pay the full taxes due by the deadline is ineligible to participate in the settlement initiative program. The commissioner must retain any partial payments and apply them against any taxes the taxpayer owes, plus the full interest and penalties.

Under the act, a taxpayer is not entitled to any refund or credit of (1) tax settlement payments or (2) amounts he or she paid toward the tax liability before the date of the commissioner's written notice.

The act authorizes the commissioner to take necessary actions to implement the program in a timely manner.

§§ 90 & 91 — ECONOMIC NEXUS FOR CORPORATION AND INCOME TAX

The act establishes “economic nexus” as the basis for determining whether an out-of-state business is subject to (1) the Connecticut corporation tax, if it is a C corporation, or (2) Connecticut income tax on nonresident partners' or members' income from the business, if it is a partnership or S corporation.

C Corporations

Under prior law, an out-of-state corporation that had no physical presence in the state (i. e. , no property or payroll here) was not liable for the state corporation tax. To the extent allowed by the U. S. Constitution, this act subjects such a company to the corporation tax if, instead of a physical presence, it has a “substantial economic presence” here or derives income from sources in the state. The act requires such a corporation to use Connecticut law to apportion its gross income between Connecticut and the other states where it does business.

S Corporations and Partnerships

Likewise, under prior law, members and partners in an out-of-state S corporation or partnership were not subject to the Connecticut personal income tax if they derive no income from sources within or connected to Connecticut. This act, to the extent allowed by the U. S. Constitution, subjects such members or partners to the state income tax if their company is doing business here. Under the act, having a “substantial economic presence” in Connecticut is deemed to show that a partnership or S corporation is doing business here.

Substantial Economic Presence

Under the act, a company has “substantial economic presence” in Connecticut if it purposefully directs business towards the state. Its purpose can be determined by such measures as the frequency, quantity, and systematic nature of its economic contact with the state. The act specifies that its description of factors used to indicate substantial economic nexus are examples and do not limit or exclude other indicators.

EFFECTIVE DATE: Upon passage and applicable to income and taxable years starting on or after January 1, 2010.

§ 92 — MARSHAL FEE INCREASE

Starting October 1, 2009, the act increases the annual fee each state marshal must pay from $250 to $750. The fee is payable by October 1 each year to the State Marshal Commission and is deposited in the General Fund.

§ 93 — DEPARTMENT OF SOCIAL SERVICES DEADLINES FOR SERVICE OF PROCESS

The act requires the DSS commissioner to send any subpoena, summons, warrant, or court order related to department-initiated proceedings to a state marshal for service if (1) no action was taken on it within the preceding 14 days and (2) the underlying proceedings are unresolved. (PA 09-5, September Special Session (§ 46), eliminates this requirement. ) In addition, to resolve any backlog, the act requires the commissioner, starting October 1, 2009, to forward up to 150 such documents per month to state marshals for service, if no action was taken on them within the preceding 30 days. (PA 09-5, September Special Session (§ 46) extends the inactivity period to 60 days and also requires the marshals to return the documents to DSS within two business days. )

§§ 94 & 102 — CORPORATION TAX SURCHARGE

The act imposes a 10% corporation tax surcharge for income years beginning in 2009, 2010, and 2011. The surcharge does not apply to companies (1) with less than $100 million in annual gross revenue for the year or (2) whose tax liability for the year does not exceed the $250 minimum tax. Companies that file combined or unitary returns for the income year are not eligible for the gross revenue exemption.

A company must calculate its surcharge based on its tax liability excluding any credits. The surcharge is due, payable, and collectible as part of each company's total tax for the year and applies both to companies that pay the tax on their net income and those that pay on their capital base.

EFFECTIVE DATE: Upon passage and applicable to income years starting on or after January 1, 2009.

§§ 95, 120 & 121 — FEDERAL QUALIFIED DOMESTIC PRODUCTION ACTIVITIES DEDUCTION

The act bars companies, individuals, and trusts and estates from counting the federal tax deduction for income from qualified domestic production activities when determining their taxable income for the state's corporation and income taxes.

Under federal tax law, taxpayers may deduct from their gross income a percentage of qualifying income they earn from eligible production activities taking place wholly or mostly within the United States. Eligible production activity includes manufacturing, construction, engineering, energy production, computer software, films and videotape, and agricultural products processing. The deduction is 6% of qualifying income for 2009 and 9% for 2010 and after (Internal Revenue Code § 199).

The act requires (1) corporations to disregard the qualified domestic production activities deduction when calculating net income for purposes of the state corporation tax and (2) individuals and trusts and estates to add back any such deduction included in their federal AGI when calculating Connecticut AGI for state income tax purposes.

EFFECTIVE DATE: Upon passage. The corporation tax change applies to income years starting on or after January 1, 2009 and the income tax change applies to tax years starting on or after January 1, 2009.

§ 96 — TAX CREDIT FOR DONATING OPEN SPACE

The law provides a credit against the corporation tax for donations or discounted sales of open space land or interests in land to the state, a political subdivision, or a nonprofit land conservation organization when the land will be permanently preserved as open space. The credit equals 50% of the (1) donated land's market value at its highest and best use or (2) value of the discounted sales price of the land or interest in the land.

The act extends the period for which a company may carry forward unused credits from 15 to 25 years. As under prior law, the carryforward applies only to credits allowed for any tax year starting on or after January 1, 2000.

EFFECTIVE DATE: Upon passage and applicable to income years starting on or after January 1, 2009.

§§ 97-101 & 485 — FILM AND DIGITAL ANIMATION PRODUCTION AND INFRASTRUCTURE INVESTMENT TAX CREDITS

The law establishes tax credits against the corporation and insurance premium taxes for Connecticut expenses and infrastructure investments related to film and digital animation production. The act revises the film tax credit program to, among other things, raise minimum expenditures required to be eligible for credits and limit credit eligibility for out-of-state production expenses and expenses for star compensation. It also transfers the responsibility for administering the credit program from the Commission on Culture and Tourism (CCCT) to the Department of Economic and Community Development (DECD) and makes various changes in how the tax credits are administered.

Film and Digital Animation Production Credits

Prior law gave qualifying companies tax credits against the corporation and insurance premium taxes equal to 30% of the eligible costs of $50,000 or more for qualifying film and digital animation productions. For income years starting January 1, 2010, the act increases the minimum expenditure needed for credit eligibility to $100,000 and establishes a variable credit percentage depending on the production's total Connecticut expenses or costs as follows: 10% for expenses between $100,000 and $500,000, 15% for expenses over $500,000 up to $1 million, and 30% for expenses over $1 million.

Starting January 1, 2010, the act also:

1. requires a production company to conduct at least 50% of its principal photography days in the state in order to be eligible for a credit (PA 09-8, September Special Session adds the alternative eligibility criterion that a company spend at least 50% of its post-production costs here);

2. bars a company from counting out-of-state expenses used in Connecticut as part of its credit-eligible expenses instead of, as under prior law, between January 1, 2009 and January 1, 2012, allowing a company to count 50% of out-of-state production expenses towards the credit if the out-of-state expenses were used in Connecticut;

3. changes the limit on credit-eligible compensation from $15 million paid to a single star to an aggregate of $20 million for all star talent featured in the production; and

4. requires that, to count towards the credit, compensation to star talent be subject to Connecticut income tax.

Finally, the act (1) makes infomercials ineligible for the film production tax credit and (2) excludes from credit eligibility any costs related to an independent audit of film or digital animation production project costs and expenses that DECD requires before credit certification.

Infrastructure Investment Credits

Starting January 1, 2010, the act changes the film industry infrastructure investment credit from a credit of from 10% to 20% depending on a project's costs to one equal to a flat 20% of the qualifying investment. It also increases the minimum qualifying expenditure from $15,000 to $3 million and requires a project be 100%, rather than at least 60%, complete before it can receive a tax credit voucher.

Under prior law, the infrastructure investment credit was 10% for projects costing at least $15,000, 15% for projects costing at least $150,000, and 20% for projects costing at least $1 million.

Credit Administration

The act transfers authority for administering the film tax credits from CCCT to DECD. It (1) transfers to DECD the CCCT's powers and duties concerning digital media and motion picture promotion activities and (2) requires state agencies and institutions that contract for digital media or film productions to send copies of their requests for proposals to DECD, rather than CCCT.

It also requires DECD, rather than CCCT, to prepare an explanatory guide for producers that shows the impact of relevant state and municipal tax statutes, regulations, and administrative opinions on typical production activities, and includes an explanation of the film production tax credit. The act also requires the guide to explain all three credits (production, digital animation, and infrastructure).

Interim Film Production Tax Credit

The act eliminates a process that allows a company to apply for a tax credit voucher while a production is in progress, starting no sooner than three months after submitting its eligibility application, for its expenses up to that time. It continues to allow a production company to apply for and receive credits on an annual basis on or after the date it incurs its last production expense.

Cost Certification and Administrative Fee

The act requires a film production or digital animation company, when it applies for a tax credit voucher, to use an audit professional chosen from a list DECD compiles to provide the required independent certification of the amount of its production expenses and costs. It also requires the DECD to charge a reasonable administrative fee sufficient to cover its costs to analyze tax credit applications.

Limits on Post—Certification Remedies

Under prior law, once CCCT issued a film production, digital animation, or infrastructure tax credit voucher, CCCT and the DRS commissioner could not recapture, disallow, or recover the credits or impose any other remedy that reduced or limited the credit amounts stated on the voucher. Prior law also limited CCCT's and the DRS commissioner's power to further audit or examine the expenses on which the credits are based unless there is the possibility of material misrepresentation or fraud. If the company made material misrepresentations or committed fraud in its expense report and those actions resulted in inflated or inaccurate tax credits, CCCT's and the DRS commissioner's only remedy was to recover the amount of the credits from the production company itself and not from any other company to which the production company transferred the credits.

The act applies these limits on post—certification remedies and audits to transferred credits, thus allowing DECD and the DRS commissioner to apply a post—certification remedy to credits after they are issued. DECD and the DRS commissioner may only recover the amount of the credits from any entity that committed the fraud or misrepresentation.

Under prior law, a production company was liable for a financial penalty equal to the credit amount, in addition to any other penalties already provided by law, only if it willfully submitted information for purposes of the film production and digital animation credits that it knew was false or fraudulent. The act eliminates the requirement that the submission be willful but retains the requirement that the company know that the information is false or fraudulent.

Reporting Requirement

The act requires DECD, rather than CCCT, to report to the General Assembly on digital media and movie production promotion activities, the economic impact of all productions, and the impact of each state-assisted production. The act also requires that DECD (1) report each year, instead of every other year, starting by January 1, 2010, and (2) submit the report to the Commerce and Finance, Revenue and Bonding committees only instead of the entire legislature.

It eliminates a requirement that the report include the impact of each state-assisted production and instead requires it to include (1) an analysis of all three credits and (2) for each project or production issued a tax credit, (a) a description, (b) the credit amount, (c) the total production expenses or costs the taxpayer issued the credit incurred in the state, and (d) any other information the Commerce or Finance committee chairpersons request.

Claiming Production Credits

§ 103 — CORPORATION COMBINED REPORTING PREFERENCE TAX

The act doubles, from $250,000 to $500,000, the maximum preference tax for groups of companies filing combined corporation tax returns.

By law, any company subject to the Connecticut corporation tax and included with one or more affiliated corporations in a consolidated federal income tax return can choose to file a combined Connecticut return as well. The DRS commissioner may also require a corporation to file a combined return with its affiliates under certain circumstances. In either a case, a corporate group filing a combined Connecticut corporation tax must pay a supplemental tax in addition to that calculated using the group's combined net income or capital base. This so-called “preference tax” is the difference between the sum of the amounts that would have been due if each member of the corporate group filed separately and the amount due under the combined return, but no more than a maximum amount. The act increases this maximum amount from $250,000 to $500,000. (PA 09-8, September Special Session (§ 39) applies the increase to income years starting on or after January 1, 2009. )

§§ 104-106 — CIGARETTE TAX INCREASE

The act increases the cigarette tax by $1, from $2 to $3 per pack of 20 (from 10 cents to 15 cents per cigarette), starting October 1, 2009.

It also imposes a $1 “floor tax” on each pack of cigarettes that dealers and distributors have in their inventories at the later of the close of business or 11: 59 p. m. on September 30, 2009. By November 15, 2009, each dealer and distributor must report to DRS the number of cigarettes in inventory as of that time and date and pay the floor tax. If a dealer or distributor does not report by the due date, the DRS commissioner must file the report, estimating the number of cigarettes in the dealer's or distributor's inventory using any information the commissioner has or obtains.

Failure to file the report by the due date is grounds for DRS to revoke a dealer's or distributor's license, and willful failure to file subjects the dealer or distributor to a fine of up to $1,000, one year in prison, or both. A dealer or distributor who willfully files a false report can be fined up to $5,000, sentenced to one to five years in prison, or both. Late filers are also subject to the same interest and penalties that apply to other late cigarette tax payments.

EFFECTIVE DATE: Upon passage. The cigarette tax increase applies to cigarette sales on or after October 1, 2009.

§ 107 — TOBACCO PRODUCTS AND SNUFF TOBACCO TAX INCREASES

The act increases the tobacco products tax from 20% to 27. 5% of the wholesale price and the tax on snuff tobacco from 40 cents to 55 cents per ounce. The tobacco products tax applies to cigars, cheroots, pipe tobacco, and similar products.

EFFECTIVE DATE: Upon passage and applicable to sales on and after October 1, 2009.

§§ 108-113 — SALES AND USE TAX RATE REDUCTION

Starting January 1, 2010, the act reduces the sales and use tax rates applicable to most taxable items and services from 6% to 5. 5%, if certain conditions are met. The reduction does not take effect if, before January 1, 2010, the comptroller's monthly statement indicates that estimated General Fund tax revenue for FY 10 is at least 1% less than the FY 10 General Fund estimated gross tax revenue adopted by the Finance, Revenue and Bonding Committee and incorporated in the act. That estimate is $12. 0175 billion (§ 485).

If the reduction takes effect and any of the comptroller's monthly statements issued between January 1, 2010 and June 30, 2010 show estimated gross General Fund tax revenue for FY 10 falling 1% or more below $12. 0175 billion, the sales and use tax rate must be restored to 6% on July 1, 2010.

The act does not change rates for items and services taxable at rates other than 6%, such as hotel room rentals (12%), motor vehicle sales to out-of-state residents on full-time active military duty in the state (4. 5%), and computer and data processing services (1%).

The act also makes conforming changes.

EFFECTIVE DATE: The provisions setting conditions for a rate reduction on January 1, 2010 are effective on passage. The remaining provisions take effect January 1, 2010. Any sales and use tax rate changes that take effect apply to sales on or after that date.

§ 114 — REAL ESTATE CONVEYANCE TAX ON FORECLOSURES

This act extends the real estate conveyance tax (see BACKGROUND) to property foreclosed by sale through a court order. Prior law exempted such property transfers from the tax.

Under a foreclosure by sale, any party can ask the court to force a sale of the property. The court appoints a committee to sell the property, after which the court grants the deed to the purchaser. The borrower whose home is being foreclosed may stop the sale by paying up his or her mortgage. (A “foreclosure by sale” is distinct from a “strict foreclosure” or bank foreclosure through which a lender asks the court for the deed. )

EFFECTIVE DATE: January 1, 2010 and applicable to conveyances on or after that date.

§ 115 — USE TAX TABLE

The act requires the DRS commissioner to include a use tax table on state income tax forms, showing the Connecticut use tax rate and the total taxes due for various amounts spent.

By law, someone who buys a taxable item or service for use in Connecticut and does not pay sales tax to the retailer at the time of the purchase must remit the equivalent use tax directly to DRS. Use tax is generally remitted along with personal income tax payments.

§ 116-118 — ESTATE AND GIFT TAX

Starting with deaths occurring and gifts made on or after January 1, 2010, this act (1) increases, from $2 million to $3. 5 million, the minimum value of an estate or gift subject to the estate and gift tax and (2) reduces marginal tax rates on estates and gifts valued at $3. 5 million or more by 25%, as shown in Table 6.

It also eliminates the so-called “cliff” in the tax. Under prior law, an estate or gift valued at $2 million or less was exempt while the full value of any estate or gift valued at more than $2 million was taxable. This structure produced a “cliff” in which a $1 increase in the value of a gift or estate from $2,000,000 to $2,000,001 or more increased its tax liability from zero to $101,700. The act eliminates the cliff by eliminating the requirement that, once an estate's or gift's taxable value exceeded the taxable threshold, the tax applied to its entire value. Instead, it applies the tax only to the marginal value over the threshold (see Table 6).

Table 6: Old and New Estate and Gift Taxes

The act also reduces the time an executor has to file an estate tax return by making the filing deadline six, rather than nine, months after the date of death, starting with deaths on or after July 1, 2009.

Finally, the act allows a taxpayer a credit against gift taxes owed for gifts made on or after January 1, 2010, but only for taxes previously paid for other gifts also made on or after that date. (PA 09-8, September Special Session, expands the credit to include gift taxes paid on gifts made between January 1, 2005 and December 31, 2009 but specifies that the credit cannot exceed the gift tax imposed for gifts on or after January 1, 2010. )

EFFECTIVE DATE: The change in the estate tax filing deadline takes effect July 1, 2009 and applies to taxes payable on or after that date. (PA 09-8, September Special Session, changes this to apply the new filing deadline to estates of those who die on or after July 1, 2009. ) The other changes take effect January 1, 2010 and apply to estates of those who die, and to gifts made, on or after that date.

§ 119 — INCOME TAX RATE INCREASE

The act increases income taxes on taxable incomes over $1 million for joint filers, $800,000 for heads of households, and $500,000 for single filers and married people filing separately. It does so by adding a third, higher-income tax bracket and increasing the marginal tax rate for income in that bracket from 5. 0% to 6. 5%. It also increases the flat income tax rate for trusts and estates from 5. 0% to 6. 5%.

Table 7 shows tax rates and brackets under the prior law and the act. (Note: The tax rates shown apply only to the taxable income in the applicable bracket, not to all of a taxpayer's income. )

Table 7: Old and New Income Tax Rates and Brackets

EFFECTIVE DATE: Upon passage and applicable to tax years starting on or after January 1, 2009.

§§ 122-124 — DELAY IN SCHEDULED INCOME TAX REDUCTIONS FOR SINGLE FILERS

The act delays scheduled income tax reductions for single filers for three years. It does so by delaying scheduled increases in (1) their adjusted gross income (AGI) exempt from the tax and (2) income thresholds for phasing out their personal exemptions and credits and their maximum property tax credits.

Personal Exemption

Under prior law, the maximum personal exemption for single filers was scheduled to increase from $13,000 to $13,500 on January 1, 2009. It was also scheduled to rise in annual steps to $15,000 on January 1, 2012. The act instead maintains the $13,000 personal exemption for three more years, through the 2011 tax year, delaying the increase to $13,500 and each subsequent increase by three years. It also delays scheduled increases in the exemption reduction thresholds to correspond, as shown in Table 8. (The income tax personal exemption is reduced by $1,000 for each $1,000 of AGI over a specified threshold, which varies according to filing status. )

Personal Credit

The act also delays by three years scheduled increases in income ranges that allow single filers to qualify for personal credits against their income tax. Personal credits range from 1% to 75% of tax liability depending on AGI. Filers with AGIs above specified levels, which vary depending on filing status, do not qualify for any credit. Table 9 shows qualifying personal credit income ranges for single filers under prior law and the act.

Property Tax Credit

Finally, the act delays by three years scheduled increases in AGI ranges that allow single filers to qualify for property tax credits. By law, the maximum property tax credit is $500. Certain taxpayers qualify for a reduced credit or no credit depending on their AGI and filing status, with the maximum credit reduced by 10% for each $10,000 of AGI over the specified threshold. Under prior law, the AGI threshold at which a single filer's maximum property tax credit starts to be reduced was scheduled to increase annually over the four years from 2008 to 2012 from $56,500 to $64,500. This act delays each of these scheduled increases by three years as shown in Table 10.

Table 10: Maximum Property Tax Credits for Single Filers

EFFECTIVE DATE: Upon passage and applicable to tax years starting on or after January 1, 2009.

§ 125 — PLAN TO SELL STATE ASSETS

The act requires the state treasurer and the OPM secretary jointly to establish a plan to sell state assets to raise up to $15 million of net general revenue for FY 10 and up to $45 million for FY 11. They must finish the plan and provide it to the Appropriations and Finance, Revenue and Bonding committee chairpersons by February 3, 2010.

§ 126 — TRANSFERS TO SPECIAL TRANSPORTATION FUND

The act requires the comptroller to transfer the following amounts from the General Fund to the Special Transportation Fund: (1) $72 million for FY 10 and (2) $117. 5 million for FY 11 and each fiscal year thereafter. (PA 09—8, September Special Session (§ 41) changes the transfer amounts to $81. 2 million for FY 10, $126 million for FY 11 and FY 12, and $172. 8 million for FY 13 and subsequent years. )

§§ 127 & 128 — SCHOOL CONSTRUCTION BOND AUTHORIZATIONS

The act authorizes an additional $188. 35 million in GO bonds for local school construction projects and an additional $2. 6 million in such bonds for school construction interest subsidy grants. (PA 09-2, September Special Session (§§ 3 and 4), increases these authorizations by $488. 5 million and $9 million, respectively. )

§§ 129-132 — BONDS CONFORMING TO NEW FEDERAL SUBSIDY PROGRAMS

The act authorizes the State Bond Commission or a municipality, as appropriate, to make any agreements and representations needed to ensure that bonds, notes, and other debt obligations they issue are eligible for any applicable federal payments, tax credits, or other desired federal income tax treatment. The law already allowed the commission and municipalities to make whatever agreements and representations are required to ensure that interest on state and local debt obligations is exempt from federal income taxes. The act's expanded representation authority for the commission applies to both state general obligation and special tax obligation bonds.

Starting July 1, 2009, the act credits to the Special Transportation Fund all money received or collected by the state as the issuer of transportation bonds under the issuer subsidy option.

The act's changes enable the state and municipalities to take advantage of the federal “Build America Bonds” (BABs) program authorized by the 2009 federal American Recovery and Reinvestment Act (ARRA) (see BACKGROUND).

§§ 133 & 134 — BONDING FOR TOWN AID ROAD (TAR) PROGRAM

The act allows the state to issue special tax obligation bonds to make payments to towns under the TAR Program. Under prior law, the state appropriated money for TAR. The aid must be used for (1) local road and bridge construction and repair; (2) improving dirt and other unimproved roads; and (3) emergency repairs for roads, bridges, and dams damaged by natural disasters.

The act also makes a technical correction to a statutory reference in a provision of PA 09-2 that transfers $28 million from the Local Bridge Revolving Fund (loan program) to the General Fund as revenue for FY 09.

§§ 135-139 — SUPERIOR COURT FEE INCREASES

The act increases the fees for filing certain actions and motions with the Superior Court, as shown in Table 11.

Table 11: Superior Court Fee Increases

§§ 140-462 — STATE FEE INCREASES

The act raises many state fees according to the following general pattern. It:

1. increases all fees under $15 to at least $15;

2. doubles fees under $150;

3. increases fees between $150 and $1,000 by 25%; and

4. adds $250 to fees of $1,000 or more.

It also makes the following changes in DEP fees set by regulation: (1) doubles those set at less than $150; (2) increases those that were previously set between $150 and $1,000 by 25%, rounded up to the nearest $5; and (3) increases those of more than $1,000 by $250. (PA 09-8, September Special Session, makes additional changes in DEP's regulatory fees. )

Table 12 lists the act's fee increases, by agency. Agencies are in alphabetical order in the table and fees are listed in numerical order by section under each agency.

Table 12: State Fee Increases

(Note: Subsequent public acts reverse or otherwise change some of the fee increases passed in this act. Please refer to notes at the end of this table for amendments to the fee increases listed below. )