OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

HB-6221

AN ACT CONCERNING THE ELIMINATION OF CERTAIN SUNSET DATES.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 12 $

FY 13 $

Department of Revenue Services

GF - Potential Revenue Gain

See Below

See Below

Note: GF=General Fund

Municipal Impact:

Municipalities

Effect

FY 12 $

FY 13 $

Various Municipalities

Potential Revenue Gain

See Below

See Below

Explanation

The bill eliminates the sunset date for the municipal tax incremental financing (TIF) program. To the extent that the elimination of the sunset enhances the ability of IT and industrial site development projects to be financed, there is a potential for grand list expansion in those municipalities. This could result in an increase in state revenue collections if it produces economic development that leads to an increase in the state's tax base.

The bill also eliminates the sunset date for the TIF program that uses the incremental revenues from state taxes to pay the debt service on the bonds issued to build a project. This may result in an increase in state revenue from a variety of state taxes to the degree that projects using the TIF financing mechanism generate more revenue than the amount required to pay the cost of the bonds issued to finance the project.

Eliminating the sunset date for the TIF program may result in costs to the Connecticut Development Authority (CDA), a quasi-public agency, if towns submit applications for TIF projects that do not subsequently receive funding. Under the program, towns are required to reimburse the agency for expenses associated with the statutory evaluation process, including a financial assessment, a revenue impact assessment and legal fees. However if for any reason the project does not receive TIF funding, the agency's costs are not reimbursed.

The Out Years

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