File No. 844

Senate, May 18, 2015

The Committee on Finance, Revenue and Bonding reported through SEN. FONFARA of the 1st Dist., Chairperson of the Committee on the part of the Senate, that the substitute bill ought to pass.

AN ACT CONCERNING TAX FAIRNESS AND ECONOMIC DEVELOPMENT.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective July 1, 2016) (a) For purposes of this section, "state, municipal or tribal property" means all real property described in subsection (a) of section 12-19a of the general statutes, as amended by this act, "college and hospital property" means all real property described in subsection (a) of section 12-20a of the general statutes, as amended by this act, "municipality" means any town, city, borough, consolidated town and city and consolidated town and borough, and "district" means any district, as defined in section 7-324, of the general statutes.

(b) Notwithstanding the provisions of sections 12-19a and 12-20a of the general statutes, as amended by this act, all funds appropriated for state grants in lieu of taxes shall be payable to municipalities and districts pursuant to the provisions of this section. For fiscal years commencing on and after July 1, 2016, all state grants in lieu of property taxes for state, municipal or tribal property and college and hospital property shall be such that each municipality or district shall receive a grant in lieu of taxes in an amount equal to or greater than that paid to the municipality or district pursuant to sections 12-19a and 12-20a of the general statutes, as amended by this act, for the fiscal year commencing July 1, 2014. On or before January first, annually, the Secretary of the Office of Policy and Management shall determine the amount due, as a state grant in lieu of taxes, to each municipality and district in this state wherein college and hospital property is located and to each municipality in this state wherein state, municipal or tribal property, except that which was acquired and used for highways and bridges, but not excepting property acquired and used for highway administration or maintenance purposes, is located.

(1) The grant payable to any municipality for state, municipal or tribal property under the provisions of this section in the fiscal year commencing July 1, 2016, and each fiscal year thereafter shall be equal to the total of:

(A) One hundred per cent of the property taxes that would have been paid with respect to any facility designated by the Commissioner of Correction, on or before August first of each year, to be a correctional facility administered under the auspices of the Department of Correction or a juvenile detention center under direction of the Department of Children and Families that was used for incarcerative purposes during the preceding fiscal year. If a list containing the name and location of such designated facilities and information concerning their use for purposes of incarceration during the preceding fiscal year is not available from the Secretary of the State on August first of any year, the Commissioner of Correction shall, on said date, certify to the Secretary of the Office of Policy and Management a list containing such information;

(B) One hundred per cent of the property taxes that would have been paid with respect to that portion of the John Dempsey Hospital located at The University of Connecticut Health Center in Farmington that is used as a permanent medical ward for prisoners under the custody of the Department of Correction. Nothing in this section shall be construed as designating any portion of The University of Connecticut Health Center John Dempsey Hospital as a correctional facility;

(C) One hundred per cent of the property taxes that would have been paid on any land designated within the 1983 Settlement boundary and taken into trust by the federal government for the Mashantucket Pequot Tribal Nation on or after June 8, 1999;

(D) Subject to the provisions of subsection (c) of section 12-19a of the general statutes, as amended by this act, sixty-five per cent of the property taxes that would have been paid with respect to the buildings and grounds comprising Connecticut Valley Hospital in Middletown;

(E) With respect to any municipality in which more than fifty per cent of the property is state-owned real property, one hundred per cent of the property taxes that would have been paid with respect to such state-owned property;

(F) Forty-five per cent of the property taxes that would have been paid with respect to all municipally owned airports; except for the exemption applicable to such property, on the assessment list in such municipality for the assessment date two years prior to the commencement of the state fiscal year in which such grant is payable. The grant provided pursuant to this section for any municipally owned airport shall be paid to any municipality in which the airport is located, except that the grant applicable to Sikorsky Airport shall be paid one-half to the town of Stratford and one-half to the city of Bridgeport;

(G) Forty-five per cent of the property taxes that would have been paid with respect to any land designated within the 1983 Settlement boundary and taken into trust by the federal government for the Mashantucket Pequot Tribal Nation prior to June 8, 1999, or taken into trust by the federal government for the Mohegan Tribe of Indians of Connecticut, provided the real property subject to this subparagraph shall be the land only, and shall not include the assessed value of any structures, buildings or other improvements on such land; and

(H) Forty-five per cent of the property taxes that would have been paid with respect to all other state-owned real property.

(2) (A) The grant payable to any municipality or district for college and hospital property under the provisions of this section in the fiscal year commencing July 1, 2016, and each fiscal year thereafter shall be equal to the total of seventy-seven per cent of the property taxes that, except for any exemption applicable to any institution of higher education or general hospital facility under the provisions of section 12-81 of the general statutes, would have been paid with respect to college and hospital property on the assessment list in such municipality or district for the assessment date two years prior to the commencement of the state fiscal year in which such grant is payable; and

(B) Notwithstanding the provisions of subparagraph (A) of this subdivision, the grant payable to any municipality or district with respect to a campus of the United States Department of Veterans Affairs Connecticut Healthcare Systems shall be one hundred per cent.

(c) The Secretary of the Office of Policy and Management shall list municipalities and districts based on the percentage of real property on the grand list of each municipality that is exempt from property tax under any provision of the general statutes other than that set forth in subparagraph (A) of subdivision (1) of subsection (b) of this section. Such tax exempt property shall not include municipally owned property except for municipally owned airports. Boroughs and districts shall have the same ranking as the municipality in which such borough or district is located.

(d) (1) In the event that the total of grants payable to each municipality and district in accordance with the provisions of subsection (b) of this section exceeds the amount appropriated for the purposes of this section for the fiscal year, (A) the amount of the grant payable to each municipality in any year for property described in subparagraphs (A) to (G), inclusive, of subdivision (1) of subsection (b) of this section and to each municipality or district in any year for property described in subparagraph (B) of subdivision (2) of subsection (b) of this section shall be reduced proportionately, provided no such grant shall be reduced to an amount less than that received by a municipality or district for such property pursuant to section 12-19a or 12-20a of the general statutes, as amended by this act, for the fiscal year commencing July 1, 2014; (B) the amount of the grant payable to each municipality or district in any year for property described in subparagraph (A) of subdivision (2) of subsection (b) of this section shall be reduced as follows, provided no such grant shall be reduced to an amount less than that received by a municipality or district for such property pursuant to section 12-20a of the general statutes, as amended by this act, for the fiscal year commencing July 1, 2014: (i) The ten municipalities or districts with the highest percentage of tax exempt property on the list of municipalities prepared by the secretary pursuant to subsection (c) of this section and having a mill rate of twenty-five mills or more shall each receive a grant in lieu of taxes equal to forty-two per cent of the property taxes that would have been paid to such municipality or district on college and hospital property other than that set forth in subparagraph (B) of subdivision (2) of subsection (b) of this section; (ii) the next twenty-five municipalities or districts with the highest percentage of tax exempt property on such list having a mill rate of twenty-five mills or more shall each receive a grant in lieu of taxes equal to thirty-seven per cent of the property taxes that would have been paid to such municipality or district on college and hospital property other than that set forth in subparagraph (B) of subdivision (2) of subsection (b) of this section; and (iii) all municipalities or districts not included in subparagraphs (B)(i) and (B)(ii) of this subdivision shall each receive a grant in lieu of taxes equal to thirty-two per cent of the property taxes that would have been paid to such municipality or district on college and hospital property other than that set forth in subparagraph (B) of subdivision (2) of subsection (b) of this section; and (C) the amount of the grant payable to each municipality in any year for property described in subparagraph (H) of subdivision (1) of subsection (b) of this section shall be reduced as follows, provided no such grant shall be reduced to an amount less than that received by a municipality for such property pursuant to section 12-19a of the general statutes, as amended by this act, for the fiscal year commencing July 1, 2014: (i) The ten municipalities with the highest percentage of tax exempt property on the list of municipalities prepared by the secretary pursuant to subsection (c) of this section and having a mill rate of twenty-five mills or more shall each receive a grant in lieu of taxes equal to thirty-two per cent of the property taxes that would have been paid to such municipality for property described in subparagraph (H) of subdivision (1) of subsection (b) of this section; (ii) the next twenty-five municipalities with the highest percentage of tax exempt property on such list having a mill rate of twenty-five mills or more shall each receive a grant in lieu of taxes equal to twenty-eight per cent of the property taxes that would have been paid to such municipality for property described in subparagraph (H) of subdivision (1) of subsection (b) of this section; and (iii) all municipalities not included in subparagraphs (C)(i) and (C)(ii) of this subdivision shall each receive a grant in lieu of taxes equal to twenty-four per cent of the property taxes that would have been paid to such municipality for property described in subparagraph (H) of subdivision (1) of subsection (b) of this section.

(2) If the amount appropriated for the purposes of subsection (b) of this section is less than the total of grants payable to each municipality and district in accordance with subsection (b) of this section but exceeds the amount necessary to issue grants to each municipality and district in an amount equal to that received by each such municipality or district pursuant to section 12-19a or 12-20a of the general statutes, as amended by this act, for the fiscal year commencing July 1, 2014, for property described in subparagraphs (A) to (G), inclusive, of subdivision (1) and subparagraph (B) of subdivision (2) of subsection (b) of this section plus the amount of grants payable pursuant to subparagraphs (B) and (C) of subdivision (1) of this subsection, then each grant payable to a municipality or district in accordance with this section shall be increased proportionately to the amount received by each municipality or district pursuant to subdivision (1) of this subsection.

(e) Notwithstanding the provisions of subsections (a) to (d), inclusive, of this section, for any municipality receiving payments under section 15-120ss of the general statutes, property located in such municipality at Bradley International Airport shall not be included in the calculation of any state grant in lieu of taxes pursuant to this section.

(f) For purposes of this section, any real property which is owned by the John Dempsey Hospital Finance Corporation established pursuant to the provisions of sections 10a-250 to 10a-263, inclusive, of the general statutes or by one or more subsidiary corporations established pursuant to subdivision (13) of section 10a-254 of the general statutes and which is free from taxation pursuant to the provisions of section 10a-259 of the general statutes shall be deemed to be state-owned real property.

(g) The Office of Policy and Management shall report, in accordance with the provisions of section 11-4a of the general statutes, to the joint standing committee of the General Assembly having cognizance of matters relating to finance, revenue and bonding, on or before July 1, 2017, and on or before July first annually thereafter until July 1, 2020, with regard to the grants distributed in accordance with this section, and shall include in such reports any recommendations for changes in the grants.

Sec. 2. Subsection (a) of section 12-19a of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2015):

(a) [On] Until the fiscal year commencing July 1, 2016, on or before January first, annually, the Secretary of the Office of Policy and Management shall determine the amount due, as a state grant in lieu of taxes, to each town in this state wherein state-owned real property, reservation land held in trust by the state for an Indian tribe or a municipally owned airport, except that which was acquired and used for highways and bridges, but not excepting property acquired and used for highway administration or maintenance purposes, is located. The grant payable to any town under the provisions of this section in the state fiscal year commencing July 1, 1999, and each fiscal year thereafter, shall be equal to the total of (1) (A) one hundred per cent of the property taxes which would have been paid with respect to any facility designated by the Commissioner of Correction, on or before August first of each year, to be a correctional facility administered under the auspices of the Department of Correction or a juvenile detention center under direction of the Department of Children and Families that was used for incarcerative purposes during the preceding fiscal year. If a list containing the name and location of such designated facilities and information concerning their use for purposes of incarceration during the preceding fiscal year is not available from the Secretary of the State on the first day of August of any year, said commissioner shall, on said first day of August, certify to the Secretary of the Office of Policy and Management a list containing such information, (B) one hundred per cent of the property taxes which would have been paid with respect to that portion of the John Dempsey Hospital located at The University of Connecticut Health Center in Farmington that is used as a permanent medical ward for prisoners under the custody of the Department of Correction. Nothing in this section shall be construed as designating any portion of The University of Connecticut Health Center John Dempsey Hospital as a correctional facility, and (C) in the state fiscal year commencing July 1, 2001, and each fiscal year thereafter, one hundred per cent of the property taxes which would have been paid on any land designated within the 1983 Settlement boundary and taken into trust by the federal government for the Mashantucket Pequot Tribal Nation on or after June 8, 1999, (2) subject to the provisions of subsection (c) of this section, sixty-five per cent of the property taxes which would have been paid with respect to the buildings and grounds comprising Connecticut Valley Hospital in Middletown. Such grant shall commence with the fiscal year beginning July 1, 2000, and continuing each year thereafter, (3) notwithstanding the provisions of subsections (b) and (c) of this section, with respect to any town in which more than fifty per cent of the property is state-owned real property, one hundred per cent of the property taxes which would have been paid with respect to such state-owned property. Such grant shall commence with the fiscal year beginning July 1, 1997, and continuing each year thereafter, (4) subject to the provisions of subsection (c) of this section, forty-five per cent of the property taxes which would have been paid with respect to all other state-owned real property, (5) forty-five per cent of the property taxes which would have been paid with respect to all municipally owned airports; except for the exemption applicable to such property, on the assessment list in such town for the assessment date two years prior to the commencement of the state fiscal year in which such grant is payable. The grant provided pursuant to this section for any municipally owned airport shall be paid to any municipality in which the airport is located, except that the grant applicable to Sikorsky Airport shall be paid half to the town of Stratford and half to the city of Bridgeport, and (6) forty-five per cent of the property taxes which would have been paid with respect to any land designated within the 1983 Settlement boundary and taken into trust by the federal government for the Mashantucket Pequot Tribal Nation prior to June 8, 1999, or taken into trust by the federal government for the Mohegan Tribe of Indians of Connecticut, provided (A) the real property subject to this subdivision shall be the land only, and shall not include the assessed value of any structures, buildings or other improvements on such land, and (B) said forty-five per cent grant shall be phased in as follows: (i) In the fiscal year commencing July 1, 2012, an amount equal to ten per cent of said forty-five per cent grant, (ii) in the fiscal year commencing July 1, 2013, thirty-five per cent of said forty-five per cent grant, (iii) in the fiscal year commencing July 1, 2014, sixty per cent of said forty-five per cent grant, (iv) in the fiscal year commencing July 1, 2015, eighty-five per cent of said forty-five per cent grant, and (v) in the fiscal year commencing July 1, 2016, one hundred per cent of said forty-five per cent grant.

Sec. 3. Subsection (a) of section 12-20a of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2015):

(a) [On] Until the fiscal year commencing July 1, 2016, on or before January first, annually, the Secretary of the Office of Policy and Management shall determine the amount due to each municipality in the state, in accordance with this section, as a state grant in lieu of taxes with respect to real property owned by any private nonprofit institution of higher learning or any nonprofit general hospital facility or freestanding chronic disease hospital or an urgent care facility that operates for at least twelve hours a day and that had been the location of a nonprofit general hospital for at least a portion of calendar year 1996 to receive payments in lieu of taxes for such property, exclusive of any such facility operated by the federal government, except a campus of the United States Department of Veterans Affairs Connecticut Healthcare Systems, or the state of Connecticut or any subdivision thereof. As used in this section, "private nonprofit institution of higher learning" means any such institution, as defined in subsection (a) of section 10a-34, or any independent institution of higher education, as defined in subsection (a) of section 10a-173, that is engaged primarily in education beyond the high school level, and offers courses of instruction for which college or university-level credit may be given or may be received by transfer, the property of which is exempt from property tax under any of the subdivisions of section 12-81; "nonprofit general hospital facility" means any such facility that is used primarily for the purpose of general medical care and treatment, exclusive of any hospital facility used primarily for the care and treatment of special types of disease or physical or mental conditions; and "freestanding chronic disease hospital" means a facility that provides for the care and treatment of chronic diseases, excluding any such facility having an ownership affiliation with and operated in the same location as a chronic and convalescent nursing home.

Sec. 4. Section 12-19b of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(a) Not later than April first in any assessment year, any town or borough to which a grant is payable under the provisions of section 12-19a, as amended by this act, or section 1 of this act, shall provide the Secretary of the Office of Policy and Management with the assessed valuation of the real property eligible therefor as of the first day of October immediately preceding, adjusted in accordance with any gradual increase in or deferment of assessed values of real property implemented in accordance with section 12-62c, which is required for computation of such grant. Any town which neglects to transmit to the secretary the assessed valuation as required by this section shall forfeit two hundred fifty dollars to the state, provided the secretary may waive such forfeiture in accordance with procedures and standards adopted by regulation in accordance with chapter 54. Said secretary may on or before the first day of August of the state fiscal year in which such grant is payable, reevaluate any such property when, in the secretary's judgment, the valuation is inaccurate and shall notify such town of such reevaluation by certified or registered mail. Any town or borough aggrieved by the action of the secretary under the provisions of this section may, not later than ten business days following receipt of such notice, appeal to the secretary for a hearing concerning such reevaluation. Such appeal shall be in writing and shall include a statement as to the reasons for such appeal. The secretary shall, not later than ten business days following receipt of such appeal, grant or deny such hearing by notification in writing, including in the event of a denial, a statement as to the reasons for such denial. Such notification shall be sent by certified or registered mail. If any town or borough is aggrieved by the action of the secretary following such hearing or in denying any such hearing, the town or borough may not later than ten business days after receiving such notice, appeal to the superior court for the judicial district wherein such town is located. Any such appeal shall be privileged.

(b) Notwithstanding the provisions of section [12-19a] 1 of this act or subsection (a) of this section, there shall be an amount due the municipality of Voluntown, on or before the thirtieth day of September, annually, with respect to any state-owned forest, of an additional sixty thousand dollars, which amount shall be paid from the annual appropriation, from the General Fund, for reimbursement to towns for loss of taxes on private tax-exempt property.

Sec. 5. Section 12-19c of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

The Secretary of the Office of Policy and Management shall, not later than September fifteenth, certify to the Comptroller the amount due each town or borough under the provisions of section [12-19a] 1 of this act, or under any recomputation occurring prior to said September fifteenth which may be effected as the result of the provisions of section 12-19b, as amended by this act, and the Comptroller shall draw an order on the Treasurer on or before the fifth business day following September fifteenth and the Treasurer shall pay the amount thereof to such town on or before the thirtieth day of September following. If any recomputation is effected as the result of the provisions of section 12-19b, as amended by this act, on or after the August first following the date on which the town has provided the assessed valuation in question, any adjustments to the amount due to any town for the period for which such adjustments were made shall be made in the next payment the Treasurer shall make to such town pursuant to this section.

Sec. 6. Section 12-20b of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(a) Not later than April first in each year, any municipality to which a grant is payable under the provisions of section 12-20a, as amended by this act, or section 1 of this act, shall provide the Secretary of the Office of Policy and Management with the assessed valuation of the tax-exempt real property as of the immediately preceding October first, adjusted in accordance with any gradual increase in or deferment of assessed values of real property implemented in accordance with section 12-62c, which is required for computation of such grant. Any municipality which neglects to transmit to the Secretary of the Office of Policy and Management the assessed valuation as required by this section shall forfeit two hundred fifty dollars to the state, provided the secretary may waive such forfeiture in accordance with procedures and standards adopted by regulation in accordance with chapter 54. Said secretary may, on or before the first day of August of the state fiscal year in which such grant is payable, reevaluate any such property when, in his or her judgment, the valuation is inaccurate and shall notify such municipality of such reevaluation. Any municipality aggrieved by the action of said secretary under the provisions of this section may, not later than ten business days following receipt of such notice, appeal to the secretary for a hearing concerning such reevaluation, provided such appeal shall be in writing and shall include a statement as to the reasons for such appeal. The secretary shall, not later than ten business days following receipt of such appeal, grant or deny such hearing by notification in writing, including in the event of a denial, a statement as to the reasons for such denial. If any municipality is aggrieved by the action of the secretary following such hearing or in denying any such hearing, the municipality may not later than two weeks after such notice, appeal to the superior court for the judicial district in which the municipality is located. Any such appeal shall be privileged. Said secretary shall certify to the Comptroller the amount due each municipality under the provisions of section [12-20a] 1 of this act, or under any recomputation occurring prior to September fifteenth which may be effected as the result of the provisions of this section, and the Comptroller shall draw his or her order on the Treasurer on or before the fifth business day following September fifteenth and the Treasurer shall pay the amount thereof to such municipality on or before the thirtieth day of September following. If any recomputation is effected as the result of the provisions of this section on or after the January first following the date on which the municipality has provided the assessed valuation in question, any adjustments to the amount due to any municipality for the period for which such adjustments were made shall be made in the next payment the Treasurer shall make to such municipality pursuant to this section.

(b) Notwithstanding the provisions of section [12-20a] 1 of this act or subsection (a) of this section, the amount due the municipality of Branford, on or before the thirtieth day of September, annually, with respect to the Connecticut Hospice, in Branford, shall be one hundred thousand dollars, which amount shall be paid from the annual appropriation, from the General Fund, for reimbursement to towns for loss of taxes on private tax-exempt property.

(c) Notwithstanding the provisions of section [12-20a] 1 of this act or subsection (a) of this section, the amount due the city of New London, on or before the thirtieth day of September, annually, with respect to the United States Coast Guard Academy in New London, shall be one million dollars, which amount shall be paid from the annual appropriation, from the General Fund, for reimbursement to towns for loss of taxes on private tax-exempt property.

Sec. 7. Subsection (a) of section 12-63h of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(a) The Secretary of the Office of Policy and Management shall establish a pilot program in up to three municipalities whereby the selected municipalities shall develop a plan for implementation of land value taxation that (1) classifies real estate included in the taxable grand list as (A) land or land exclusive of buildings, or (B) buildings on land; and (2) establishes a different mill rate for property tax purposes for each class, provided the higher mill rate shall apply to land or land exclusive of buildings. The different mill rates for taxable real estate in each class shall not be applicable to any property for which a grant is payable under section [12-19a or 12-20a] 1 of this act.

Sec. 8. Subsection (b) of section 12-64 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(b) Except as provided in subsection (c) of this section, any land, buildings or easement to use air rights belonging to or held in trust for the state, not used for purposes attributable to functions of the state government or any other governmental purpose but leased to a person or organization for use unrelated to any such purpose, exclusive of any such lease with respect to which a binding agreement is in effect on June 25, 1985, shall be separately assessed in the name of the lessee and subject to local taxation annually in the name of the lessee having immediate right to occupancy of such land or building, by the town wherein situated as of the assessment day next following the date of leasing pursuant to section 4b-38, as amended by this act. If such property or any portion thereof is leased to any organization which, if the property were owned by or held in trust for such organization, would not be liable for taxes with respect to such property under any of the subdivisions of section 12-81, such organization shall be entitled to exemption from property taxes as the lessee under such lease, provided such property is used exclusively for the purposes of such organization as stated in the applicable subdivision of [said] section 12-81 and the portion of such property so leased to such exempt organization shall be eligible for a grant in lieu of taxes pursuant to section [12-19a] 1 of this act. Whenever the lessee of such property is required to pay property taxes to the town in which such property is situated as provided in this subsection, the assessed valuation of such property subject to the interest of the lessee shall not be included in the annual list of assessed values of state-owned real property in such town as prepared for purposes of state grants in accordance with [said] section [12-19a] 1 of this act and the amount of grant to such town under [said] section [12-19a] 1 of this act shall be determined without consideration of such assessed value.

Sec. 9. Subsections (a) to (d), inclusive, of section 3-55j of the general statutes are repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(a) Twenty million dollars of the moneys available in the Mashantucket Pequot and Mohegan Fund established by section 3-55i shall be paid to municipalities eligible for a state grant in lieu of taxes pursuant to subsection (b) of section [12-19a] 1 of this act in addition to the grants payable to such municipalities pursuant to section [12-19a] 1 of this act subject to the provisions of subsection (b) of this section. Such grant shall be [calculated under the provisions of section 12-19a and shall equal one-third of the additional amount which such municipalities would be eligible to receive if the total amount available for distribution were eighty-five million two hundred five thousand eighty-five dollars and the percentage of reimbursement set forth in section 12-19a were increased to reflect such amount] equal to that paid to the municipality pursuant to this section for the fiscal year commencing July 1, 2014. Any eligible special services district shall receive a portion of the grant payable under this subsection to the town in which such district is located. The portion payable to any such district under this subsection shall be the amount of the grant to the town under this subsection which results from application of the district mill rate to exempt property in the district. As used in this subsection and subsection (c) of this section, "eligible special services district" means any special services district created by a town charter, having its own governing body and for the assessment year commencing October 1, 1996, containing fifty per cent or more of the value of total taxable property within the town in which such district is located.

(b) No municipality shall receive a grant pursuant to subsection (a) of this section which, when added to the amount of the grant payable to such municipality pursuant to subsection (b) of section [12-19a] 1 of this act, would exceed one hundred per cent of the property taxes which would have been paid with respect to all state-owned real property, except for the exemption applicable to such property, on the assessment list in such municipality for the assessment date two years prior to the commencement of the state fiscal year in which such grants are payable, except that, notwithstanding the provisions of said subsection (a), no municipality shall receive a grant pursuant to said subsection which is less than one thousand six hundred sixty-seven dollars.

(c) Twenty million one hundred twenty-three thousand nine hundred sixteen dollars of the moneys available in the Mashantucket Pequot and Mohegan Fund established by section 3-55i shall be paid to municipalities eligible for a state grant in lieu of taxes pursuant to subsection (b) of section [12-20a] 1 of this act, in addition to [and in the same proportion as] the grants payable to such municipalities pursuant to section [12-20a] 1 of this act, subject to the provisions of subsection (d) of this section. Such grant shall be equal to that paid to the municipality pursuant to this section for the fiscal year commencing July 1, 2014. Any eligible special services district shall receive a portion of the grant payable under this subsection to the town in which such district is located. The portion payable to any such district under this subsection shall be the amount of the grant to the town under this subsection which results from application of the district mill rate to exempt property in the district.

(d) Notwithstanding the provisions of subsection (c) of this section, no municipality shall receive a grant pursuant to said subsection which, when added to the amount of the grant payable to such municipality pursuant to subsection (b) of section [12-20a] 1 of this act, would exceed one hundred per cent of the property taxes which, except for any exemption applicable to any private nonprofit institution of higher education, nonprofit general hospital facility or freestanding chronic disease hospital under the provisions of section 12-8, would have been paid with respect to such exempt real property on the assessment list in such municipality for the assessment date two years prior to the commencement of the state fiscal year in which such grants are payable.

Sec. 10. Subsection (g) of section 4b-38 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(g) Notwithstanding the provisions of this section, the board of trustees of a constituent unit of the state system of higher education may lease land or buildings, or both, and facilities under the control and supervision of such board when such land, buildings or facilities are otherwise not used or needed for use by the constituent unit and such action seems desirable to produce income or is otherwise in the public interest, provided the Treasurer has determined that such action will not affect the status of any tax-exempt obligations issued or to be issued by the state of Connecticut. Upon executing any such lease, said board shall forward a copy to the assessor or board of assessors of the municipality in which the leased property is located. The proceeds from any lease or rental agreement pursuant to this subsection shall be retained by the constituent unit. Any land so leased for private use and the buildings and appurtenances thereon shall be subject to local assessment and taxation annually in the name of the lessee, assignee or sublessee, whichever has immediate right to occupancy of such land or building, by the town wherein situated as of the assessment day of such town next following the date of leasing. Such land and the buildings and appurtenances thereon shall not be included as property of the constituent unit for the purpose of computing a grant in lieu of taxes pursuant to section [12-19a] 1 of this act provided, if such property is leased to an organization which, if the property were owned by or held in trust for such organization would not be liable for taxes with respect to such property under section 12-81, such organization shall be entitled to exemption from property taxes as the lessee under such lease, and the portion of such property exempted and leased to such organization shall be eligible for a grant in lieu of taxes pursuant to [said] section [12-19a] 1 of this act.

Sec. 11. Section 4b-39 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

Land, buildings or facilities leased pursuant to section 4b-35 and section 4b-36 shall be exempt from municipal taxation. The value of such land, buildings or facilities shall be used for computation of grants in lieu of taxes pursuant to section [12-19a] 1 of this act.

Sec. 12. Section 4b-46 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

On and after July 1, 1995, any property which is subject to an agreement entered into by the Commissioner of Administrative Services for the purchase of such property through a long-term financing contract shall be exempt from taxation by the municipality in which such property is located, during the term of such contract. The assessed valuation of such property shall be included with the assessed valuation of state-owned land and buildings for purposes of determining the state grant in lieu of taxes under the provisions of section [12-19a] 1 of this act.

Sec. 13. Section 10a-90 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

The Board of Trustees for the Connecticut State University System, with the approval of the Governor and the Secretary of the Office of Policy and Management, may lease state-owned land under its care, custody or control to private developers for construction of dormitory buildings, provided such developers agree to lease such buildings to such board of trustees with an option to purchase and provided further that any such agreement to lease is subject to the provisions of section 4b-23, prior to the making of the original lease by the board of trustees. The plans for such buildings shall be subject to approval of such board, the Commissioner of Administrative Services and the State Properties Review Board and such leases shall be for the periods and upon such terms and conditions as the Commissioner of Administrative Services determines, and such buildings, while privately owned, shall be subject to taxation by the town in which they are located. The Board of Trustees for the Connecticut State University System may also deed, transfer or lease state-owned land under its care, custody or control to the State of Connecticut Health and Educational Facilities Authority for financing or refinancing the planning, development, acquisition and construction and equipping of dormitory buildings and student housing facilities and to lease or sublease such dormitory buildings or student housing facilities and authorize the execution of financing leases of land, interests therein, buildings and fixtures in order to secure obligations to repay any loan from the State of Connecticut Health and Educational Facilities Authority from the proceeds of bonds issued thereby pursuant to the provisions of chapter 187 made by the authority to finance or refinance the planning, development, acquisition and construction of dormitory buildings. Any such financing lease shall not be subject to the provisions of section 4b-23 and the plans for such dormitories shall be subject only to the approval of the board. Such financing leases shall be for such periods and upon such terms and conditions that the board shall determine. Any state property so leased shall not be subject to local assessment and taxation and such state property shall be included as property of the Connecticut State University System for the purpose of computing a grant in lieu of taxes pursuant to section [12-19a] 1 of this act.

Sec. 14. Subsection (b) of section 10a-91 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(b) Any land so leased to a private developer for rental housing or commercial establishments and the buildings and appurtenances thereon shall be subject to local assessment and taxation annually in the name of the lessee, assignee or sublessee, whichever has immediate right to occupancy of such land or building, by the town wherein situated as of the assessment day of such town next following the date of leasing. Such land shall not be included as property of the Connecticut State University System for the purpose of computing a grant in lieu of taxes pursuant to section [12-19a] 1 of this act.

Sec. 15. Section 15-101dd of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

Whenever any lessee is required to pay property taxes under this chapter, the assessed valuation of such property subject to the interest of the lessee shall not be included in the annual list of assessed values of state-owned real property in such town as prepared for purposes of state grants in accordance with section [12-19a] 1 of this act and the amount of grant to such town under [said] section [12-19a] 1 of this act shall be determined without consideration of such assessed value.

Sec. 16. Subsection (c) of section 22-26jj of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(c) The commissioner may lease all or part of one property acquired by him under this section as part of a demonstration project, in accordance with subsection (d) of this section, provided such project is approved by the Secretary of the Office of Policy and Management. Such property may be leased to one or more agricultural users for a period not to exceed five years. Such lease may be renewed for periods not to exceed five years. Any property leased under such demonstration project shall be exempt from taxation by the municipality in which the property is located. The assessed valuation of the property shall be included with the assessed valuation of state-owned land and buildings for purposes of determining the state's grant in lieu of taxes under the provisions of section [12-19a] 1 of this act.

Sec. 17. Subsection (c) of section 22-26oo of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(c) The Commissioner of Agriculture may lease, permit or license all or part of said farm to one or more persons for the purpose of engaging in agriculture, as defined in section 1-1. Any such lease, permit or license shall be for a period not to exceed fifteen years and shall contain, as a condition thereof, compliance with the provisions of the permanent conservation easement granted pursuant to subsection (b) of this section. Any such lease, permit or license may be renewed for a period not to exceed fifteen years. Any property leased, permitted or licensed pursuant to this subsection shall be exempt from taxation by the municipality in which said property is located. The assessed valuation of said property shall be included in the assessed valuation of state-owned land and buildings for purposes of determining the state's grant in lieu of taxes pursuant to the provisions of section [12-19a] 1 of this act. Any such lease, permit or license shall be subject to the review and approval of the State Properties Review Board. The State Properties Review Board shall complete a review of each lease, permit or license not later than thirty days after receipt of a proposed lease, permit or license from the Commissioner of Agriculture.

Sec. 18. Section 22a-282 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

The Materials Innovation and Recycling Authority, notwithstanding the provisions of subsection (b) of section 22a-208a concerning the right of any local body to regulate, through zoning, land usage for solid waste disposal and section 22a-276, may use and operate as a solid waste disposal area, pursuant to a permit issued under sections 22a-208, 22a-208a and 22a-430, any real property owned by said authority on or before May 11, 1984, any portion of which has been operated as a solid waste disposal area, and the authority shall not be subject to regulation by any such body, except that the authority shall pay to the municipality in which such property is located one dollar per ton of unprocessed solid waste received from outside of such municipality and disposed of at the solid waste disposal area by the authority. Any payment shall be in addition to any other agreement between the municipality and the authority. The provisions of section [12-19a] 1 of this act shall not be construed to apply to any such real property.

Sec. 19. Section 23-30 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

The Commissioner of Energy and Environmental Protection may, for the purposes specified in section 23-29, lease, for a period of not less than ninety-nine years, any lands within the state, title to which has been acquired by the resettlement administration or other agency of the government of the United States, provided the form of such lease shall be approved by the Attorney General. Said commissioner may enter into cooperative agreements with any branch of the government of the United States regarding the custody, management and use of lands so leased. All lands leased under this section shall, for the purposes of taxation, be considered as owned by the state, and the towns in which such lands are situated shall receive from the state grants in lieu of taxes thereon, as provided in section [12-19a] 1 of this act.

Sec. 20. Section 32-610 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

The exercise of the powers granted by section 32-602 constitute the performance of an essential governmental function and the Capital Region Development Authority shall not be required to pay any taxes or assessments upon or in respect of the convention center or the convention center project, as defined in section 32-600, levied by any municipality or political subdivision or special district having taxing powers of the state and such project and the principal and interest of any bonds and notes issued under the provisions of section 32-607, their transfer and the income therefrom, including revenues derived from the sale thereof, shall at all times be free from taxation of every kind by the state of Connecticut or under its authority, except for estate or succession taxes but the interest on such bonds and notes shall be included in the computation of any excise or franchise tax. Notwithstanding the foregoing, the convention center and the related parking facilities owned by the authority shall be deemed to be state-owned real property for purposes of sections [12-19a and] 12-19b, as amended by this act, and 1 of this act and the state shall make grants in lieu of taxes with respect to the convention center and such related parking facilities to the municipality in which the convention center and such related parking facilities are located as otherwise provided in [said] sections [12-19a and] 12-19b, as amended by this act, and 1 of this act.

Sec. 21. Subsections (a) and (b) of section 32-666 of the general statutes are repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(a) Any land on the Adriaen's Landing site leased by the secretary for purposes of site acquisition for an initial term of at least ninety-nine years shall, while such lease remains in effect, be deemed to be state-owned real property for purposes of sections [12-19a and] 12-19b, as amended by this act, and 1 of this act and subdivision (2) of section 12-81 and the state shall make grants in lieu of taxes with respect to such land to the municipality in which the same is located as otherwise provided in sections [12-19a and] 12-19b, as amended by this act, and 1 of this act.

(b) Any land that comprises a private development district designated pursuant to section 32-600 and all improvements on or to such land shall, while such designation continues, be deemed to be state-owned real property for purposes of sections [12-19a and] 12-19b, as amended by this act, and 1 of this act and subdivision (2) of section 12-81, and the state shall make grants in lieu of taxes with respect to such land and improvements to the municipality in which the same is located as otherwise provided in sections [12-19a and] 12-19b, as amended by this act, and 1 of this act. Section 32-666a shall not be applicable to any such land or improvements while designated as part of the private development district.

Sec. 22. Subsection (a) of section 12-62m of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(a) If real property eligible for a grant or for reimbursement of a property tax or a portion thereof under the provisions of [sections 12-19a] section 1 of this act, 12-20b, as amended by this act, [and] or 12-129p, or any other provision of the general statutes, is located in a town that (1) elected to phase in assessment increases pursuant to section 12-62a of the general statutes, revision of 1958, revised to January 1, 2005, with respect to a revaluation effective on or before October 1, 2005, or (2) elects to phase in assessment increases pursuant to section 12-62c with respect to a revaluation effective on or after October 1, 2006, the assessed valuation of said property as reported to the Secretary of the Office of Policy and Management shall reflect the gradual increase in assessment applicable to comparable taxable real property for the same assessment year.

Sec. 23. (NEW) (Effective October 1, 2015, and applicable to assessment years commencing on or after October 1, 2015) For the assessment year commencing October 1, 2015, and each assessment year thereafter, each municipality shall tax motor vehicles in accordance with this section. Commencing with said assessment year, the municipal mill rate for motor vehicles shall not exceed 29.36 mills and any municipality may establish a mill rate for motor vehicles that is different from the municipality's mill rate for real property to comply with the provisions of this section.

Sec. 24. Section 4-66l of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2015):

(a) For the purposes of this section:

(1) "FY 15 mill rate" means the mill rate a municipality uses during the fiscal year ending June 30, 2015;

(2) "Mill rate" means the mill rate a municipality uses to calculate tax bills for motor vehicles;

(3) "Municipality" means any town, city, consolidated town and city or consolidated town and borough;

(4) "Municipal spending" means:

(5) "Per capita distribution" means:

(6) "Pro rata distribution" means:

(7) "Regional council of governments" means any such council organized under the provisions of sections 4-124i to 4-124p, inclusive;

(8) "Town population" means the number of persons in a municipality according to the most recent estimate of the Department of Public Health;

(9) "Total state population" means the number of persons in this state according to the most recent estimate published by the Department of Public Health;

(10) "Weighted mill rate" means a municipality's FY 15 mill rate divided by the average of every municipality's FY 15 mill rate;

(11) "Weighted mill rate calculation" means per capita distribution multiplied by a municipality's weighted mill rate; and

(12) "Sales tax revenue" means the revenue deposited into the municipal revenue sharing account each year.

[(a)] (b) There is established an account to be known as the "municipal revenue sharing account" which shall be a separate, nonlapsing account within the General Fund. The account shall contain any moneys required by law to be deposited in the account. [Moneys] Ninety per cent of the moneys in the account shall be expended by the Secretary of the Office of Policy and Management for the purposes of grants established pursuant to [subsections (b) and (c)] subsection (d) of this section. The secretary shall distribute the remaining ten per cent of funds to regional councils of governments on a per capita basis, as determined by the most recent population estimate of the Department of Public Health.

[(b) (1) The secretary shall provide manufacturing transition grants to municipalities in an amount equal to the amount each municipality received from the state as payments in lieu of taxes pursuant to sections 12-94b, 12-94c, 12-94f and 12-94g of the general statutes, revision of 1958, revised to January 1, 2011, for the fiscal year ending June 30, 2011. Such grant payments shall be made in quarterly allotments, payable on November fifteenth, February fifteenth, May fifteenth and August fifteenth. The total amount of the grant payment is as follows:

(2) The amount of the grant payable to each municipality in any year in accordance with this subsection shall be reduced proportionately in the event that the total of such grants in such year exceeds the amount available in the municipal revenue sharing account established pursuant to subsection (a) of this section with respect to such year.

(3) Notwithstanding any provision of the general statutes, any municipality that, prior to June 30, 2011, was overpaid under the program set forth in section 12-94b of the general statutes, revision of 1958, revised to January 1, 2011, shall have such overpayments deducted from any grant payable pursuant to this section.

(4) Notwithstanding any provision of the general statutes, not later than August 15, 2012, a payment shall be made to the town of Ledyard in the amount of $39,411 and to the town of Montville in the amount of $62,954. Such payments shall be in addition to any other payments said towns may receive from the municipal revenue sharing account pursuant to this subsection.

(c) If there are moneys available in the municipal revenue sharing account after all grants are made pursuant to subsection (b) of this section, the secretary shall distribute the remaining funds as follows: (1) Fifty per cent of such funds shall be distributed to municipalities on a per capita basis, as determined by the most recent federal decennial census, and (2) fifty per cent shall be distributed in accordance with the formula in subsection (e) of section 3-55j using population information from the most recent federal decennial census, the 2007 equalized net grand list and 1999 per capita income.]

(c) No bill which, if passed, would reduce or eliminate the amount of any deposit to the municipal revenue sharing account, as set forth in this section, shall be enacted by the General Assembly without an affirmative vote of at least three-fifths of the members of the joint standing committee of the General Assembly having cognizance of matters relating to appropriations and the budgets of state agencies and at least three-fifths of the members of the joint standing committee of the General Assembly having cognizance of matters relating to state finance, revenue and bonding.

(d) For the fiscal year ending June 30, 2017, and each fiscal year thereafter, each town shall receive an equalization grant as follows:

(1) (A) A municipality having a mill rate at or above twenty-five shall receive the per capita distribution or pro rata distribution, whichever is higher for such municipality. (B) Such grants shall be increased as follows:

(C) Provided further that Hartford shall receive no more than 5.2 per cent of the equalization grants distributed pursuant to this subsection; Bridgeport shall receive no more than 4.5 per cent of the equalization grants distributed pursuant to this subsection; New Haven shall receive no more than 2.0 per cent of the equalization grants distributed pursuant to this subsection and Stamford shall receive no more than 2.8 per cent of the equalization grants distributed pursuant to this subsection. Any excess funds remaining after such reductions in payments to Hartford, Bridgeport, New Haven and Stamford shall be distributed to all other municipalities having a mill rate at or above twenty-five on a pro rata basis according to the payment they receive pursuant to this subdivision; and

(2) A municipality having a mill rate below twenty-five shall receive the per capita distribution or pro rata distribution, whichever is less for such municipality.

(e) For the fiscal year ending June 30, 2018, and each fiscal year thereafter, the amount of the grant payable to a municipality in any year in accordance with subsection (d) of this section shall be reduced if municipal spending in such municipality increases by 2.5 per cent or more or the rate of inflation, whichever is greater. Municipal spending shall not include spending for debt service.

(f) The amount of the grant payable to a municipality in any year in accordance with subsection (d) of this section shall be reduced proportionately in the event that the total of such grants in such year exceeds the amount available in the municipal revenue sharing account established pursuant to subsection (b) of this section.

Sec. 25. Section 12-122a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2015, and applicable to assessment years commencing on or after October 1, 2015):

Any municipality which has more than one taxing district may by a majority vote of its legislative body set a uniform city-wide mill rate for taxation of motor vehicles, except that if the charter of such municipality provides that any mill rate for property tax purposes shall be set by the board of finance of such municipality, such uniform city-wide mill rate may be set by a majority vote of such board of finance. No uniform city-wide mill rate may exceed the amount set forth in section 23 of this act.

Sec. 26. (NEW) (Effective October 1, 2015, and applicable to assessment years commencing on or after October 1, 2015) The following terms, when used in this section and sections 27 to 30, inclusive, of this act have the following meanings, unless the context otherwise requires:

(1) "Administrative auditor" means the person selected pursuant to section 29 of this act;

(2) "Average fiscal capacity" means the assessed value of all real property in all municipalities within the planning region combined, including property eligible for grants pursuant to section 1 of this act and sections 12-19a and 12-20a of the general statutes, as amended by this act, divided by the total population of all municipalities of the region combined;

(3) "Base year" means the assessment year commencing October 1, 2013;

(4) "Commercial and industrial property" means (A) real property used for the sale of goods or services, including, but not limited to, nonresidential living accommodations, dining establishments, motor vehicle services, warehouses and distribution facilities, retail services, banks, office buildings, multipurpose buildings wherein one or more occupations are conducted, commercial condominiums for retail or wholesale use, recreation facilities, entertainment facilities, airports, hotels and motels, and (B) real property used for production and fabrication of durable and nondurable man-made goods from raw materials or compounded parts. Commercial and industrial property includes the lot or land on which a building is situated and accessory improvements located thereon, including, but not limited to, pavement and storage buildings. Commercial and industrial property does not include real property located in an enterprise zone;

(5) "Increase from base year" means the total assessed value of all commercial and industrial property within a municipality for the current year less the total assessed value of all commercial and industrial property within a municipality for the base year;

(6) "Municipality" means any town, city, borough, consolidated town and city or consolidated town and borough;

(7) "Municipal base value" means the total assessed value of commercial and industrial property within a municipality for the base year;

(8) "Municipal commercial industrial mill rate" means:

(9) "Municipal contribution to the area-wide tax base" means:

(10) "Municipal fiscal capacity" means the assessed value of all real property within a municipality, including property eligible for grants pursuant to section 1 of this act, and sections 12-19a and 12-20a of the general statutes, as amended by this act, divided by the population of such municipality;

(11) "Municipal distribution index" means:

(12) "Planning region" means a planning region of the state as defined or redefined by the Secretary of the Office of Policy and Management, or his or her designee, under the provisions of section 16a-4a of the general statutes;

(13) "Population" means the number of persons residing in a municipality according to the most recent federal decennial census, except that, in intervening years between such censuses, "population" means the number of persons according to the most recent estimate made, pursuant to section 19a-2a of the general statutes, by the Department of Public Health, with patients and inmates of state hospitals, institutions of correction, and other state institutions excluded;

(14) "Regional council of governments" means any such council organized under the provisions of sections 4-124i to 4-124p, inclusive, of the general statutes;

(15) "Regional mill rate" means the average mill rate of all municipalities within its respective planning region as of January first as calculated by the administrative auditor for such planning region and verified by the Secretary of the Office of Policy and Management; and

(16) "Total value" means the total assessed value of commercial and industrial property within a municipality for the current assessment year.

Sec. 27. (NEW) (Effective October 1, 2015, and applicable to assessment years commencing on or after October 1, 2015) There is established an optional regional property tax base revenue sharing system. To establish such revenue sharing system within a planning region the members of its regional council of governments must unanimously vote to participate therein. On and after January 1, 2017, the tax collector of each municipality within a planning region participating in such revenue sharing system shall remit its municipal contribution to the area-wide tax base, not later than February first, annually, to the administrative auditor for the planning region in which such municipality is located. The administrative auditor shall distribute such revenue to each municipality within the planning region pursuant to section 30 of this act.

Sec. 28. (NEW) (Effective October 1, 2015, and applicable to assessment years commencing on or after October 1, 2015) Notwithstanding any provision of any general statute, public act or special act, municipalities located within a planning region participating in the regional property tax base revenue sharing system shall use such municipality's municipal commercial industrial mill rate to determine the amount of taxes imposed on commercial and industrial property within such municipality, unless there is no increase from the base year, in which case the municipal mill rate shall be used.

Sec. 29. (NEW) (Effective October 1, 2015) (a) On or before August 1, 2016, and each even-numbered year thereafter, the regional council of governments for each planning region participating in the regional property tax base revenue sharing system shall meet and elect from among their number one member to serve as administrative auditor for a period of two years and until a successor is elected. If a majority is unable to agree upon a person to serve as administrative auditor, the Secretary of the Office of Policy and Management shall appoint one member from among the council's members. If the administrative auditor ceases to serve as a member within the planning region during the term for which elected or appointed, a successor shall be chosen in the same manner as provided in this subsection for the original selection, to serve for the unexpired term.

(b) The administrative auditor shall utilize the staff and facilities of the planning region. The planning region shall be reimbursed for the marginal expenses incurred by its staff by contribution from each other municipality in the planning region in an amount which bears the same proportion of the total expenses as the population of such municipality bears to the total population of the planning region. The administrative auditor shall annually, on or before February first, certify the amount of total expenses for the preceding calendar year, and the share of each municipality, to the treasurer or other fiscal officer of each municipality within the planning region. Payment shall be made by the treasurer or other fiscal officer of each municipality to the treasurer or other fiscal officer of the planning region on or before the succeeding March first.

Sec. 30. (NEW) (Effective October 1, 2015, and applicable to assessment years commencing on or after October 1, 2015) The administrative auditor of each planning region participating in the regional property tax base revenue sharing system shall distribute the moneys remitted to such auditor pursuant to section 27 of this act to each municipality on or before March first, annually, in an amount which bears the same proportion as such municipality's municipal distribution index bears to the total of all municipal distribution indices within such planning region. The revenue distributed to a municipality under this section shall be used by a municipality in the same manner and for the same purposes as the proceeds from taxes on real property levied by the municipality.

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact:

Note: GF=General Fund

Municipal Impact:

Explanation

The bill 1) changes the reimbursement rates, and the basis for determining those rates, for the State Property PILOT and College & Hospital PILOT grant programs; 2) caps the motor vehicle mill rate at 29.36; 3) distributes a portion of sales tax revenue to municipalities; and 4) establishes an optional commercial property tax revenue sharing system for regional councils of government. Below is a description of the fiscal impact of each section:

Changes to PILOT grants

The revenue gain to municipalities associated with this portion of the bill in FY 17 (the first year it takes effect) will vary based on grand list and mill rate data that municipalities have not yet finalized. The revenue gain is anticipated to be significant. As an illustration, the revenue gain in FY 16, if this bill were effective then, would be $63.6 million. In FY 15, the revenue gain would have been $45.3 million.

Costs in the out years will vary based on continued changes in municipal grand lists and mill rates. As municipal mill rates and grand lists tend to increase over time, costs in FY 17 and in the out years could be significantly higher than the cost in FY 16.

The bill freezes at FY 15 levels the portion of each town's Pequot grant that is dependent on its State Property PILOT and College & Hospital PILOT payments. This precludes any changes in a town's Pequot grant that would result from changes to either of its PILOT grant payments.

Motor Vehicle Tax Cap

The bill caps each town's motor vehicle mill rate at 29.36. If this cap had been in place in FY 14, it is anticipated that 57 municipalities would have lost approximately $82.6 million in revenue.

Sales Tax Distribution

sSB 946 diverts a portion of sales tax revenue ($289.8 million in FY 16 and $402.7 million in FY 17)¹ to the Municipal Revenue Sharing Account. sSB 1 distributes that revenue to municipalities and regional councils of government, beginning in FY 17.

Due to the timing of payments, this results in a FY 17 revenue gain of $260.8 million to municipalities and $29.0 million to regional councils of government. In FY 18, it is estimated that municipalities will receive $362.5 million and regional councils of government will receive $40.3 million.

Beginning in FY 18, The bill requires that the grant a municipality receives under this provision of the bill be reduced in the event that municipal spending growth exceeds 2.5%, or inflation (whichever is greater) based on the two prior years.

Grand List Growth Sharing

The bill allows each regional council of government (COG) to establish a property tax base sharing program under which its member municipalities share property tax revenues generated by the growth in their commercial and industrial property tax bases.

Under the bill's provisions, towns would remit a payment to their COGs equal to 20% (or less) of net commercial and industrial grand list growth, divided by 1,000, and multiplied by the regional mill rate. For example, if a participating town's commercial and industrial grand list grew by $1 million, it could remit a payment of up to $6,000 to its COG (assuming a regional mill rate of 30).

The bill then establishes a formula for calculating the municipal commercial and industrial mill rate (for any participating municipality). The mill rate is intended to raise enough revenue to offset the payment to the COG.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to changes in municipal grand lists and mill rates.

OLR Bill Analysis

sSB 1

AN ACT CONCERNING TAX FAIRNESS AND ECONOMIC DEVELOPMENT.

SUMMARY:

This bill authorizes several initiatives to strengthen municipalities' fiscal capacity and minimize disparities resulting from the property tax on motor vehicles.

The bill restructures the state's payment in lieu of taxes (PILOT) programs by establishing minimum annual payments and a method for disbursing PILOT grants when appropriations are not enough to fund the full grant amounts. It also modifies the distribution formulas for the Mashantucket and Mohegan Fund grants that are currently linked to the state's PILOT grants.

The bill establishes a mechanism for sharing state sales and use tax revenue in the Municipal Revenue Sharing Account (MRSA) with municipalities and the state's nine regional councils of government (COGs). It apportions 90% of the revenue to municipalities according to the formulas it specifies and 10% to the COGs on a per capita basis.

The bill authorizes a regional property tax base revenue sharing program for municipalities within a planning region (see BACKGROUND) to share up to 20% of the property tax revenue generated on specified commercial and industrial (C&I) property. The bill requires a COG's member municipalities to unanimously agree to participate in the program in order to implement it. Those that do must (1) tax C&I property at a composite mill rate, based in part on the average mill rate in their regions, and (2) share up to 20% of the property tax revenue generated by the growth in their C&I property tax bases since 2013.

Lastly, beginning with the 2015 assessment year (for taxes to be paid in FY 17), the bill allows municipalities to tax motor vehicles at a different rate than other taxable property, but caps the motor vehicle rate at 29.36.

EFFECTIVE DATE: July 1, 2016, unless otherwise noted below.

§§ 1-22 — PILOT PROGRAM

The bill restructures the state's PILOT programs, requiring municipalities to receive minimum annual grant amounts equal to the amounts they received in FY 15. It maintains the existing PILOT reimbursement rate schedule, but establishes minimum reimbursement rates for a subset of PILOT-eligible properties that apply when the appropriation for the grants is not enough to fully fund them.

Eligible Property and Reimbursement Rates (§§ 1-6)

By law, the state makes annual PILOT payments to municipalities to reimburse them for a part of the revenue loss from (1) state-owned property, Indian reservation and trust land, and municipally owned airports (“state, municipal, and tribal property”) and (2) private nonprofit college and hospital property (“college and hospital property”). Under current law, these PILOTs are based on (1) a specified percentage of taxes that each municipality would otherwise collect on the property and (2) the amount the state appropriates for the payments.

Beginning in FY 17, the bill sunsets the current PILOT programs and requires all PILOTs to be paid under a new consolidated program that establishes a minimum grant amount. The new program reimburses municipalities for the same types of property, at the same reimbursement rates, using the same application and payment process as the current program. As under current law, the rate is (1) 45% for state-owned property, (2) 77% for college and hospital property, and (3) between 45% and 100% for other specified properties (see BACKGROUND).

The bill also retains the following PILOTs for municipalities that host specified properties or institutions:

1. $100,000 to Branford for Connecticut Hospice,

2. $1 million to New London for the U.S. Coast Guard Academy, and

3. an additional $60,000 to Voluntown for state-owned forest land.

Eligible Municipalities (§ 1)

Under current law, only towns and boroughs are eligible for state, municipal, and tribal property PILOTs. The bill conforms the law to current practice by extending such PILOTs to cities, consolidated towns and cities, and consolidated towns and boroughs.

As under existing law, the bill provides college and hospital property PILOTs to towns, boroughs, cities, consolidated towns and cities, and consolidated towns and boroughs, and village, fire, sewer, or combination fire and sewer districts, and other municipal organizations authorized to levy and collect taxes.

Prorated Grant Amounts (§ 1)

Under current law, the PILOTs are proportionately reduced if the amount appropriated is not enough to fund the full amount to every municipality. The bill maintains this requirement, but adds two mitigating features. It requires each municipality to receive PILOTs that equal or exceed their total FY 15 PILOTs. It also establishes a minimum reimbursement rate for specific types of PILOT-eligible property, based on a municipality's mill rate. PILOTs for all other eligible properties must be proportionately reduced, as under current law. In either case, each municipality must receive PILOTs that equal or exceed the amount they received in FY 15.

Minimum Reimbursement Rate. The bill establishes a minimum reimbursement rate for PILOTs on (1) state-owned property (i.e., the category of state-owned property reimbursed at 45%); (2) private, nonprofit colleges and universities; (3) nonprofit general and chronic disease hospitals; and (4) certain urgent care facilities (see BACKGROUND).

Under the bill, the Office of Policy and Management (OPM) must rank each municipality based on (1) its mill rate and (2) the percentage of tax-exempt property on its grand list, excluding correctional and juvenile detention facilities and municipally-owned property (other than municipal airports). OPM must give boroughs and districts the same rankings as the municipalities in which they are located.

The bill sets a minimum reimbursement rate for municipalities based on this ranking, as shown in Table 1.

Table 1: Minimum PILOT Reimbursement Rates

Under the bill, the grants must be increased proportionately if the amount appropriated for the grants is not enough to fully fund them, but exceeds the amount necessary to fund the minimum reimbursement rates shown above.

Reporting Requirement (§ 1)

The bill requires OPM, beginning by July 1, 2017, to annually report for four years to the Finance, Revenue and Bonding Committee on the PILOTs and include its recommendations for changes.

Mashantucket Pequot and Mohegan Fund Distribution (§ 9)

Current law annually allocates a portion of the Mashantucket Pequot and Mohegan Fund to municipalities according to distribution formulas that are linked to the state, municipal, and tribal property and college and hospital property PILOTs ($20,000,000 and $20,123,916, respectively). The bill instead sets each municipality's distribution of the funds equal to the amount they received in FY 15. It also makes a conforming change to reflect the bill's PILOT provisions.

EFFECTIVE DATE: July 1, 2016, except that the provisions sunsetting the current PILOT programs are effective July 1, 2015.

§§ 23 & 25 — MOTOR VEHICLE PROPERTY TAX MILL RATES

Beginning with the October 1, 2015 grand list, the bill allows municipalities to tax motor vehicles at a different rate than other taxable property, but caps the motor vehicle rate at 29.36. (Municipalities annually assess all property for taxes on October 1 and begin taxing the property on the following July 1, when the new fiscal year begins.) It makes a conforming change to a provision allowing municipalities with more than one taxing district to set a uniform citywide mill rate for taxing motor vehicles.

EFFECTIVE DATE: October 1, 2015, and applicable to assessment years beginning on or after that date.

§ 24 — MUNICIPAL REVENUE SHARING ACCOUNT (MRSA) DISTRIBUTIONS

sSB 946, reported favorably by the Finance, Revenue and Bonding Committee, directs a portion of sales tax revenue to MRSA (see BACKGROUND). Beginning October 1, 2016, this bill requires OPM to distribute that revenue to municipalities and the state's nine regional COGs. It apportions 90% of the revenue to municipalities according to the formulas it specifies (see below) and 10% to the COGs on a per capita basis. OPM must calculate the per capita grants to COGs based on the most recent Department of Public Health (DPH) population estimate.

The bill also eliminates the current process for distributing MRSA funds, which requires OPM to (1) provide manufacturing transition grants to municipalities and (2) distribute any remaining funds according to a specified municipal revenue sharing formula.

Basis for Municipal Distribution

The formula for distributing MRSA funds to municipalities depends on a municipality's motor vehicle mill rate (MVMR). As explained below, it gives more weight to municipalities with relatively high motor vehicle mill rates by setting a 25-mill threshold and basing the distribution on whether a municipality's MVMR is above or below that threshold.

Formula for Distributing Funds to Municipalities below the Threshold. OPM must calculate grant amounts for municipalities below the 25-mill threshold using the bill's per capita and pro rata formulas. A municipality's grant is the lesser of the per capita and pro rata distributions.

OPM must calculate each municipality's per capita distribution by multiplying the municipality's share of the state's total population (based on the most recent DPH estimate) by the total sales tax revenue in MRSA.

OPM must calculate each municipality's pro rata distribution using a multi-step formula, as follows:

1. First, it must calculate a municipality's “weighted mill rate,” which is its MVMR for FY 15 divided by the average FY 15 MVMR for all municipalities.

2. Next, it must multiply the municipality's weighted mill rate by its per capita distribution. (This step increases a municipality's share of the sales tax revenue if the municipality's FY 15 MVMR is greater than the statewide FY 15 MVMR average and lowers it if the MVMR is less than that average. The bill refers to the outcome of this step as the “municipal weighted mill rate calculation.”)

3. OPM must then (1) divide the municipal weighted mill rate calculation by the sum of all municipal weighted mill rate calculations and (2) multiply the result by the total sales tax revenue in MRSA, thus yielding the municipality's pro rata distribution.

Grant Formula for Municipalities At or Above the 25-mill Threshold. The formula for municipalities at or above the 25-mill threshold also begins by calculating the per capita and pro rata distributions, but OPM must select the greater of the two amounts and increase it based on a specified ratio. OPM must determine that ratio by:

1. subtracting the total pro rata grants for municipalities below the 25-mill threshold from the total per capita grants for such municipalities and

2. dividing the difference by the sum of the pro rata and per capita distributions for municipalities at or above the 25-mill threshold.

Presumably, OPM must multiply the ratio by the per capita or pro rata distribution in order to increase it.

The bill caps the grant amounts for specified municipalities. It caps Hartford's grant at 5.2% of the municipal MRSA distributions, Bridgeport's at 4.5%, New Haven's at 2.0%, and Stamford's at 2.8%. OPM must redistribute any funds remaining after determining these caps to all other municipalities with MVMRs at or above the 25-mill threshold according to the pro rata distribution formula used to determine their initial grant amounts.

Proportionate Reductions

OPM must proportionately reduce each municipality's grant if the total amount of grants for all municipalities exceeds the available MRSA funds.

Spending Penalty

Beginning in FY 18, OPM must reduce the grant amount for those municipalities whose spending (minus debt service) exceeds the bill's spending limit. Each fiscal year, OPM must determine the municipality's percentage growth in spending in the prior fiscal year (compared to the previous year) and reduce the grant by an unspecified amount if the growth rate exceeds 2.5% or the inflation rate, whichever is greater.

Reducing or Eliminating MRSA Funds

The bill imposes procedural requirements on bills to reduce or eliminate MRSA funds. Before the legislature can enact any bill that would reduce or eliminate these funds, the Appropriations and Finance, Revenue and Bonding committees must approve the bill by a three-fifths vote. It is unclear whether this provision is enforceable against future legislatures (see BACKGROUND).

EFFECTIVE DATE: October 1, 2015

§§ 26-30 — PROPERTY TAX BASE REVENUE SHARING PROGRAM

The bill authorizes COGs to establish a property tax base revenue sharing program under which the municipalities in their planning regions (1) tax C&I property at a composite mill rate, based in part on the average mill rate in their regions, and (2) share up to 20% of the property tax revenue generated by the growth in their C&I property tax bases since 2013, which the bill designates as the base year. The revenue sharing must be administered by an auditor elected by a COG's members.

The bill allows a COG to implement the program only if its member municipalities unanimously authorize it to do so. It appears that COGs must decide whether to participate by August 1, 2016.

It allows COGs to establish the program beginning with the 2015 assessment year and, for those doing so, requires municipalities to begin, on or after January 1, 2017, annually remitting revenue sharing payments by February 1, for redistribution as described below.

Mill Rate

Growth in C&I Property Tax Base. In regions implementing the revenue sharing program, the growth in a municipality's C&I property tax base must be taxed at a composite rate determined according to the following formula. Under the bill, growth in a municipality's C&I property tax base is measured as the difference between the total assessed value of its C&I property for the current year, minus the total assessed value of its C&I property for the base year (“increase from base year”).

The bill defines C&I property as real property used for:

1. selling goods or services, including nonresidential living accommodations, dining establishments, motor vehicle services, warehouses, distribution facilities, retail services, banks, office buildings, multipurpose buildings, commercial condominiums for retail or wholesale use, recreation facilities, entertainment facilities, airports, hotels, and motels; and

2. producing or fabricating durable and nondurable man-made goods from raw materials or compounded parts.

It includes the lot or land on which a building is situated and any accessory improvements, including pavement and storage buildings, but excludes any real property located in an enterprise zone.

Municipal Commercial Industrial Mill Rate. The bill requires municipalities in participating COGs that have experienced an increase in their C&I tax base from the base year to tax C&I property at a “municipal commercial industrial mill rate,” rather than their local mill rates. Municipalities that have experienced no change or a decrease in their C&I tax base since the base year must tax C&I property using their local mill rates.

The municipal commercial industrial mill rate is calculated according to a formula that incorporates the average mill rate in the municipality's planning region (“regional mill rate”) and the municipality's mill rate for the following fiscal year (i.e., the mill rate effective July 1 of the current year). Although the bill does not specify when the municipality must calculate this rate, presumably it would do so after finalizing its budget for the following year (typically in May or June).

The mill rate is determined by dividing the sum of the following three amounts by the total assessed value of the municipality's C&I property for the current assessment year:

1. the revenue sharing percentage determined by the COG (i.e., 0.2 or less) multiplied by the (a) increase from the base year and (b) regional mill rate;

2. 0.8 multiplied by the (a) increase from the base year and (b) municipal mill rate for the following fiscal year; and

3. the total assessed value of C&I property for the base year (“municipal base value”) multiplied by the municipal mill rate for the following fiscal year.

Revenue Sharing

Percentage. The municipalities in a planning region that implements the program must share a portion of the revenue generated by the growth in their C&I tax base. Each COG implementing the program must determine the revenue sharing percentage. That percentage, which must be 20% or less, is a variable in the formulas used to calculate the (1) municipal commercial industrial mill rate and (2) municipal contribution to the area-wide tax base, described below.

Municipal Contribution to the Area-Wide Tax Base. Starting January 1, 2017, each municipality in a participating COG must annually remit, by February 1, its property tax revenue sharing payment (i.e., its “municipal contribution to the area-wide tax base”) to the administrative auditor (see below). The payment is a portion of the property taxes paid on the growth in the municipality's C&I tax base since 2013, based on the regional mill rate.

The municipality must calculate the payment amount by (1) multiplying its increase from the base year by the revenue sharing percentage set by the COG, (2) dividing that number by 1000, and (3) multiplying the result by the regional mill rate.

Municipal Distribution Index. By March 1, annually, the administrative auditor must distribute the property tax revenue sharing payments according to a distribution index based on municipal fiscal capacity (“municipal distribution index”). For each municipality, the index equals the municipality's population multiplied by a ratio measuring the average fiscal capacity in the region compared to the municipality's fiscal capacity.

Specifically, the ratio's numerator is the assessed value of all real property in the planning region, including PILOT-eligible property, divided by the region's total population (“average fiscal capacity”). The denominator is the total assessed value of all real property in the municipality, including PILOT-eligible property, divided by the municipality's total population (“municipal fiscal capacity”).

The auditor must distribute the revenue sharing payments in the same proportion as the municipality's municipal distribution index bears to the total of all municipal distribution indices with the region. In other words, if the municipality's fiscal capacity is the same as the regional average, its share of the funds will be the same as its share of the region's population. If its fiscal capacity is above the regional average, its share will be smaller. If its fiscal capacity is below the regional average, its share will be larger.

Municipalities must use the revenue sharing payments in the same way and for the same purposes for which they use real property tax revenue.

Administrative Auditor

The bill requires each COG implementing the program to elect, from among its members, an administrative auditor to coordinate the property tax revenue sharing payments under the program. The COG must elect the auditor by August 1, 2016 and in succeeding even-numbered years. If a majority of the COG's members is unable to agree on a person to serve as the auditor, the OPM secretary must appoint one from among the members.

The auditor serves for two years and until the COG elects his or her successor. If he or she ceases to serve as a COG member during his or her term, a successor must be chosen to serve for the unexpired term, in the same manner in which the original auditor was chosen (i.e., by the COG or OPM secretary).

The auditor must use the planning region's staff and facilities. The COG's member municipalities must reimburse it for the marginal expenses its staff incurs. Each municipality's share of the total expenses is based on its relative share of population in the region. Annually, by February 1, the auditor must certify, to each municipality's treasurer or other fiscal officer, the amount of total expenses for the preceding calendar year and the municipality's share of the expenses. The treasurer or officer must pay such amount to the planning region's treasurer or fiscal officer by the following March 1.

EFFECTIVE DATE: October 1, 2015, and applicable to assessment years beginning on or after that date, except for the provision requiring COGs to elect an administrative auditors, which is effective October 1, 2015.

BACKGROUND

Planning Regions

By law, the OPM secretary designates the state's local planning regions. There are currently nine regions: Capitol, Greater Bridgeport, Lower CT River Valley, Naugatuck Valley, Northeastern, Northwest Hills, South Central, Southeastern, and Western.

PILOT Rates for Specific Types of Property

By law, PILOT reimbursement rates differ for specific types of properties, as shown in Table 2.

Table 2: PILOT Rates for Specified Property Types

Legislative Entrenchment

Legislative entrenchment refers to one legislature restricting a future legislature's ability to enact legislation. For example, CGS § 2-35 previously prohibited appropriations bills from containing general legislation. (This provision has since been repealed.) In Patterson v. Dempsey, 152 Conn. 431 (1965), the Connecticut Supreme Court held that this provision of CGS § 2-35 was unenforceable, writing that, “to hold otherwise would be to hold that one General Assembly could effectively control the enactment of legislation by a subsequent General Assembly. This obviously is not true, except where vested rights, protected by the constitution, have accrued under the earlier act. ”

Related Bills

sSB 946, favorably reported by the Finance, Revenue and Bonding Committee, splits the state's 6.35% sales and use tax rate into a 5.85% “state revenue tax” and 0.5% “municipal revenue tax” and directs the revenue attributed to the “municipal revenue tax” into MRSA.

sSB 1070, favorably reported by the Planning and Development Committee, (1) consolidates the state's two PILOT programs into a single program, (2) expands it to include other types of tax-exempt property, and (3) restructures the statutory formulas for the grants.

COMMITTEE ACTION

Planning and Development Committee

Joint Favorable Substitute Change of Reference

Finance, Revenue and Bonding Committee

Joint Favorable Substitute

¹ The FY 16 figure represents nine months of deposits, resulting from the timing of sSB 946. The FY 17 figure represents an annualized figure.