OLR Bill Analysis

SB 501

Emergency Certification

AN ACT ADJUSTING THE STATE BUDGET FOR THE BIENNIUM ENDING JUNE 30, 2017.

SUMMARY:

This bill modifies appropriations for FY 17 that were previously adopted in 2015 as part of the 2016-2017 biennial state budget. It also modifies the sales tax revenue diversion to the Municipal Revenue Sharing Account (MRSA) and Special Transportation Fund (STF) for FY 17 and makes various changes to the municipal grant programs currently funded through MRSA.

A full summary of the bill's budget provisions ( 1-39 & 47) may be found in the Office of Fiscal Analysis' fiscal note. A section-by-section analysis of the bill's revenue provisions ( 40-46) appears below.

EFFECTIVE DATE: Various, see below.

1-39 & 47 — BUDGET ADJUSTMENTS

Please refer to the fiscal note for an explanation of these sections.

40 — SALES TAX DIVERSION TO MRSA

The bill eliminates the sales tax revenue diversion to MRSA for FY 17. Current law requires the DRS commissioner to direct to MRSA (1) 4.7% of sales tax revenue from May 2016 through April 2017, (2) 6.3% for May and June 2017, and (3) 7.9% for July 2017 and thereafter. The bill terminates the 4.7% diversion by June 30, 2016, eliminates the 6.3% diversion, and retains the 7.9% diversion.

The bill also requires the DRS commissioner to transfer to MRSA any sales tax revenue that accrues on or after July 1, 2016 that is attributed to May through June 2016.

EFFECTIVE DATE: Upon passage

41-43 & 46 — TRANSFER OF GRANT PAYMENTS FROM MRSA TO MUNICIPAL REVENUE SHARING FUND

The bill transfers the funding source for specified municipal grant programs for FY 17 from MRSA to a new Municipal Revenue Sharing Fund. The bill establishes the fund as a separate, nonlapsing fund and appropriates $185 million in FY 17 to the fund (see 8). Under the bill, the Office of Policy and Management (OPM) secretary must use the Municipal Revenue Sharing Fund, rather than MRSA, to fund the following grant programs for FY 17:

1. municipal revenue sharing grants, as described below;

2. regional services grants to councils of governments;

3. supplemental payments in lieu of taxes (PILOTs) to specified municipalities and districts; and

4. supplemental education cost sharing (ECS) grants.

For FY 17 and each fiscal year thereafter, the bill transfers from the General Fund to the Municipal Revenue Sharing Fund the amount appropriated to OPM from the Municipal Revenue Sharing Fund. OPM must distribute the funds as specified above.

Motor Vehicle Property Tax Grants and Municipal Revenue Sharing Grants

Beginning in FY 17, current law requires OPM to use MRSA funds to distribute motor vehicle property tax grants and municipal revenue sharing grants to municipalities. For FY 17, the bill eliminates the motor vehicle property tax grants and modifies the municipal revenue sharing grant amounts. It specifies the revenue sharing grant amounts for municipalities and special taxing districts, reducing the grant amounts for most towns, and requires OPM to pay the grants by August 1, 2016. Under the bill, the revenue sharing grant amounts and payment schedule revert in FY 18 to those specified under existing law.

By law, the motor vehicle grants are limited to municipalities with mill rates, or combined municipal and district mill rates, greater than the capped motor vehicle mill rate. The bill specifies that such mill rates are those the municipalities and districts impose on real and personal property other than motor vehicles.

The bill also modifies the motor vehicle property tax grant formula for FY 18 and subsequent years. Under current law, a municipality's grant is equal to the difference between the (1) amount of property taxes a municipality and any district located there levied on motor vehicles for the 2013 assessment year and (2) amount of the 2013 levy at 32 mills in FY 17 or 29.36 mills in FY 18 and subsequent years. The bill ties the grant amount to 32 mills, rather than 29.36 mills, for FY 18 and thereafter.

Supplemental PILOT Grants

Current law establishes an additional PILOT grant for FY 17 for specified municipalities and districts, funded by MRSA funds transferred to the select PILOT account. The bill reduces the grant amounts and requires that they be funded through the Municipal Revenue Sharing Fund.

EFFECTIVE DATE: July 1, 2016, except the provision establishing the new fund is effective upon passage.

44 — FY 17 TRANSFER FROM MRSA TO GENERAL FUND

The bill requires the OPM secretary, by June 30, 2016, to transfer $22.8 million from MRSA to the General Fund for FY 17.

EFFECTIVE: Upon passage

45 — SALES TAX DIVERSION TO SPECIAL TRANSPORTATION FUND (STF)

By law, the DRS commissioner must deposit a specified percentage of sales tax revenue each month into the STF. For FY 17, the bill requires him to reduce each monthly STF deposit by $4,166,667 (i.e., $50 million in the aggregate).

EFFECTIVE DATE: July 1, 2017