OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sSB-29

AN ACT AUTHORIZING AND ADJUSTING BONDS OF THE STATE FOR CAPITAL IMPROVEMENTS, TRANSPORTATION AND OTHER PURPOSES.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 15 $

FY 16 $

Treasurer, Debt Serv.

GF - Cost

See Below

See Below

Treasurer, Debt Serv.

TF - Cost

See Below

See Below

Department of Revenue Services

GF - Revenue Loss

10 million

10 million

Office of Early Childhood

GF - Cost

214,868

214,868

State Comptroller - Fringe Benefits1

GF - Cost

72,325

72,325

Municipal Impact: None

Explanation

The bill: (1) authorizes a total of $1,082.21 million in new General Obligation (GO) bonds between FY 15 and FY 24 and (2) cancels $20.00 million in prior GO bond authorizations. The fiscal impact of the new authorizations is summarized in Table 1 below. See Table 3 for an agency-by-agency summary of the GO bond authorizations and cancellations in the bill.

The FY 15 net authorization of $502.21 million is comprised of $522.21 million in new authorizations and $20.00 million in cancellations. Assuming that the $522.21 million authorized for FY 15 is allocated through the State Bond Commission during FY 15 and the Office of the State Treasurer issues the bonds before the end of FY 15, the debt service cost in FY 16 will be $52.22 million.

Table 1: New GO Bond Authorization and Estimated Debt Service Cost $ millions

Fiscal Year

Authorization Amount

Total Debt Service Cost*

Interest

Principal

FY 15

522.21

796.37

274.16

522.21

FY 16

70.00

106.75

36.75

70.00

FY 17

70.00

106.75

36.75

70.00

FY 18

60.00

91.50

31.50

60.00

FY 19

60.00

91.50

31.50

60.00

FY 20

60.00

91.50

31.50

60.00

FY 21

60.00

91.50

31.50

60.00

FY 22

60.00

91.50

31.50

60.00

FY 23

60.00

91.50

31.50

60.00

FY 24

60.00

91.50

31.50

60.00

TOTAL

1,082.21

1,650.37

568.16

1,082.21

*Figures assume that bonds are issued at 5.0% over 20 year term

The bill cancels a net total of $7.25 million in Special Tax Obligation (STO) bonds in FY 15, which is comprised of $52.75 million in new authorizations and $60.0 million in cancellations. The fiscal impact of the new authorizations is summarized in Table 2 below. See Table 4 for a summary of the STO bond authorizations and cancellations in the bill.

Assuming that the $52.75 million is allocated through the State Bond Commission during FY 15 and the Office of the State Treasurer issues the bonds before the end of FY 15, the debt service cost in FY 16 will be $4.41 million.

Table 2: New STO Bond Authorization and Estimated Debt Service Cost $ millions

Fiscal Year

Authorization Amount

Total Debt Service Cost*

Interest

Principal

FY 15

52.75

88.28

35.53

52.75

*Figures assume that bonds are issued at 5.5% over 20 year term

The bill also does the following:

1. It creates a new public preschool program under the Office of Early Childhood (OEC) and funds it through: (a) an annual disbursement, between FY 15 and FY 24, of $10 million from the Tobacco Settlement Fund and (b) automatic annual $10 million GO bond authorizations/allocations between FY 15 and FY 24 (a total of $100 million). This provision will result in a cost of up to $287,193 to OEC associated with administering a new grant program for capital projects to support school readiness programs. Costs reflect the salaries ($214,868) and fringe benefits ($72,325) to support an Education Consultant ($84,350) and two Educational Projects Coordinators ($65,259 each).

2. It establishes a new grant-in-aid program for eligible drinking water projects approved by the Department of Public Health (DPH) under the Drinking Water State Revolving Fund (DWSRF) program and funds it through annual $50 million GO bond authorizations between FY 15 and FY 24 (a total of $500 million). This has no administrative cost impact on DPH because DWSRF is an established DPH program.

3. It transfers the Stem Cell Research Fund from the Department of Public Health to Connecticut Innovations, Inc. (CII) and renames it the Regenerative Medicine Research Fund (RMRF). The bill also transfers an existing $10 million GO bond authorization for FY 15 and authorizes an additional $20 million ($10 million in each of FY 16 and FY 17).

sHB 5042, An Act Concerning the Regenerative Medicine Research Fund, implements the program underlying the RMRF bond authorization. The estimated cost to CII to administer the program is $390,000 in FY 15. sHB 5030, the revised FY 15 budget, as favorably reported by the Appropriations Committee, transfers $500,000 from the Tobacco Settlement Fund to CII in FY 15 for administrative and peer review costs associated with the RMRF program and the Bioscience Innovation Fund program.

4. It changes the funding source for FY 15 Town Aid Road (TAR) grants-in-aid to municipalities by cancelling $60 million in STO bonds and authorizing $60 million in GO bonds under the Department of Transportation. The change is necessary because the IRS limits the amount of tax-exempt bonds that may be issued for working capital2 to five percent of the amount issued. The $60 million in TAR funding exceeds five percent of the $600 million anticipated total STO bond issuance for FY 15 so the bonds would have to be issued at a higher taxable interest rate. Using GO bonds to fund TAR remedies the problem because total annual GO issuance is much larger and could absorb the $60 million TAR authorization and still maintain the tax-exempt status of the GO bonds.

5. It makes several technical corrections to prior bond language, restores three bond authorizations for the Department of Administrative Services, and cancels three invalid GO bond authorizations under the Department of Economic and Community Development. These changes have no fiscal impact because they have already been taken into account for in prior fiscal notes and calculations of fiscal indebtedness.

Further Explanation

Table 3 lists new General Obligation (GO) bond authorizations for FY 15, organized by agency. Table 4 summarizes new Special Tax Obligation (STO) bond authorizations for FY 15. Table 5 summarizes other provisions in the bill.

Table 3: Revisions to FY 15 General Obligation Bond Authorizations

Act/Section

Agency/Description

FY 15

Amount $

GO Bond Authorizations

Office of Legislative Management

Sec. 2(a)(1)

Information technology updates, replacements and improvements, replacement of various equipment in the Capitol complex, including updated technology for the Office of State Capitol Police, renovations and repairs and minor capital improvements at the Capitol complex and the Old State House

4,892,200

Sec. 2(a)(2)

Production and studio equipment for the Connecticut Network

3,230,000

Office of Governmental Accountability

Sec. 2(b)

Information technology improvements

1,000,000

Connecticut Public Broadcasting Network (Comptroller's Office) 

Sec. 9(a)

Grant-in-aid to the Connecticut Public Broadcasting Network for transmission, broadcast, production and information technology equipment

3,300,000

Office of Policy and Management

Sec. 2(c)

Transit-oriented development predevelopment fund

7,000,000

Sec. 44

Information technology capital investment program. PA 13-239, Sec. 25. Increase FY 15 authorization from $25 million to $50 million.

25,000,000

Sec. 48

Grants-in-aid to private, nonprofit health and human service organizations that receive funds from the state to provide direct health or human services to state agency clients, for alterations, renovations, improvements, additions and new construction, including health, safety, compliance with the Americans with Disabilities Act and energy conservation improvements, information technology systems, technology for independence and purchase of vehicles. PA 13-239, Sec. 32(a). Increase FY 15 authorization from $20 million to $50 million

30,000,000

Sec. 26

Urban Action Program; Language change: Provide $10 million grant-in-aid for an intermodal transportation facility in northeastern Connecticut

60,000,000

Department of Veterans' Affairs 

Sec. 2(d)(1)

State matching funds for federal grants-in-aid for renovations and code required improvements to existing facilities

1,409,450

Sec. 2(d)(2)

Planning and feasibility study for additional veterans housing at the Rocky Hill campus, including demolition of vacant buildings

500,000

Department of Administrative Services

Sec. 2(e)

Land acquisition, construction, improvements, repairs and renovations at fire training schools

15,777,672

Office of the Healthcare Advocate 

Sec. 2(f)

Development, acquisition and implementation of Health Information Technology systems and equipment in support of the State Innovation Model

1,900,000

Department of Labor 

Sec. 9(b)

Subsidized Training and Employment program (STEP)

10,000,000

Agricultural Experiment Station

Sec. 2(g)

Planning and design for additions and renovations to the Valley Laboratory in Windsor

1,000,000

Department of Energy and Environmental Protection 

Sec. 9(c)

Grants-in-aid or reimbursement to municipalities in amounts up to $1,000 per grant or reimbursement, for the initial installation of a drop box for prescription drugs

100,000

Department of Economic and Community Development  

Sec. 9(d)(1)

Connecticut Manufacturing Innovation Fund, and for grants-in-aid for research and development of advanced composite materials

30,000,000

Sec. 9(d)(2)

Grant-in-aid to the Northeast Connecticut Economic Development Alliance

2,000,000

Sec. 9(d)(3)

Grants-in-aid to nonprofit organizations sponsoring cultural and historic sites

10,000,000

Sec. 29

Manufacturing Assistance Act

100,000,000

Connecticut Innovations, Inc. 

Sec. 22

Regenerative Medicine Research Fund - Provide $10 million in each of FY 16 & FY 17

 

Sec. 49

Change name of fund and transfer from DPH: New name - Regenerative Medicine Research Fund (formerly the Stem Cell Research Fund). PA 13-239, Sec. 32(a)

 

Department of Housing  

Sec. 9(e)

Shoreline resiliency fund

25,000,000

Sec. 46

Housing development and rehabilitation programs. PA 13-239, Sec. 28 New language: Not less than $20 million shall be used to promote homeownership through new home construction or home conversions in the cities of Hartford, New Haven, Bridgeport, New London and New Britain. FY 15 authorization of $70 million.

-

Department of Public Health 

Sec. 27

For the Department of Public Health: Grants-in-aid to public water systems for drinking water projects, not exceeding in the aggregate $500,000,000, provided $50,000,000 of said authorization shall be effective July 1, 2015; $50,000,000 of said authorization shall be effective July 1, 2016; $50,000,000 of said authorization shall be effective July 1, 2017; $50,000,000 of said authorization shall be effective July 1, 2018; $50,000,000 of said authorization shall be effective July 1, 2019; $50,000,000 of said authorization shall be effective July 1, 2020; $50,000,000 of said authorization shall be effective July 1, 2021; $50,000,000 of said authorization shall be effective July 1, 2022; and $50,000,000 of said authorization shall be effective July 1, 2023.

50,000,000

Sec. 28

DPH is required to adopt regulations for the program

-

Department of Social Services 

Sec. 9(g)

Grant-in-aid to Oak Hill for down payment assistance or capital improvements associated with acquisition of Camp Hemlocks

1,000,000

Department of Rehabilitation Services 

Sec. 9(h)

Grant-in-aid for home modifications and assistive technology devices related to aging in place

5,000,000

Department of Education  

Sec. 9(i)

Grants-in-aid for alterations, repairs, improvements, technology, equipment and capital start-up costs, including acquisition costs, to expand the availability of high-quality school models, and assist in the implementation of common CORE state standards and assessments, in accordance with procedures established by the Commissioner of Education.

10,000,000

Sec. 41

School Security Infrastructure Grant Program. PA 13-3, Sec. 85

22,000,000

Sec. 40

School Security Infrastructure Grant Program: Provide reimbursements to regional education service centers, charter schools, the technical high school system and private primary and secondary schools. Provide funding for real time interoperable communications and multimedia sharing infrastructure systems. PA 13-3, Sec. 84

-

Sec. 51

Grants-in-aid for the purpose of capital start-up costs related to the development of new interdistrict magnet school programs to assist the state in meeting the goals of the [2008] current stipulation and order for Milo Sheff, et al. v. William A. O'Neill, et al., for the purpose of purchasing a building or portable classrooms, subject to the reversion provisions in subdivision (1) of subsection (c) of section 10-264h of the general statutes, leasing space, and purchasing equipment, including, but not limited to, computers and classroom furniture. PA 13-239, Sec. 32(g)(1). Increase FY 15 amount from $7.5 million to $17.4 million.

9,900,000

Office of Early Childhood  

Sec. 23

Establish Pre-K competitive grant program

 

Sec. 24

Pre-K competitive grant program bond authorization: Total of $100 million over 10 years - $10 million automatically authorized and allocated each year between FY 15 and FY 24

10,000,000

Sec. 25

Pre-K competitive grant program: Transfer $10 million per year, between FY 15 and FY 24, from Tobacco Settlement Fund to the Pre-K competitive grant program

-

Sec. 52

Transfer from SDE: Grants-in-aid to municipalities and organizations exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, for facility improvements and minor capital repairs to that portion of facilities that house school readiness programs and state-funded day care centers operated by such municipalities and organizations. PA 13-239. Sec. 32(g)(2)

-

Sec. 34

Transfer from SDE: Grants-in-aid for minor capital improvements and wiring for technology for school readiness programs. PA 07-7, (JSS), Sec. 32(h)(2). Unallocated balance $1.5 million.

-

Sec. 39

Transfer from SDE: Grants-in-aid to municipalities and organizations exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, for facility improvements and minor capital repairs to that portion of facilities that house school readiness programs and state-funded day care centers operated by such municipalities and organizations. PA 12-189, Sec. 9(e)(4). Unallocated balance $10 million.

-

Sec. 42

Transfer from SDE: Grants-in-aid to municipalities and organizations exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, for facility improvements and minor capital repairs to that portion of facilities that house school readiness programs and state-funded day care centers operated by such municipalities and organizations. PA 13-239 13(h)(2). Unallocated balance $5,898,768.

-

State Library 

Sec. 2(h)

Creation and maintenance of a state-wide platform for the distribution of electronic books to public library patrons

2,200,000

Board of Regents for Higher Education: Regional Community College System  

Sec. 45

Cancellation: All Community Colleges: New and replacement instruction, research or laboratory equipment. PA 13-239, Sec. 21(l)(1)(A)

(5,000,000)

Sec. 45

Cancellation: All Community Colleges: System Technology Initiative. PA 13-239, Sec. 21(l)(1)(B)

(5,000,000)

Sec. 45

Cancellation: All Community Colleges: Alterations, renovations and improvements to facilities including fire, safety, energy conservation and code compliance improvements. PA 13-239, Sec. 21(l)(1)(C)

(5,000,000)

Department of Transportation  

Sec. 9(f)

Authorize Town Aid Road as GO bond funds, cancel $60 million in STO bonds for TAR

60,000,000

Sec. 50

Grants-in-aid for improvements to deep water ports, including dredging. PA 13-239, Sec. 32(f). Increase FY 15 amount from $5 million to $25 million

20,000,000

Total GO New Bond Authorizations 

507,209,322

 

Cancellation of Prior Year Authorizations  

Sec. 38

Cancellation: Alterations, renovations and improvements to facilities, including fire, safety, energy conservation and code compliance. PA 11-57, Sec. 21(l)(1)(A)

(5,000,000)

Table 4: Revisions to FY 15 Special Tax Obligation Bond Authorizations

Act/Section

Agency/Description

FY 15

Amount $

Bureau of Highways

Sec. 17(a)

Development of a comprehensive asset management plan in accordance with federal requirements

10,000,000

Sec. 17(b)

Highway and bridge renewal equipment

5,400,000

Sec. 17(c)

Local Bridge Program

10,000,000

Sec. 17(d)

Reconfiguration of an existing ramp off of the Merritt Parkway in Westport

3,000,000

Sec. 54

Environmental compliance, soil and groundwater remediation, hazardous materials abatement, demolition, salt shed construction and renovation, storage tank replacement, and environmental emergency response at or in the vicinity of state-owned properties or related to Department of Transportation operations. PA 13-239, Sec. 46. Increase FY 15 amount from $13.99 million to $20.69 million.

6,700,000

Sec. 55

Town Aid Road Program - Repeal STO bond funds and authorize as GO bond funds. PA 13-239, Sec. 46

(60,000,000)

Bureau of Public Transportation 

Sec. 56

Bus and rail facilities and equipment, including rights-of-way, other property acquisition and related projects. PA 13-239, Sec. 46. Increase FY 15 amount from $143.00 million to $160.65 million.

17,650,000

TOTAL STO Bond Authorizations

(7,250,000)

Table 5: Technical Corrections

Act/Section

Agency/Description

FY 15

Amount $

Sec. 30

Technical correction

-

Sec. 31

Community-Technical Colleges: Northwestern Community College: Infrastructure development and improvements related to the nursing and allied health program. PA 07-7, (JSS), 2(s)(7)

(340,000)

Sec. 32

CSUS: All campuses - Land acquisition and related development costs. PA 07-7, (JSS), 2(t)(1)(E)

(5,490)

Sec. 33

Technical correction

-

Sec. 35

Technical correction

-

Sec. 37

Language change for DAS: Alterations, renovations and improvements, including installation of air conditioning, [and related planning, design, development and demolition work,] to the State Office Building and associated parking facilities in Hartford. PA 11-57, Sec. 21(d)(1)

-

Sec. 57

Grants-in-aid to the Metropolitan Economic Development Commission for construction, improvements, repairs, renovations and land acquisition for the purpose of creating elderly housing. PA 13-268, Sec. 2(b)(1)

(500,000)

Sec. 57

Grants-in-aid to the John E. Rogers African American Cultural Center for construction, improvements, repairs, renovations and land acquisition for the purpose of converting the former Northwest-Jones School to a cultural center. PA 13-268, Sec. 2(b)(2)

(500,000)

Sec. 57

Grants-in-aid to Catholic Charities of Hartford for construction, improvements, repairs and renovations for the purpose of creating affordable housing with supportive services. PA 13-268, Sec. 2(b)(3)

(500,000)

Total Technical Corrections

(1,845,490)

The Out Years

The annual $10 million revenue loss identified for each of FY 15 and FY 16 would continue between FY 17 and FY 24. The cost to OEC to administer the public preschool program would also continue over this period of time. The General Fund and Special Transportation Fund debt service impacts identified above would continue over the 20 year term of issuance for the bonds.

1 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes is 36.66% of payroll in FY 15 and FY 16.

2 All TAR grants-in-aid are considered potential working capital because municipalities are permitted to use them for maintenance and current operating expenses.