October 23, 2009	2009-R-0387
Legislative History of the Mashantucket Pequot Grant Formula
By: Judith Lohman, Chief Analyst Kerry A. Kelley, Pincipal Budget Analyst

You asked for a legislative history of the Mashantucket Pequot and Mohegan aid formula, including the original formula and subsequent legislative changes. This report has been updated by OLR Report 2019-R-0134.

summary

The Mashantucket Pequot and Mohegan Fund is a separate, nonlapsing fund whose revenue derives from casino gaming. Money from the fund is distributed to towns according to various statutory formulas and grant criteria. The basic distribution formulas and grant criteria were established in 1993 when the fund was created and have not changed since that time (CGS § 3-55j(a)-(f)). However, since 1993, the legislature has enacted additional or supplemental grants from the fund, which it has changed and extended over the years. The last such change was enacted in 2007 (CGS §§ 3-55l and 3-55m).

1993 – original distribution

The legislature set up the separate Mashantucket Pequot Fund in 1993 (PA 93-388).The original law established distribution formulas initially only for FY 94. They were made permanent the following year. For FY 94, the act allocated all Indian gaming payments over $28 million up to $135 million to the fund. For FY 95, it allocated Indian gaming payments between $50 million and $135 million to the fund.

PA 93-388 established the following distribution formulas.

· $20 million according to the formula for distributing payment in lieu of taxes (PILOT) grants for state-owned real property and Indian reservation land, excluding property acquired for highways and bridges. PA 93-485 later amended this formula to require that each town receive one-third of the difference between what it is eligible actually to receive as a state-owned real property PILOT in the appropriate fiscal year and what it would receive if that PILOT grant program had been funded at $85,205,085. Each town must receive a minimum grant of $1,667 from this part of the formula. The grant from this part of the formula, when added to the grant a town receives as a PILOT for its state-owned real property, cannot exceed 100% of the property taxes the town would have received from such property based on its assessment list for the year preceding the fiscal year in which the grants are payable.

· $20,123,916 according to the distribution formula for PILOT grants for real property owned by private colleges and nonprofit general hospitals. Such grants, when added to grants a town receives as a PILOT for college and hospital property, cannot exceed 100% of the property taxes the town would have received from such property based on its assessment list for the year preceding the fiscal year in which the grants are payable.

· $35 million according to a formula based on each town’s (1) equalized net grand list, (2) per capita income in relation to other towns, and (3) population. In 1993, this formula was used to distribute funds from the Local Property Tax Relief Trust Fund. The legislature eliminated that fund in 1997, but retained the statutory formula for purposes of distributing this part of the Mashantucket Pequot Fund (§ 7-528).

· $5.475 million distributed to Bridgeport, Hamden, Hartford, Meriden, New Britain, New Haven, New London, Norwalk, Waterbury, and Windham according to the Local Property Tax Relief Trust Fund formula described above.

Regardless of the above-described distribution formulas, PA 93-388 also required that 28 particular towns receive specified annual amount grants from the Mashantucket Pequot Fund. There is no statutory formula for these grants, which total $44,206,717 annually. The grants are shown in Table 1.

Table 1: Statutory Grants Payable Under CGS § 3-55j(g)

Town	Grant
Bloomfield	$267,489
Bridgeport	10,506,506
Bristol	1,004,050
Chaplin	141,725
Danbury	1,612,564
Derby	432,162
East Hartford	522,421
East Lyme	488,160
Groton	2,037,088
Hamden	1,592,270
Manchester	1,014,244
Meriden	1,537,900
Middletown	2,124,960
Milford	676,535
New Britain	3,897,434
New London	2,649,363
North Haven	268,582
Norwalk	1,451,367
Norwich	1,662,147
Preston	461,939
Rocky Hill	477,950
Stamford	1,570,767
Union	38,101
Voluntown	156,902
Waterbury	5,179,655
Wethersfield	371,629
Windham	1,307,974
Windsor Locks	754,833

PA 93-388 also provided an additional $25,000 each to Ledyard, North Stonington, and Preston. These grants became known as the “impact grants” while the towns that receive them are known as “host towns.” The impact grants were initially payable only for FY 94 but were later made permanent. These grants were also increased and expanded to cover more towns in subsequent years.

1994

PA 94-1, May Special Session made the distribution formulas in PA 93-388 permanent. It also changed the amount of Indian gaming revenue allocated to the fund to $85 million per year.

1995

SA 95-12 increased the annual impact grants to Ledyard, North Stonington, and Preston to $75,000 per year for FY 96 and FY 97. For those fiscal years it also allocated $84.755 million each year in Indian gaming payments to the fund

1997

PA 97-11, June 18 Special Session increased the impact grants to Ledyard, North Stonington, and Preston to $175,000 per year. It also added an annual $150,000 grant to Montville.

PA 97-274 changed the fund’s name to Mashantucket Pequot and Mohegan Fund. It also entitled special services districts to receive a portion of their towns’ payments from the fund if they (1) were created by town charter; (2) have their own governing bodies; and (3) for the assessment year beginning October 1, 1996, contain at least 50% of the value of the town’s total property. These special services districts must receive a share of the Mashantucket Pequot and Mohegan Fund payment distributed according to the formula for PILOTs for state-owned real property.

1999

PA 99-1, June Special Session, increased the total Mashantucket Pequot and Mohegan funds distributed by $50 million per year, from $85 million to $135 million. Starting with FY 00, it required $49.75 million of the additional amount to be distributed as an annual supplemental grant to towns in proportion to the amounts they received under the basic distribution formulas or, in the case of the 28 towns listed in Table 1, their statutory grant amount. The remaining $250,000 was used to increase Ledyard’s impact grant to $450,000 annually.

2002

PA 02-7, May 9 Special Session, reduced the annual supplemental grant to all municipalities from $49.75 million to $47.5 million stating with FY 03. Also starting with FY 03, it (1) increased the number of host towns receiving impact grants from four to five by adding Norwich and (2) increased all impact grant amounts to $500,000 annually as shown below:

Town	Impact Grant
	Before FY 03	FY 03 and After
Ledyard	$425,000	$500,000
Montville	150,000	$500,000
North Stonington	175,000	$500,000
Norwich	0	$500,000
Preston	175,000	$500,000

Finally, the 2002 act specified that the supplemental grant must be proportionately reduced if the total amount payable to towns exceeds the annual appropriation for the grants (§ 3-55j(k)).

2005

PA 05-3, June Special Session, made the following changes:

· For FY 06, it increased the impact grants to the five towns (Ledyard, Montville, North Stonington, Norwich, and Preston) from $500,000 to $750,000. Starting with FY 07, it eliminated the impact grants, but gave each of the five towns an annual grant of $750,000 per year and specified that the new grants cannot be prorated for insufficient appropriations.

· For FY 07, it appropriated $4.8 million from the FY 05 surplus for additional Mashantucket Pequot and Mohegan grants. It distributed two-thirds of the additional funding ($3.2 million) through the existing formulas and one-third ($1.6 million) proportionately to (1) towns that are members of the Southeastern Connecticut Council of Governments and (2) distressed municipalities that are members of either the Northeastern Connecticut Council of Governments or the Windham Area Council of Governments. The affected towns are: Bozrah, Colchester, East Lyme, Franklin, Griswold, Groton, Killingly, Ledyard, Lisbon, Montville, New London, North Stonington, Norwich, Preston, Putnam, Salem, Sprague, Stonington, Voluntown, Waterford, and Windham.

· The act specified that these grants were (1) in addition to those the towns receive under the other parts of the formula and (2) are not subject to the proportional reductions required for other supplemental grants when the annual state appropriation is not sufficient to fund the full amounts.

2006

PA 06-187 makes the FY 07 grants to the towns in the Southeastern Connecticut Council of Governments and the distressed municipalities in either the Northeastern Connecticut Council of Governments or the Windham Area Council of Governments apply for FY 08 and subsequent fiscal years.

2007

PA 07-1, June Special Session, allocated an additional $1,665,665 annually for FY 08 and FY 09 to the (1) towns that are members of the Southeastern Connecticut Council of Governments and (2) distressed municipalities that are members of either the Northeastern Connecticut Council of Governments or the Windham Area Council of Governments. These funds were an additional grant over and above the $1.6 million for those towns described above. The act required the additional funds be distributed proportionately to each of the municipalities based on the total amounts they received from the fund for FY 07 and FY 08.

As with the other additional payments to these towns, these additional funds are not subject to proportional reductions when the annual state appropriation is not sufficient to fund the full amounts.

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