OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sSB-942

AN ACT CONCERNING CAPS ON STATE FINANCIAL ASSISTANCE FOR BUSINESS PROJECTS AND THE URBAN AND INDUSTRIAL SITE TAX CREDIT.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 14 $

FY 15 $

Department of Economic & Community Development

GOBonds - See Below

See Below

See Below

CT Innovations Inc. (quasi-public)

CII Funds - See Below

See Below

See Below

Department of Revenue Services

GF - Potential Revenue Loss

None

None

Municipal Impact: None

Explanation

The bill increases the limits for the amount of economic development assistance that the Department of Economic and Community Development (DECD) and Connecticut Innovations, Inc. (CII) may provide without affirmative legislative approval.

Assuming that any eligible project(s) would receive legislative approval without the proposed change there is no fiscal impact.

However if DECD provides assistance to an eligible project(s) that the legislature would otherwise disapprove, there would be a cost to the Manufacturing Assistance Act (MAA) program. The MAA program, funded by General Obligation bonds, is DECD's primary source for providing loans and grants for economic development assistance.

If CII provides assistance to an eligible project(s) that the legislature would otherwise disapprove, there would be a cost to CII. CII is a quasi-public state agency that is financed by loan repayments, investment returns, and fees so any costs would not be realized by the state's funds.

The Out Years

Section 2 of the bill raises the limit for Urban and Industrial Sites tax credits.

Assuming that any eligible project(s) would receive legislative approval without the proposed change there is no fiscal impact.

However if an eligible project or projects receive tax credits that the legislature would otherwise disapprove, there would be a revenue loss in the outyears. These tax credits may begin to be utilized in the third full income year succeeding the year in which the investment on the project was made.1

1 The Urban and Industrial Sites tax credit may be utilized on the following schedule: 0% in the income year in which the investment on the project was made and the two succeeding years; 10% in the third full income year after the investment and the three succeeding years; 20% in the seventh full income year after the investment and the two succeeding years.