OLR Bill Analysis

SB 502 (as amended by Senate "A")*

AN ACT CONCERNING REVENUE AND OTHER ITEMS TO IMPLEMENT THE BUDGET FOR THE BIENNIUM ENDING JUNE 30, 2017.

SUMMARY:

A section-by-section analysis follows.

*Senate Amendment “A” (1) eliminates provisions on an internet lottery feasibility study and hospital appeals of certain agency decisions; (2) renames the new Commission on Women, Children, and the Elderly as the Commission on Women, Children, and Seniors; (3) delays a requirement about Councils of Government (COGs) regional services grant spending; (4) adds provisions about electronic nicotine delivery systems and vapor product dealers and manufacturers; and (5) makes other minor and technical changes.

EFFECTIVE DATE: Various, see below.

1-4, 11 & 12 — CTNEXT

The bill establishes CTNext as a subsidiary of Connecticut Innovations (CI), the state's quasi-public venture capital agency. In doing so, it requires CI to take no other actions to create the subsidiary except adopting a resolution. As discussed below, the bill transfers some of CI's statutory purposes to CTNext, specifying that it is CI's successor with respect to those purposes.

CTNext's major purpose is to assist entrepreneurs and startup and growth-stage businesses (i.e., those that have been incorporated for no more than 10 years, raised private capital, and saw a 20% increase in their annual gross revenues in each of their previous three income years). CTNext must do this by:

1. fostering innovation, start-up, and growth-stage businesses, and building entrepreneur communities;

2. serving as a catalyst to protect and enhance the innovation ecosystem;

3. connecting start-up entrepreneurs and growth-stage businesses with each other and state, federal, and private resources;

4. facilitating (a) the establishment of innovation places and (b) mentoring for entrepreneurs and start-up and growth-stage businesses;

5. providing technical training and resources to start-up and growth-stage businesses and entrepreneurs; and

6. facilitating innovation and entrepreneurship at higher education institutions.

CTNext continues as long as it has outstanding obligations and until it is legally terminated. Termination does not affect any of its outstanding contractual obligations. Upon termination, (1) the state succeeds to CTNext's obligations under any contract, and (2) CTNext's rights and properties pass to and vest in CI.

CTNext is not subject to state collective bargaining laws.

CTNext Board (1)

CTNext is governed by an 11-member board of directors, most of whom must be serial entrepreneurs representing a diverse range of Connecticut's growth sectors. Under the bill, a serial entrepreneur is a person who has brought one or more start-up businesses to a point where institutional investors invested venture capital in the business. The bill does not impose the requirement applicable to other CI subsidiary boards that at least half of the members be CI employees, officers, or directors or their designees.

Board members must have education or experience in at least one of the following areas:

1. start-up and growth-stage business development,

2. investment,

3. innovation place development,

4. urban planning, and

5. technology commercialization in higher education.

Appointment and Length of Terms. Five members of the board serve initial two-year terms, and four members serve initial one-year terms. The chairpersons of the Finance, Revenue and Bonding Committee jointly appoint two of the members serving initial two-year terms; the governor, the House speaker, and Senate president pro tempore each appoint one member to serve an initial two-year term; and House and Senate majority and minority leaders each appoint one member to serve an initial one-year term. Successor members, appointed by the original appointing authorities, serve two-year terms.

The bill designates as ex officio board members CI's executive director and the economic and community development commissioner.

Board members are eligible for reappointment, and the original appointing authority fills any vacancy for the balance of an unexpired term. The appointing authority may remove, for misfeasance, malfeasance, willful neglect of duty, or failure to attend three consecutive board meetings, any member it appoints.

Reimbursement and Conflicts of Interest. Board members are reimbursed for the actual and necessary expenses they incur performing their official duties. They are public officials and may engage in private employment or in a profession or business, subject to applicable state laws, rules, and regulations on ethics and conflict of interest. The bill exempts board members from filing statements of financial interests (CGS 1-83).

It does not constitute a conflict of interest for a trustee, director, partner, or officer of any person, firm, or corporation or any individual with a financial interest in a person, firm, or corporation to serve on the board, provided such trustee, director, partner, officer, or individual complies with the State Code of Ethics. Among other things, this means that members must abstain from taking official action on a matter if they have a substantial conflict of interest.

By law, directors, officers, and employees of quasi-public agencies, including CI and their subsidiaries, are generally not personally liable for the debts, obligations, or liabilities of the agency, and such agencies must generally protect, save harmless, and indemnify them from financial loss and expense arising from claims against the agency (CGS 1-125 and 32-11e(e)).

Officers, Meetings, and Quorum. The board's chairperson is CI's chief executive officer. Initial appointments to the board must be made by September 1, 2016, and the chairperson must schedule the board's first meeting, which must be held by October 15, 2016. The board must meet at least quarterly and at other times the chairperson deems necessary.

A majority of members then seated constitute a quorum to transact business and exercise any power. Except as the bill provides otherwise, the board may act by a majority of the members present at any meeting at which there is a quorum. A board member may not, in his or her absence, designate a representative to perform his or her official duties under the bill.

Executive Director. The chairperson, with board approval, must appoint an executive director to supervise CTNext's administrative affairs and technical activities as the board directs. The executive director is a CTNext employee and receives a salary set by the board.

CTNext Powers and Duties ( 2, 11, & 12)

General Administrative Powers. The bill gives CTNext many of the general powers and duties of state quasi-public agencies. It specifically allows CTNext to do the following:

1. employ assistants, agents, and other employees, who are not state employees;

2. establish necessary and appropriate personnel practices and policies, including hiring, promotion, compensation, retirement, and collective bargaining policies, which may align with CI's but do not have to align with the state's;

3. engage consultants, attorneys, and appraisers to fulfill its purposes;

4. receive and accept grants or contributions from any source to fulfill its purposes, subject to the source's terms and conditions;

5. enter into contracts and agreements to execute its powers and fulfill its purposes, including contracts for professional services;

6. insure its property, assets, and employees;

7. audit its funds and those of the parties it funds;

8. measure and evaluate the administration and performance of CTNext's performance; and

9. establish advisory committees to help fulfill CTNext's duties.

Powers and Duties Specific to Innovation and Entrepreneurship. The bill assigns the following powers and duties to CTNext to:

1. encourage younger generation start-up entrepreneurs to stay in Connecticut,

2. promote entrepreneurship at Connecticut public and independent institutions of higher education, and

3. do all things necessary to carry out its purposes and execute its powers.

The other powers and duties the bill assigns to CTNext are narrower. CTNext may:

1. counsel and assist start-up and growth-stage entrepreneurs with preparing business plans and managing, financing, and marketing their businesses;

2. hold workshops, seminars, and conferences on business topics with other organizations, including municipalities, chambers of commerce, higher education institutions, and small business development organizations;

3. facilitate partnerships between innovative start-up and growth-stage businesses and research institutions and venture capitalists or financial institutions;

4. increase the capital supply for entrepreneurs and start-up and growth-stage businesses, including capital supplied by angel investors and venture capitalists;

5. award higher education entrepreneurship grants the Higher Education Entrepreneurship Advisory Committee recommends (28);

6. establish a program providing grants to businesses that have transitioned from the startup to growth stages;

7. connect entrepreneurs in innovation places to municipal and state resources geared toward helping them comply with regulations; and

8. award planning grants to entities seeking designation as an innovation place, as long as the entities demonstrate that the proposed place meets the innovation place program's purposes (see 5-9).

The bill gives certain CI powers to CTNext, allowing both entities to exercise them. These shared powers are:

1. promoting technology-based development in Connecticut;

2. encouraging and promoting the establishment of advanced technology centers and, within available resources, providing financial assistance to them;

3. promoting and encouraging the coordination of public and private resources and activities in Connecticut aimed at helping technology-based entrepreneurs and business enterprises;

4. promoting science, engineering, mathematics, and other disciplines necessary for developing and applying technology;

5. coordinating efforts with existing business outreach centers;

6. providing financial aid to people developing smart buildings, incubator facilities, or other offices and laboratories that rely heavily on information technology; and

7. advising several state officials on science, engineering, and technology matters that may affect (1) state policies, programs, employers, and residents and (2) the state's efforts to create and retain jobs.

Those officials are the governor, legislators, the economic and community development commissioner, the University of Connecticut president, and the Board of Regents for Higher Education president. (The University of Connecticut president is not included among the officials CI must advise about science, engineering, and technology matters.)

The bill also transfers the following CI powers to CTNext:

1. maintaining an inventory of information on state and federal programs and serving as a clearinghouse and referral service for such information;

2. promoting and encouraging the establishment, maintenance, and operation of incubator facilities and, within available resources, providing financial assistance to them; and

3. coordinating the development and implementation of strategies regarding technology-based talent and innovation among state and quasi-public agencies, which include creating and administering the Connecticut Small Business Innovation Research Office to provide information and technical assistance to businesses seeking to participate in the federal small business research and development programs.

Although the bill transfers power to create and administer the office, it requires CI to fund it.

CTNext and CI may jointly exercise these powers until September 1, 2016, after which only CTNext may exercise them.

Specific Powers and Duties Given to the CTNext. The bill requires CTNext to designate innovation places (see 5-8) and develop a plan to support entrepreneurial research and develop entrepreneurial talent by strengthening the relationships between the state's businesses and institutions of higher education.

Informational Website. CTNext must also (1) create an informational Internet website that offers information and services of value to entrepreneurs and (2) publicize the website and other workshops, seminars, and conferences CT Next offers. (In practice, CI maintains a website called CTNext that provides similar information.) The website must:

1. list services, programs, and events aimed at entrepreneurs;

2. function as an online community for entrepreneurs;

3. list entrepreneurial and innovation-related research projects that professors at higher education institutions are undertaking;

4. provide information about college and university innovation and entrepreneurial programs, including those related to engineering, computer science, and bioscience; and

5. connect businesses seeking to buy Connecticut-made products for their business inputs.

Marketing. CTNext must also annually develop, update, and implement a strategic statewide plan for promoting Connecticut as a hub for innovation and entrepreneurship. CTNext's executive director must report on the plan to the Commerce and Finance, Revenue and Bonding committees by February 1, 2017 and annually thereafter.

CTNext Written Policies and Procedures ( 3)

The CTNext board must adopt written procedures, according to the laws that quasi-public agencies follow, for the following:

1. adopting an annual budget and operations plan, including requiring the board to approve these items before they take effect;

2. hiring, dismissing, promoting, and compensating CTNext employees, which may be consistent with CI's procedures, as long as they (a) include an affirmative action policy and (b) require the board to approve new positions or filling vacant ones;

3. acquiring personal property and personal services, including a requirement that the board approve any non-budgeted expenditure above a board-determined amount;

4. contracting for financial, legal, and professional services, including a requirement that CTNext solicit proposals at least once every three years for the services it uses;

5. awarding grants and other financial assistance, including specifying eligibility criteria, the application process, and the roles of CTNext staff and board;

6. using surplus funds, to the extent allowed under the bill and the law; and

7. disclosing conflicts of interests at board meetings.

CTNext Fund ( 4)

The bill establishes the CTNext Fund as a nonlapsing fund outside the General Fund and requires CI to administer it. The fund must contain any money the law requires and any contributions, gifts, grants, donations, bequests, or devises from any public or private source.

CI may invest the fund's money in any institution it chooses, and these institutions must invest or pay that money as CI directs. CI may tap the fund, with approval by the CTNext board, to (1) make grants for the specified purposes or (2) fund other purposes the law specifies.

Under the bill, the CTNext's board must approve individual and budgeted expenditures under the conditions it established when it approved the budget.

CI must administer the fund and provide any staff, office space, office systems, and administrative support needed to operate it. CI can do so by using all of its statutory powers but must obtain the board's approval before it can spend funds.

Starting January 1, 2017, CI must annually prepare an operations plan and operating and capital budget for the fund and submit it to the board for review and approval at least 90 days before the fiscal year begins.

Starting April 15, 2017, CI must also submit an annual report on the fund's activities to the board for review and approval. The report must provide available information on fund's status and operations, including information on the grants it awarded. After the board approves the report, it must submit the report to the Commerce and Finance, Revenue and Bonding committees.

EFFECTIVE DATE: Upon passage, except the provisions transferring CI powers to CTNext take effect September 1, 2016.

5-9 — INNOVATION PLACE PROGRAM

The bill establishes, within CTNext, an innovation place program to foster innovation and entrepreneurship in compact, mixed use geographic areas with start-ups, “growth stage businesses,” “anchor institutions,” and access to public transit. Under the bill, an “anchor institution” is an entity having a significant and stable presence in the community, including an institution of higher education, hospital, major corporation, research institution, or business incubator or accelerator. A “growth stage businesses” is a business that (1) has been incorporated for up to 10 years, (2) has raised private capital, and (3) whose annual gross revenue has increased by 20 percent for each of the three preceding income years. “Public transit” means the New Haven rail line (including the Danbury, Waterbury, and New Canaan branch lines), the Shore Line East rail line, the New Haven-Hartford-Springfield rail line, and the New Britain to Hartford busway and any planned expansion of the busway.

Under the bill, entities such as corporations, associations, nonprofit organizations, municipalities, and institutions of higher education may submit applications for the designation of an innovation place. The bill (1) establishes eligibility and selection criteria and (2) specifies the information an application must include. Among other things, an application must outline a plan for developing the place and leveraging private investment. Grants are available to (1) entities preparing such applications (planning grants) and (2) successful applicants.

The bill also authorizes the CTNext board to initiate, or provide grants to entities for, projects that network innovation places with one another.

The bill requires the CTNext board to report by September 30, 2017 and annually for three years thereafter to the Commerce and Finance, Revenue and Bonding committees on the operation and effectiveness of the innovation place program and grants distributed under it.

EFFECTIVE DATE: July 1, 2016, except the provision requiring DECD and CI to publicize and post on their websites certain information is effective upon passage.

Program's Purposes

Under the bill, the purpose of the innovation place program is to:

1. foster innovation and entrepreneurship by facilitating the designation and establishment of innovation places consisting of at least one compact geographic area within the same municipality having entrepreneurial and innovation potential where (a) existing anchor institutions, companies, institutions, and recreational spaces are in close proximity to start-up and growth stage businesses; (b) public transit is accessible; (c) a significant portion of the underlying zoning allows for mixed-use development; and (d) foot traffic is promoted;

2. identify, designate, and fund the initial costs associated with developing an innovation place;

3. encourage collaboration among higher education institutions, medical institutions, hospitals, existing companies, start-up and growth stage businesses, researchers, and investors;

4. encourage the leveraging of private investment in innovation places;

5. connect entrepreneurs who are facing similar opportunities and challenges with other entrepreneurs and with private and public resources.

Applying for Planning Grants

The bill authorizes the CTNext board to award planning grants to entities preparing an application for innovation place designation. By July 1, 2016, CI must post on its website a planning grant application form it prescribes (the section with this requirement takes effect on July 1, 2016). Applicants must submit the application to the CTNext board.

Planning grant applicants must apply by October 1, 2016. The board may extend this deadline by up to 60 days. The CTNext board must award grants by November 15, 2016.

Planning grants cannot exceed $50,000 and must be proportionate to the anticipated grants for designated innovation places (see below). The bill does not specify these proportions. In the aggregate, planning grants cannot exceed $500,000.

Applying for Innovation Place Designation

The bill requires the CTNext board to screen all submitted applications for innovation place designation and select several finalists. It specifies the required application contents and the criteria by which the board must judge them.

Notice and Deadlines. Applications for innovation place designation are due by April 1, 2017.

The bill requires the CTNext board to publicize and post on its website the deadline by which entities must submit an application for innovation place designation. It also requires DECD and CI to publicize and post on their websites, by July 1, 2016, the (1) application deadline for innovation place designation and (2) portion of the bill setting forth definitions related to the innovation place program, the program's purposes, and the application and review process.

Application Contents. Applicants must submit an application on a board-prescribed form and include with it information on the proposed innovation place, including (1) a plan for its development (“Master plan,” see below), (2) a list of municipal and state legislative action that may be required to execute the plan, and (3) information concerning the capability of the applicant and its partners to implement and administer the plan and how such partners will be involved in the plan's implementation.

The application must also include information on:

1. the proposed place's conformity with the program's purposes;

2. the place's geographical boundaries (including a map) and walkability;

3. at least two anchor institutions in the place and how they will participate in its development and activities;

4. existing and proposed transportation-related infrastructure in and around the place;

5. existing and proposed businesses, recreational facilities, public parks, and other public or private gathering spaces in the place; and

6. the proposal's consistency with the State Plan of Conservation and Development.

The application must also include letters of support from (1) private investors and (2) the chief elected official of the affected municipality. The latter letter must include a statement that the municipality's legislative body has, by majority vote, indicated its support for the proposed place and for any municipal legislative action recommended in the place plan. A chief elected official may submit a letter of support for only one proposed place in his or her municipality.

Master Plan. As noted above, the application must include a master plan outlining the applicant's plans for developing the place. The plan must include a proposal for connecting the place to public transit via rail or bus and leveraging private investment. It must also establish a proposed budget and timeline for spending grant money awarded by the CTNext board. The budget must indicate spending priorities should grants be insufficient to cover the entire proposed budget.

Applicants may include in their submitted plan (a) letters of support from community members and (b) plans for the following initiatives:

1. attracting and directing support to start-up businesses and attracting anchor institutions;

2. developing, in collaboration with private partners, a business incubator, co-working space, business accelerator, or public meeting space;

3. events, community building, marketing, and outreach; and

4. open space improvement, housing development, bicycle paths, and improved technology infrastructure, including broadband.

Application Approval

The CTNext board must approve applications and designate such applications as innovation places. The board may condition its approval on modifications agreed to by the applicant. The board may not approve an application that does not meet the program's purposes.

Minimum Requirements. The bill prohibits the board from approving an application for innovation place designation unless:

1. it is is consistent with the program's purposes;

2. a significant portion of the place is in an area zoned for mixed uses or mixed use zoning is proposed;

3. it was prepared in collaboration with the local chamber of commerce or other industry association and the affected municipality's economic development department, or similar authority; and

4. it is supported by the affected municipality's legislative body, as demonstrated by a majority vote of the body.

Other Criteria. In determining whether to approve an application for innovation place designation, the CTNext board must consider whether the entities partnering together to implement and administer the proposed master plan are of the quality, and have demonstrated the commitment, to implement and administer the master plan in a manner sufficient to achieve the program's purposes. The board must give preference to applicants with (1) diverse partners (including anchor institutions); (2) partnerships with entities located within the proposed place; and (3) substantial private funding for expenses associated with the proposed place's development, in relation to the amount of grants requested.

The board must generally consider whether the plan is sufficient to achieve the program's purposes and specifically consider whether the plan leverages private investment and includes the following:

1. proposed boundaries that are sufficiently compact to achieve the program's purposes;

2. sufficient measures to (a) ensure walkability within the place and (b) enhance regular interpersonal interactions among the place's residents, workers, and visitors;

3. adequate and accessible public transportation; and

4. existing or proposed restaurants, affordable housing options, and indoor or outdoor retail and public spaces providing an adequate opportunity for interpersonal interaction.

The board must also consider whether the (1) place will be self-sustaining after it spends any CTNext grants and (2) place's underlying zoning provides for, or will be amended to provide for, dwellings with reduced square footage.

The bill authorizes the board to consider any other criteria it determines are relevant for evaluating whether the proposed place will achieve the program's purposes.

Finalists. The CTNext board must conduct a site walk of each finalist's proposed innovation place and hold a public hearing on each finalist's application in the affected municipality. The board's chairperson must give at least 10 days' notice of the hearing. The notice must include the hearing's time and place and be posted (1) in a conspicuous place in or near the town clerk's office and (2) on the municipality's website, if available.

At the public hearing, the applicant must present its proposal, and the public must be given an opportunity to comment. Applicants may revise their applications based on public hearing comments.

Grants to Successful Innovation Place Applicants

The board may award grants to successful applicants, within available funding. Before awarding a grant, the board must enter into an agreement with the grantee (1) concerning allowable grant expenses and (2) requiring an annual financial audit of grant expenditures prepared by an independent auditor. The board must also confirm that (1) a significant portion of the underlying zoning of the proposed place allows for mixed-use development and (2) no portion of the grant goes to an entity that is not part of the place's master plan.

If a grantee uses grants for expenses other than those specified in the agreement, the board may require the grantee to repay the misused amounts.

10 & 16 — EARMARKED BOND FUNDS

The bill earmarks a total of $90 million in previously authorized Manufacturing Assistance Act (MAA) and CI bond funds for CTNext and other purposes, as shown below in Tables 1 and 2.

Table 1: Bonds Earmarked for CTNext

Authorization

Amount (in Millions)

Total

Purpose

FY 17

FY 18

FY 19

FY 20

FY 21

10 (b)(4)

MAA

$4.9

$4.9

$4.9

$9.9

$4.9

$29.5

Innovation Places Program

(up to $3 million for projects that network innovation places) ( 5-9)

16 (b)(5)

CI

2.0

2.0

--

--

--

10

Higher Education entrepreneurship grants (see 28)

10 (b)(5)

MAA

--

--

2.0

2.0

2.0

10 (b)(8)

MAA

0.45

0.45

0.45

0.45

0.45

2.25

Grants to growth-stage companies (see 2)

16 (b)(2)

CI

5.0

5.0

5.0

5.0

5.0

25

CTNext's purposes

16 (b)(3)

CI

--

--

--

--

--

0.5*

Grant to a policy institute or other research institution for program evaluation (see 25)

*Earmark is effective on passage

Table 2: Bonds Earmarked for Other Purposes

Authorization

Amount (in Millions)

Total

To

Purpose

FY 17

FY 18

FY 19

FY 20

FY 21

10 (b)(6)

MAA

$2

$2

$2

$2

$2

$10

DECD

Technology Talent Advisory Committee (see 23)

10 (b)(7)

MAA

0.25

0.25

0.25

0.25

0.25

1.25

DECD

Grant to the Connecticut Supplier Connection

10 (b)(7)

MAA

0.30.

0.30

0.30

0.30

0.30

1.5

DECD

Grant to the Connecticut Procurement Technical Assistance Program

16 (b)(4)

CI

--

--

--

--

--

10*

CI

Investments in Later Stage Companies (see 11)

*Earmark is effective upon passage

EFFECTIVE DATE: Upon passage

11, 13 & 22 — CI CHANGES

Location of CI Offices (11)

As a quasi-public agency, CI has broad powers to acquire and dispose of real property. The bill requires CI to consider (1) relocating its main office (Rocky Hill) to an innovation place designated under the bill and (2) establishing one or more satellite offices in one or more such places.

EFFECTIVE DATE: September 1, 2016

Private Equity Fund Investment ( 11 & 22)

CI's General Powers. The bill authorizes CI to (1) invest its unrestricted funds in private equity investment funds, or funds of funds, and (2) enter into related limited partnership agreements or other contractual arrangements with the investment funds. The investment funds may be organized and managed and invested in businesses in- or out-of-state, as long as the funds' investment objectives and criteria are consistent with policies adopted by CI's board of directors. Under the bill, the policies must require an investment fund to invest at least as much money as CI invested in the fund, discounting reasonable management fees and closing costs, to support the (1) growth of technology, bioscience, or precision manufacturing businesses or (2) relocation of these businesses to Connecticut.

EFFECTIVE DATE: September 1, 2016

Connecticut Bioscience Innovation Fund (CBIF). Under existing law, the CBIF advisory committee provides CBIF financial assistance directly to eligible recipients. Under the bill, the committee may additionally provide financial assistance indirectly to eligible recipients by investing in private equity investment funds, including those organized, managed, and investing in businesses in- or out-of-state.

The bill requires the committee to adopt guidelines for providing CBIF financial assistance through private equity investment funds. The guidelines must require any fund that receives a CBIF investment to invest an amount equal to or higher than the CBIF investment, discounting reasonable management fees and closing costs, in Connecticut entities that qualify for CBIF assistance.

EFFECTIVE DATE: July 1, 2016

Investments by State Residents. The bill authorizes CI to create a program to solicit investments from state residents and invest the funding they receive into a private investment fund as the bill allows. CI may only invest these funds in venture capital firms with offices in Connecticut.

EFFECTIVE DATE: September 1, 2016

Capital and Other Incentives for Relocating Later-Stage Businesses ( 11)

The bill authorizes CI to invest, under certain conditions, in certain out-of-state, later-stage businesses, as long as they relocate to Connecticut. Specifically, CI may invest in businesses (1) incorporated for 10 years or less, (2) that have raised private capital, and (3) whose revenue has increased by 20% in each of the previous three years (i.e., growth-stage companies). CI cannot invest more than (1) $5 million in a single venture capital funding round of a business; (2) 50% of the total amount the business raises in the funding round; and (3) $10 million in these companies, total.

Under the bill, CI may create, using its unrestricted funds, to create financial incentives to encourage growth-stage companies and out-of-state venture capital firms to relocate to Connecticut. It may do so only if it has made an investment in the growth stage company or investing in the firm's funds as a limited partner.

EFFECTIVE DATE: September 1, 2016

CI Venture Investments (13)

The bill requires CI to enter into venture capital agreements, investment agreements, and other similar agreements with one or private investor partners, except those agreements involving the Connecticut Bioscience Fund or a winner of CI's annual business competition (i.e., Venture Clash).

By law, CI invests its funds in people and businesses in Connecticut that research, develop, or apply specific technologies, procedures, services, and techniques. In exchange, CI receives rights to product or inventions, a share of the proceeds from their sale, or equity in the business that makes the product or provides the service. The equity can be in the form of common and preferred stocks (CGS 32-39 (2)). CI makes these investments by entering into venture agreements with a person or business.

EFFECTIVE DATE: Upon passage

14 — CI PERFORMANCE AUDIT

The bill requires CI to undergo a performance audit and submit it to the Commerce and Finance, Revenue and Bonding committees by December 1, 2016. CI must have an independent accounting or management consulting firm conduct the audit, which must include recommendations as to:

1. whether CI's staffing levels are appropriate;

2. CI's performance, based on performance measures the firm chooses; and

3. CI's compensation levels.

The firm must base its recommendations about CI's compensation on an analysis of compensation policies at private investment firms, recommend changes that would maximize the performance of CI's employees in a way that allows CI to achieve its statutory purpose.

By January 15, 2017, CI must submit a report to the Commerce and Finance, Revenue and Bonding committees summarizing its response to the audit report.

EFFECTIVE DATE: Upon passage

15 — DECD LOAN FORGIVENESS FOR BUSINESS MENTORS

The bill allows the DECD commissioner to forgive a portion of state financial assistance awarded to technology-based businesses that mentor other businesses through CTNext's mentorship network. The commissioner must base the forgiveness on the amount of hours the business spends mentoring another business.

EFFECTIVE DATE: Upon passage

17 — PRIORITY FOR SMALL BUSINESS EXPRESS (EXP) PROGRAM

DECD's EXP program provides grants, loans, and other forms of financial assistance to eligible businesses with fewer than 100 employees. Under current law, the DECD commissioner (1) must give priority to businesses that create jobs and (2) may give priority to those that (a) materially affect the state's economy (i.e., economic base businesses) or (b) are attempting to export their products and services to foreign markets. Under the bill, she may additionally, give priority to businesses located in innovation places CT Next designates under the bill.

EFFECTIVE DATE: October 1, 2016

18 — FIRST FIVE PLUS PROGRAM

Extensions

The bill extends the First Five Plus program's sunset date by three years, from June 30, 2016 to June 30, 2019, and increases the maximum number of business development projects DECD can fund under the program from 15 to 20. The program combines financial assistance and tax incentives under existing programs for projects that create jobs and make capital investments within the law's timeframes. Projects qualify for First Five Plus assistance if they can (1) create at least 200 new jobs within 24 months after the commissioner approved assistance or (2) invest at least $25 million and create at least 200 new jobs within five years after the commissioner approves the assistance.

First Five Plus Preferences

The bill expands the types of projects to which the DECD commissioner may give preference for First Five Plus assistance to those:

1. located in the state's 25 distressed municipalities, which the commissioner annually determines based on social and economic criteria (see BACKGROUND) or

2. that are part of an industry that the state's strategic economic development plan targets for assistance.

(The state's 2015 plan targets for priority investment health care, bioscience, insurance and financial services, advanced manufacturing, digital media, tourism, and green technologies industries.)

The bill changes the criteria under which the commissioner may give preference to projects involving the relocation of jobs to Connecticut. Under current law, she may give preference to projects involving the relocation of jobs from outside the United States, regardless of the types of jobs being relocated. The bill, instead allows her to give preference to projects involving the relocation of job from anywhere as long as they involve research, invention, or innovation.

By law, the commissioner may also give preference to projects involving:

1. the relocation of an out-of-state or international manufacturer or corporate headquarters or

2. redevelopment projects she believes will create jobs sooner than expected under the program's timeframes.

Deadline Extensions

The bill makes conforming changes aligning certain expiration dates to the bill's extension of First Five Plus's sunset date. It extends, from FY 17 through FY 20, the time during which the commissioner can use Manufacturing Assistance Act Program funds to fund First Five Plus projects without adhering to its funding limits (i.e., up to 90% funding for projects in municipalities with enterprise zones (currently 17) and up to 50% in the other municipalities).

The bill extends, from FY 17 through FY 20, the time during which First Five Plus projects are exempt from the thresholds requiring legislative approval for financial assistance or urban and industrial reinvestment tax credits for large-scale economic development projects.

The bill also extends, for the same period, the time during which the commissioner may exempt projects financed with insurance premium tax credits from the statutory limits on the amount of credits taxpayers may claim against the insurance premium tax.

Lastly, the bill extends current law's biannual reporting requirements into 2019. Under the bill, the commissioner must submit reports to the Commerce and Finance, Revenue and Bonding committees twice a year, by January 1 and September 1 in 2017, 2018, and 2019.

EFFECTIVE DATE: July 1, 2016

19 — UCONN CENTER FOR ENTREPRENEURSHIP

The bill eliminates a requirement that the UConn Center for Entrepreneurship's accelerator program and intellectual property law clinic be located with the Connecticut Center for Advanced Technology in the Hartford Area.

EFFECTIVE DATE: July 1, 2016

20 — CONNECTICUT 500 PROJECT

Purpose

The bill establishes the Connecticut 500 Project to (1) create a net increase of 500,000 new private sector jobs over the next 25 years, (2) set and achieve the state's cornerstone economic development goals for the next generation, and (3) establish a permanent governing board authorized to take specific steps to accomplish these tasks. The project must be administered by the Commission on Economic Competitiveness.

Permanent Governing Board

Composition. The commission, in collaboration with the project's governing board, must convene and work closely with the businesses, community organizations and institutions, and government agencies to achieve the bill's goals.

By January 1, 2017, the commission must solicit bids from outside consultants with economic development expertise to develop the project. The project must include creating the governing board that includes business leaders; the chief executive officers of public companies operating in Connecticut; state and local elected officials; and other business, government, and community leaders.

Powers. To achieve the CT 500 Project's goals, the governing board must propose legislation, leverage public and private investment in Connecticut and the project, solicit funds, solicit private funds to match public dollars, evaluate economic development policies, and take other actions the board deems necessary to achieve the goals.

Project Goals

Besides creating a net increase of 500,000 new private sector jobs, the project must, at a minimum:

1. increase, within an unspecified time, the state's population by 5,000 new residents;

2. create 500 new startup businesses based on intellectual property developed in Connecticut;

3. increase, by 500, the annual number of students graduating from each state college and university;

4. place Connecticut among the top five nationally ranked states with respect to economic growth, public education, quality of life, and private sector employee salary; and

5. maintain Connecticut's top five ranking with respect to productivity, higher education, and per capita income.

The bill allows the commission to rename the project and reset the goals.

EFFECTIVE DATE: July 1, 2017

21 — COMMISSION ON ECONOMIC COMPETITIVENESS MEMBERSHIP

PA 15-5, June Special Session, established the 13-member Commission on Economic Competitiveness to assess how the state's tax policies affect business and industry and develop policies to promote economic growth. The bill adds the following 10 members to the commission, increasing its membership to 23: the chairperson of CTNext or the chairperson's designee; the chairpersons and ranking members of the Commerce and Finance, Revenue and Bonding committees or their designees; and a member appointed by the governor.

The commission's current members consist of designated and appointed members. The designated members are the revenue services and economic and community development commissioners and a Connecticut Business and Industry Association (CBIA) representative appointed by the CBIA president. As Table 3 shows, the other members are appointed by legislative leaders.

Table 3: Commission's Appointed Members under Current Law

Appointing Authority

Number of Appointments

Member Qualifications

House speaker

3

One appointee must be an executive of a publicly traded company

Senate president pro tempore

3

One appointee must be an attorney

House majority leader

1

Member of an employee advocacy group

Senate majority leader

1

Economist

House minority leader

1

Representative of a major corporation headquartered in Connecticut

Senate minority leader

1

Small business owner

EFFECTIVE DATE: Upon passage

23 — TECHNOLOGY TALENT ADVISORY COMMITTEE

The bill establishes a Technology Talent Advisory Committee within DECD to identify shortages of qualified employees in specific technology sectors and develop pilot programs to address those shortages.

Composition

The DECD commissioner determines the committee's size and appoints the members, which, at a minimum must include representatives of UConn, the Board of Regents for Higher Education, independent institutions of higher education, and private industry. The committee designates its chairperson from among the members.

Appointments and Terms

The commissioner sets the members' terms and must appoint the first members by September 30, 2016. A member continues to serve until the commissioner appoints his or her successor.

Members' Duties and Obligations

Members serve without compensation but are reimbursed for actual and necessary expenses incurred while performing their official duties.

Under the bill, it is not a conflict of interest for a committee member to be a trustee, director, or partner of any person, firm, or corporation, or to have a financial interest in these entities, as long as he or she complies with the state's code of ethics. The bill deems the members public officials and requires them to adhere to the code of ethics for such officials, but it exempts them from filing statements of financial interest.

Meetings

The commissioner must call the committee's first meeting by October 15, 2016. The committee must meet at least quarterly and at such other times the chairperson deems necessary.

Decision-Making

A majority of the members is needed for a quorum to transact business or exercise any of the committee's powers. If a quorum is present, the committee may act only by a majority of the members.

Identifying and Addressing Technology-Based Job Shortages

The bill specifies the tasks the committee must perform and the order in which it must perform them.

The committee must first calculate the number of software developers and other people who are (1) employed in technology-based fields (e.g., data mining, data analysis, or cybersecurity) where there is a shortage of qualified workers in Connecticut for businesses to hire and (2) employed by Connecticut businesses as of December 31, 2016.

After calculating these numbers, the committee must develop pilot programs to recruit software developers to Connecticut and train state residents in software development and other technology fields. The programs must aim to increase the number of workers employed in these fields by at least twice the number of software developers and other technology-based workers employed in the fields where there are shortages of software developers and workers. The programs must accomplish this goal by January 1, 2026.

Lastly, the committee must identify other technology industries where there are shortages of qualified employees for growth stage businesses to hire.

The bill allows the committee to develop pilot programs that:

1. market and publicize technology talent recruitment programs;

2. defer or forgive student loans for students who start businesses in Connecticut (it is not clear which loans the committee is authorized to defer or forgive); and

3. offer training, apprenticeship, and gap year initiatives (i.e., programs in which a graduating student takes a career-oriented position with a company or travel abroad before going to graduate school or seeking a permanent, full-time job).

Reporting

The committee must submit a report on its activities to the Commerce; Education; and Finance, Revenue and Bonding committees by January 1, 2017. The report must provide information about the (1) committee's pilot programs, (2) number of technology-based workers targeted for recruitment, and (3) timeline and measures for reaching the recruitment target.

EFFECTIVE DATE: Upon passage

24 — KNOWLEDGE CENTER ENTERPRISE ZONES

The bill authorizes the DECD commissioner to establish up to 10 knowledge center enterprise zones in the state's distressed municipalities based on proposals submitted by higher education institutions.

Proposing and Approving Zones

Under the bill, a higher education institution may submit to DECD a proposal to establish a knowledge center enterprise zone. The proposal must include the following components:

1. the proposed zone's geographic scope, including all of the census blocks incorporated in the zone, which may extend for up to a two-mile radius beyond the institution's boundaries;

2. the nature of the business and industry that will be developed in the zone;

3. how the business and industry (a) aligns with the institution's mission and (b) will collaborate with the institution to create jobs;

4. the (a) number of jobs, (b) state and local revenue loss, and (c) economic and community development anticipated from the zone's establishment; and

5. the institution's experience collaborating with businesses or planning for such collaboration.

The bill authorizes the DECD commissioner to approve a zone if she determines that (1) its economic development benefits outweigh the anticipated costs to the state and affected municipalities, (2) the proposal complies with the State Plan of Conservation and Development, and (3) it is located in one of the 25 state-designated distressed municipalities. (The most recent distressed municipalities list (2015) includes Ansonia, Bridgeport, Bristol, Derby, East Hartford, Enfield, Griswold, Hartford, Killingly, Meriden, Naugatuck, New Britain, New Haven, New London, North Canaan, Norwich, Plymouth, Preston, Putnam, Sprague, Stafford, Torrington, Waterbury, West Haven, and Windham.)

The DECD commissioner may modify the proposed zone's geographic scope to improve the balance between its anticipated economic benefit and cost to the state and affected municipalities.

Zone Benefits

Under the bill, businesses located in knowledge center enterprise zones receive the same benefits, subject to the same conditions, as those located in general enterprise zones.

By law, benefits given to businesses in enterprise zones include the following:

1. property and real estate conveyance tax exemptions and corporation business tax credits mainly for developing facilities, with the state reimbursing municipalities for a portion of the revenue loss from the property tax exemption (CGS 12-81, 12-498, & 12-217e) and

2. a 10-year corporation business tax credit for any newly formed corporations locating in the zones (CGS 12-271v).

Performance Assessment

The bill requires the DECD commissioner to assess each zone's performance at least 10 years after its establishment. It authorizes her to remove a zone's designation if it fails to meet the established goals and standards outlined in regulations.

Regulations

The bill requires the DECD commissioner to adopt regulations to implement the knowledge center enterprise zone program, including regulations on (1) reviewing and approving proposals, (2) establishing zone goals and performance standards, and (3) assessing their performance.

EFFECTIVE DATE: October 1, 2016

25 — ANALYZING INNOVATION AND ENTREPRENEURSHIP IN THE STATE

The bill requires CTNext's board of directors to award a grant of up to $500,000 to a policy institute, higher education institution, or research organization to conduct certain analyses of innovation and entrepreneurship in the state, as described below. The grantee must have significant experience in evaluating these initiatives and assessing statewide innovation and entrepreneurship performance generally.

CTNext must prescribe the manner in which such institutions or organizations may apply for the grant and include a request for proposals (RFP) to conduct the assessments, audits, and reports described below. Applicants must submit their RFPs to CTNext by January 1, 2017. The grantee must submit the assessments, audits, and reports to the CTNext board of directors and the Commerce and Finance, Revenue and Bonding committees.

Baseline Assessment of Innovation and Entrepreneurship

By June 1, 2017, and updated biennially for the subsequent four years, the grantee must conduct a baseline assessment of the state's innovation and entrepreneurship based on certain program measures, including:

1. the increase or decrease in the state's (a) start-up businesses, including growth stage start-ups; (b) software developers; and (c) serial entrepreneurs (i.e., those having brought at least one start-up business to venture capital funding by an institutional investor);

2. job growth within growth-stage businesses;

3. the amount of private venture capital invested in start-up and growth-stage businesses;

4. employee turnover at start-up and growth-stage businesses;

5. the amount of entrepreneurship and innovation research funded by higher education institutions in the state;

6. the rate at which businesses enter and leave the state; and

7. the degree to which the state's (a) hiring rate exceeds its job creation rate and (b) employment separation rate exceeds its job loss rate.

Annual Audits and Analyses

The grantee must annually audit and analyze:

1. CTNext's programs and initiatives and include (a) an analysis of whether they are enhancing the program measures described above and (b) recommendations for legislative or programmatic changes to improve the measures and increase business creation;

2. activity at UConn that encourages or discourages entrepreneurship, including (a) patenting and intellectual property licensing policies and (b) hiring of faculty with entrepreneurial experience; and

3. activity that would increase the likelihood of new business formation.

Other Analyses

The bill authorizes the grantee to conduct a one-time policy audit of, and recommend improvements to, state legislation and regulations effecting innovation and entrepreneurship in the state. It also allows the grantee to prepare a report (1) evaluating intrapreneurship models used by business organizations to stimulate creativity and innovation at such businesses; (2) detailing the models applied by the state's businesses, if any; and (3) recommending ways to promote the application of such models.

EFFECTIVE DATE: July 1, 2016

26 — PRIORITY FOR FINANCIAL ASSISTANCE FOR ENTITIES LOCATED IN DESIGNATED INNOVATION PLACES

The bill authorizes the DECD, housing, energy and environmental protection, and transportation commissioners; OPM secretary; and CHFA executive director to give priority for available financial assistance to entities located in designated innovation places if they determine that doing so furthers the innovation place program's purposes.

EFFECTIVE DATE: October 1, 2016

27 — HIGHER EDUCATION INNOVATION AND ENTREPRENEURSHIP WORKING GROUP

The bill establishes a working group to examine innovation and entrepreneurship at in-state public and private colleges and universities.

Membership

The bill requires the CTNext executive director to invite, by January 1, 2017, the president of every in-state public and private college and university to serve on the working group. Each president may send a designee to serve in his or her place.

Organization

Under the bill, the CTNext Executive Director must schedule the first working group meeting on or before February 1, 2017. The group must select two chairpersons from among its members, one of which must be from a public higher education institution and the other from a private.

CT Next must provide necessary staff, office space and systems, and administrative support for the working group.

Charge

The bill charges the working group with developing a master plan for fostering innovation and entrepreneurship at in-state public and private colleges and universities. The plan must accomplish the following:

1. assess the scope and scale of existing entrepreneurial programs and initiatives at higher education institutions in the context of best practices at state and national institutions of higher education that are leaders in innovation and entrepreneurship,

2. recommend initiatives that facilitate collaboration and cooperation among higher education institutions on projects that address and strengthen innovation and entrepreneurship at these institutions,

3. provide for the establishment of a statewide intercollegiate business plan competition,

4. identify funding priorities for higher education entrepreneurship grants-in-aid for projects (a) that expand and enhance entrepreneurial programs and initiatives or (b) involving partnerships among higher education institutions,

5. recommend programs that advance the state's innovation and entrepreneurship efforts, and

6. address opportunities and risks to innovation and entrepreneurship resulting from existing and emergent conditions affecting entrepreneurial programs and initiatives at higher education institutions.

The bill defines “existing and emergent conditions” to include the following elements:

1. trends in (a) national funding for research and entrepreneurship endeavors at higher education institutions and (b) student and faculty preferences in entrepreneurship-related collegiate programming and initiatives;

2. willingness of alumni, entrepreneurs, and local business organizations to serve as mentors to faculty and students and to provide student internships;

3. undergraduate and post-graduate student visa opportunities for recruiting international students interested in entrepreneurship; and

4. the state's need to expand and strengthen statewide innovation and entrepreneurship and new business formation.

Under the bill, “entrepreneurial programs and initiatives” include the following:

1. mentoring student entrepreneurs,

2. encouraging faculty entrepreneurship through (a) commercialization and licensing of intellectual property and (b) tenure policies,

3. entrepreneur in residence programs,

4. entrepreneurship-related courses,

5. research faculty having entrepreneurial experience,

6. on-campus (a) business incubators or accelerators and (b) events encouraging entrepreneurship and entrepreneurial community building, and

7. proof of concept support.

The working group must submit the plan to the CTNext board of directors by May 1, 2017. Within one month of receiving the plan, the board must review and approve or reject it.

If the board approves the plan, it must submit the plan to the Higher Education Entrepreneurship Advisory Committee (described in Section 28 below). If the board rejects the plan, it must submit a rejection letter and modification recommendations for the plan to the working group. Within one month of receiving the letter and recommendations, the working group must then revise the plan based on the recommendations and resubmit it to the board. The working group must continue to resubmit the plan to the board until it gains approval. The one-month timeframes for board review and plan resubmission apply for subsequent revisions.

EFFECTIVE DATE: July 1, 2016

28 — HIGHER EDUCATION ENTREPRENEURSHIP ADVISORY COMMITTEE

Duties

The advisory committee must review applications for higher education entrepreneurship grants-in-aid that higher education institutions, or a partnership of one or more institutions, submit. The committee prescribes the form for this application.

The committee may recommend approval of any application to the CTNext board of directors, if it determines that the application is consistent with or in furtherance of the master plan for entrepreneurship at public and private institutions of higher education developed by the higher education innovation and entrepreneurship working group (described above in 27). The bill requires the committee to give priority to applications that include collaborative initiatives between higher education institutions.

EFFECTIVE DATE: October 1, 2016

Membership

Under the bill, the CTNext board of directors must make initial appointments to the Higher Education Entrepreneurship Advisory Committee, which is to be located within CTNext, by June 1, 2017. The committee must include the following members:

1. an equal number of representatives from public and private higher education institutions,

2. one undergraduate student,

3. one graduate student,

4. one non-voting high school student, and

5. three serial entrepreneurs with experience as entrepreneurs in residence at a higher education institution.

The bill defines “serial entrepreneur” as an entrepreneur who brought one or more start-up businesses to venture capital funding by an institutional investor.

Under the bill, CTNext prescribes term limits for members. Each member must hold office until his or her successor is appointed. Members are not compensated for their service but are entitled to reimbursement for actual and necessary expenses they incur while performing their official duties.

All advisory committee members are deemed public officials under the bill and must adhere to the code of ethics for public officials established in state law. No member is required, however, to file a statement of financial interest with the Office of State Ethics for that portion of the year during which the member served on the advisory committee as public officials do.

Under the bill, it is not a conflict of interest for any of the following individuals to serve as a committee member, as long as they comply with the code of ethics for public officials, as applicable: a trustee, director, partner, or officer of any person, firm, or corporation, or any individual having a financial interest in a person, firm, or corporation.

Organization

The bill requires the CTNext executive director to call the first meeting of the advisory committee by June 15, 2017, at which the committee must select chairpersons. The committee must meet at least quarterly thereafter and may meet during additional times as the chairperson deems necessary. (It is unclear whether one chairperson or both must deem the additional meetings necessary.)

Under the bill, a majority of members constitute a quorum for the committee to transact any business or exercise any power. The bill allows the committee to act by a majority of members present at any meeting at which there is a quorum.

29 — GRANTS TO INNOVATION PLACE BUSINESSES

The bill requires CI to establish a program to award, on a competitive basis, grants of up to $50,000 to start-ups located in or relocating to a CI-selected municipality with one or more designated innovation places. CI must consider investing in the start-ups that receive these grants and provide them with access to (1) mentoring opportunities, (2) coworking space or business accelerators located in the municipality for one year, (3) talent acquisition services, (4) angel or venture capital networks, and (5) a community of entrepreneurs.

EFFECTIVE DATE: July 1, 2016

30 — CROWDFUNDING WEBSITE

The bill requires CTNext, beginning July 1, 2017, to establish and maintain a website that advertises Connecticut-based start-up businesses that (1) have been approved by CI to receive investments from angel investors or (2) are seeking funding on reward-based and equity-based crowdfunding websites. (“Crowdfunding” means funding a product, project, or venture by seeking small individual cash donations from a large number of people.)

CTNext must include, for each business it advertises on the website, (1) a description of the business and the product, project, or venture it is proposing and (2) links to the applicable websites and crowdfunding website associated with the business.

Under the bill, CTNext, DECD and CI must post a link on their websites' homepages to the website CTNext establishes. CTNext must advertise and promote the website with paid advertisements on other websites and by any other means CTNext determines.

EFFECTIVE DATE: July 1, 2016

31 — ASSESSING COMMERCIAL PROPERTY BASED ON NET PROFITS

Municipalities assess most real and personal property for property taxes based on a property's fair market value, but under a pilot program, up to five participating municipalities may each assess up to three commercial properties based on the net profits of their business occupants if the property's owners and tenants agree. This bill allows participating municipalities to assess all commercial property on this basis, if the owners and their tenants agree.

By law, municipalities that wish to assess commercial property based on net profits must apply to the Office of Policy and Management. Those selected for the program must adopt ordinances specifying the conditions and requirements for instituting these assessments (see BACKGROUND). Currently, no municipalities have applied to participate in the program since it was launched in 2014.

EFFECTIVE DATE: October 1, 2016

BACKGROUND — Ordinance for Assessing Commercial Property Based on Net Profits

PA 14-174 established this OPM-administered pilot program under which a municipality may, by ordinance, assess commercial property based on the net profits of the businesses that operate on it. The implementing ordinance must:

1. describe the properties eligible for this type of assessment,

2. describe how the tax rate for the net profits or anticipated net profits will be determined,

3. require agreement between the municipality and the property's owners and tenants on the assessment method before the municipality institutes it,

4. specify how property owners or tenants may apply for the program,

5. require property owners seeking this assessment method to show how it would benefit the property and the municipality, and

6. provide for a phase-out of the method and a return to an assessment based on fair market value.

32 — LOCAL ECONOMIC DEVELOPMENT PROPERTY TAX INCENTIVE

Fixing the Assessment on Newly Developed or Improved Property

By law, municipalities must assess real property for taxes based on 70% of its fair market value, which often increases after it is developed or improved. Current law sets conditions under which municipalities can exempt some or all of the increase in the fair market value of a property after it is developed or improved for various uses (i.e., fixing the assessment), thus reducing the taxes the property's owner would otherwise pay.

This bill gives municipalities more latitude to set the terms and conditions for fixing an assessment on such property by eliminating the statutory criteria for doing so. Those criteria base the exemption amount and its duration on an amount spent to develop or improve the property. Consequently, the bill allows municipalities to determine the amount and duration of the exemption and the criteria that must be met to obtain it. It allows them to provide this benefit for up to 10 years.

Eligible Uses

The law, which the bill does not change, allows municipalities to fix the assessments on property developed or improved for the following uses: offices; retail; residential and transient residential uses; manufacturing; warehouse, storage, or distribution uses; structure multilevel parking supporting a mass transit system; information technology; recreation facilities; transportation facilities; incentive housing zones; and health systems.

The bill limits municipalities' ability to fix the assessment for residential and transient residential property improvements to those with at least four units.

Criteria for Fixing Property Assessments

The bill eliminates the statutory criteria specifying the terms and conditions fixing an assessment. As Table 4 shows, the statutory criteria for fixing the assessments are based on the value of the improvement.

Table 4: Schedule for Fixing the Assessment on Improved Property Eliminated by Bill

Minimum Value of the Improvement

Percent of the Increase in Assessed Value Exempt from Taxation

Period for Fixing the Assessment

$3 million

Up to seven years

100%

$500,000

Up to two years

100%

$10,000

Up to three years

Up to 50%

Current law allows municipalities to set the terms and conditions for fixing the assessment on improved retail property if they adopt an ordinance designating an area where this benefit is available. The bill allows them to fix the assessment without having to adopt such an ordinance.

EFFECTIVE DATE: October 1, 2016 and applicable to assessment years beginning on or after that date.

33 & 34 — CONNECTICUT ARTS ENDOWMENT FUND

This bill changes the criterion for determining the amount of funds annually available in the Connecticut Arts Endowment Fund for making matching grants to arts organizations. Under current law, that amount equals the fund's investment earnings for the prior fiscal year. Under the bill, it equals the greater of the (1) prior fiscal year's investment earnings or (2) increase in the fund's market value, up to 5% of the fund's total market value.

By law, arts organizations seeking matching grants must apply to the Department of Economic and Community Development (DECD) by December 15 annually. The bill reduces, from $25,000 to $15,000, the minimum amount arts organizations must raise in a fiscal year from private donors to qualify for a state matching grant.

The law requires DECD to pro rate the grants if the total for all organizations exceeds the endowment's earnings. In these cases, the bill prohibits DECD from awarding grants for less than $500.

Endowment Funded Grants

The Connecticut Arts Endowment Fund is capitalized by bond proceeds, which the state treasurer invests to generate the funds for making the matching grants. Under current law, she must notify the DECD and the Connecticut Arts Council about the fund's total investment earnings for the prior fiscal year, and that amount is available to DECD for awarding matching grants.

Under the bill, the treasurer must notify DECD and the council about the prior fiscal year's investment earnings and the increase in the fund's market value. The total amount of funds available for the grants equals the greater of the investment earnings or the increase in the fund's market value, up to 5% of the fund's total market value.

Matching Grant Amounts

An arts organization may apply to DECD for a grant based on the amount of private contributions the organization received during the previous fiscal year. The grant amount depends on the organization's total private contributions for that year. Under current law, the organization must receive at least $25,000 during the previous fiscal year. If its contributions meet or exceed this threshold but fall short of the prior fiscal year's total private contributions, the organization qualifies for a grant equal to 25% of that total, up to $250,000. The bill reduces the threshold to $15,000.

If the organization's total private contributions for the fiscal year exceed the previous year's total and the bill's $15,000 threshold, it qualifies for a grant equal to that amount, up to $1 million.

EFFECTIVE DATE: July 1, 2016

35 — ESTATE TAX REDUCTION FOR INVESTMENTS IN CI INVESTMENT FUNDS

The bill establishes an estate tax reduction for decedents that made qualifying investments through CI's investment program for state residents (see 11).

Under the bill, decedents qualify for the deduction for amounts they invested for at least 10 years in a private investment fund or “fund of funds” through the CI program. As described above, the bill authorizes CI to create such a program to solicit investments from state residents and invest the funds in venture capital firms with offices in Connecticut.

The reduction is equal to 50% of the eligible investment, up to $5 million per decedent and $30 million total.

EFFECTIVE DATE: October 1, 2016 and applicable to estates of decedents who die on or after January 1, 2021.

36 — FAILURE TO FILE FOR MANUFACTURING MACHINERY AND EQUIPMENT PROPERTY TAX EXEMPTION

By law, certain machinery and equipment acquired on or after October 1, 2011 qualifies for the statutory property tax exemption (CGS 12-81(76)). The exemption applies to machinery and equipment used for manufacturing, including biotechnology, and taxpayers must file for it annually by November 1.

The bill allows taxpayers in Milford to claim this exemption for machinery and equipment on the 2015 grand list if they missed the November 1 mandatory filing deadline. It waives the deadline if the taxpayers file for the exemption by July 31, 2016. The Milford property tax assessor must waive any late filing fees. After verifying the property's eligibility for the exemption, the assessor must approve it. Milford must refund any taxes paid on the machinery and equipment if the taxpayer filed the application in a timely manner. (Property on the October 2015 grand list is taxed in FY 17.)

EFFECTIVE DATE: July 1, 2016

37-40 & 75 — OLD STATE HOUSE

The bill requires the Legislative Management Committee to lease or sublease the Old State House to the Department of Energy and Environmental Protection (DEEP) for $1. The lease or sublease must be coterminous with the committee's current lease with the city of Hartford. The bill requires DEEP to care for, maintain, and operate the Old State House.

The bill requires the Office of Legislative Management (OLM), on June 30, 2016, to transfer the funds in its Old State House (Private Funds) account in the General Fund to DEEP. DEEP must deposit the funds in an account called Old State House (Private Funds) and use the funds to operate and manage the Old State House.

The bill eliminates a requirement that the Legislative Management Committee require contractors and their subcontractors to pay at least $15 an hour or the standard wage rate, whichever is greater, to employees providing services at the Old State House. Existing law applies this wage requirement to services performed at the Legislative Office Building and the State Capitol. By law, DEEP contractors must pay employees the standard wage rate, as applicable. (The standard wage rate is the rate private contractors providing certain services in state buildings must pay their workers, as determined by the labor commissioner.)

EFFECTIVE DATE: July 1, 2016, except the provision transferring funds from OLM to DEEP is effective upon passage.

41 — ARBITRATOR COMPENSATION

The bill increases, from $225 to $325, the first day's compensation paid to State Board of Mediation and Arbitration arbitrators who preside over a proceeding as a three-member panel. By law, unchanged by the bill, (1) arbitrators on a panel receive $150 for each additional day of the proceeding, (2) the arbitrator who prepares the panel's written decision receives an additional $175, and (3) arbitrators who preside over proceedings individually receive $325 for the proceeding's first day and $150 for each additional day.

The bill also makes technical changes eliminating obsolete provisions.

EFFECTIVE DATE: July 1, 2016

42 — WAIVER OF PAYMENTS DUE FROM STATE-FINANCED HOUSING AUTHORITIES

The bill extends by two years the requirement that municipalities waive certain payments due from certain state-financed housing authorities.

Existing law requires tax-exempt state-financed housing authorities for moderate rental housing projects to make payments to municipalities in lieu of paying property taxes, special benefit assessments, and sewer system use charges. The law authorizes the Department of Housing (DOH) to make payments on the authorities' behalf as part of its Payment in Lieu of Taxes Subsidy Program.

PA 15-5, June Special Session ( 495) prohibits municipalities from requiring an authority to make these payments to municipalities in FY 16 if DOH made a payment on the authority's behalf in FY 15. The bill expands this prohibition for two more years, through FY 18. Under both existing law and the bill, no waiver is required if federal funds are made available for the payments.

EFFECTIVE DATE: Upon passage

43 — MEDICARE PART D PRESCRIPTION DRUG COVERAGE

For those who are eligible for full Medicaid assistance and also have Medicare Part D coverage (i.e., dually eligible), the bill requires the Department of Social Services (DSS) to pay for the portion of Medicare Part D prescription drug copayments that exceeds, in the aggregate, $17 in any month. Under current law, such beneficiaries must pay the full cost of their Medicare Part D prescription drug copayments.

EFFECTIVE DATE: October 1, 2016

44-45 — BURIAL EXPENSES FOR PUBLIC ASSISTANCE RECIPIENTS AND INDIGENT INDIVIDUALS

The bill decreases, from $1,400 to $1,200, the maximum amount DSS pays toward funeral and burial expenses for State Administered General Assistance (SAGA), Temporary Family Assistance (TFA), or State Supplement Program (SSP) recipients and certain other indigent individuals. It also limits the indigent individuals for whom DSS will pay such expenses. Currently, DSS covers funeral and burial costs up to the allotted maximum for individuals who die and either do not (1) leave a sufficient estate or (2) have a legally liable relative to cover such costs. Under the bill, DSS must pay such costs only if the decedent did not leave a sufficient estate and has no legally liable relatives to cover the costs.

Currently, the amount DSS contributes for funeral and burial costs for a deceased TFA or SSP recipient must be reduced by the (1) amount in any revocable or irrevocable funeral fund or prepaid funeral contract or (2) face value of the recipient's life insurance policy. The bill eliminates a provision that permits any person to contribute to the funeral and burial costs for such decedents without diminishing the state's obligation to pay. The bill instead requires DSS to further reduce its payment by (1) the net value of liquid assets in the decedent's estate, and (2) contributions over $3,400 towards the funeral and burial costs from all other sources, including friends, relatives, other persons, organizations, agencies, veterans' programs, and other benefits programs.

The bill also aligns the restrictions on the amount DSS must pay for SAGA recipients and indigent individuals to those discussed above for deceased TFA and SSP recipients. It does so by (1) increasing, from $3,200 to $3,400, the outside contribution amount above which DSS must reduce its payment towards funeral and burial costs and (2) requiring DSS to reduce its payment by the net value of all liquid assets in the decedent's estate.

The bill permits DSS to adopt regulations to implement these provisions.

EFFECTIVE DATE: July 1, 2016

46 — RATE FREEZES FOR RESIDENTIAL CARE HOMES, COMMUNITY LIVING ARRANGEMENTS, AND COMMUNITY COMPANION HOMES

Under the bill, regardless of rate-setting laws or regulations to the contrary, the rates the state pays to residential care homes, community living arrangements, and community companion homes that received the flat rate for residential services in FY 16 remain in effect in FY 17. State regulations permit these facilities to have their rates determined on a flat rate basis rather than individually on the basis of submitted cost reports (Conn. Agencies Reg. 17-311-54).

EFFECTIVE DATE: July 1, 2016

47-59 & 63 — AUTISM SPECTRUM DISORDER (ASD) SERVICES

The bill makes DSS, rather than the Department of Developmental Services (DDS), the lead agency for (1) coordinating state agency functions that have responsibility for ASD services and (2) purposes of the federal Combating Autism Act and applying for funding associated with ASD responsibilities. It also makes several conforming changes. Under the bill, DDS retains the authority to license community living arrangements and companion homes for individuals with ASD.

The bill shifts, from DDS to DSS, a requirement to report to the governor on any funding and legislation needed to provide necessary ASD services. It also (1) eliminates the requirement that the report be completed annually and (2) makes the Human Services Committee, instead of the Public Health Committee, a required recipient of this report and an annual report DSS currently issues on the status of a Medicaid-financed home and community-based program for certain individuals diagnosed with ASD.

Division of ASD Services

The bill moves the Division of ASD Services from DDS to DSS, but the DDS commissioner retains the authority to investigate reports alleging abuse or neglect of an individual receiving division services. It also makes several conforming changes.

The bill also allows DSS to adopt regulations defining ASD and establish eligibility standards and criteria for ASD services. Current law requires DDS to adopt such regulations, though it has not yet done so.

Starting February 1, 2017, the bill also (1) shifts from DDS to DSS a requirement to report annually on the division's activities and (2) makes the Human Services Committee, instead of the Public Health Committee, a required report recipient.

ASD Advisory Council

The bill adds the Office of Early Childhood commissioner as a 25th member to the ASD Advisory Council and designates the DSS commissioner, instead of the DDS commissioner, as a council co-chair. By law, the council advises the commissioner on autism-related matters.

The bill also requires the DSS commissioner, instead of the DDS commissioner, in collaboration with the council, to designate services and interventions that demonstrate empirical effectiveness for treating ASD.

ASD Definition

The bill specifies that ASD has the same meaning as set forth in the American Psychiatric Association's “Diagnostic and Statistical Manual of Mental Disorders" (DSM-5).

The bill makes an exception for a law pertaining to applied behavioral analysis services for students with ASD.

EFFECTIVE DATE: July 1, 2016, except for the provision that defines ASD, which is effective upon passage.

60 — DEPARTMENT OF REHABILITATION SERVICES' (DORS) EMPLOYMENT PROGRAM

By law, DORS may receive state and federal funds to administer, within available appropriations, an employment opportunities program for individuals with the most significant disabilities. Currently, the program may serve such individuals who do not meet the eligibility requirements of supported employment programs administered only by DDS and the Department of Mental Health and Addiction Services (DMHAS). The bill makes individuals with the most significant disabilities who do not meet the eligibility requirements for such DSS programs eligible. By law, “individuals with the most significant disabilities” include those who (1) have serious employment limitations in at least three functional areas or (2) require significant ongoing disability-related services on the job to maintain employment.

EFFECTIVE DATE: July 1, 2016

61 — NONUNION STATE EMPLOYEE PENSION CAP

The bill caps annual pensions at $125,000 for any nonunion members of the State Employees Retirement System (SERS) who are initially hired by the state on or after July 1, 2016, regardless of their years of vesting service or any other SERS requirements they have completed when they retire. It requires such a member's annual pension to be reduced to $125,000 if it exceeds that amount when it is calculated at the member's retirement or after a cost of living adjustment (COLA). It also prohibits such members with $125,000 annual pensions from receiving COLAs.

SERS is a defined benefit retirement plan that provides its members a fixed pension benefit determined by their tier membership (i.e., when they were hired), the number of years they worked for the state, and their final average salary. By law, the state must collectively bargain with the State Employees Bargaining Agent Coalition (SEBAC) over changes to SERS for unionized state employees.

EFFECTIVE DATE: July 1, 2016

62 — MEMBERSHIP OF SCHOOL BUILDING PROJECT REVIEW COMMITTEE

The bill expands, from eight to 12, the number of members that form the School Building Project Review Committee. It specifies that the members are the co-chairs and ranking members of the Appropriations; Finance, Revenue and Bonding; and Education committees. Under current law, the House speaker, House minority leader, Senate president pro tempore, and Senate minority leader each choose two legislators to be on the committee, but the law does not specify what committees the legislators represent.

By law, the committee must review and approve the list of eligible school building projects that the Department of Administrative Services (DAS) must submit each year by December 15 to the legislature. The list becomes the basis of the annual school building project authorization bill.

The bill eliminates the requirement that the appointments be made each year by July 1.

EFFECTIVE DATE: July 1, 2016

64 & 211 — EAST HARTFORD MAGNET SCHOOL TUITION GRANT

The bill repeals a provision designating up to $220,818 of the State Department of Education's (SDE) FY 17 magnet school appropriation to defray magnet school tuition costs charged to East Hartford.

The bill also makes permanent the provision that places a cap on the amount of tuition the East Hartford school district must pay to magnet schools if more than 7% of the district's student population attends magnet schools. The district is not responsible for the first $4,400 of tuition for any students over the 7% threshold. Under current law, the cap applies to FYs 16 and 17, and the bill extends it to FY 18 and each subsequent fiscal year. The bill also makes permanent the provision making SDE financially responsible for any loss of tuition to a magnet school, within available appropriations and subject to possible proportionate reductions if the total of the tuition recovery payments exceeds the amount appropriated for that purpose.

EFFECTIVE DATE: Upon passage

65 — ACUTE CARE AND EMERGENCY BEHAVIORAL HEALTH SERVICES GRANT PROGRAM

PA 15-5, June Special Session, established a grant program in DMHAS to provide funds to organizations providing acute care and emergency behavioral health services. The bill instead requires DMHAS to establish the program within available appropriations.

Additionally, the bill allows, rather than requires, the grants to be used for providing community-based behavioral health services, including (1) care coordination and (2) access to information on and referrals to available health care and social services programs. By law, the DMHAS commissioner must establish eligibility criteria and an application process.

EFFECTIVE DATE: July 1, 2016

66 — PRIORITIZATION FOR ADDITIONAL MAGNET SCHOOL SEATS

Current law permits SDE to limit (1) per-student grant payments to an interdistrict magnet school to an amount the school was eligible to receive based on its enrollment level on October 1, 2013 and (2) funding for additional students based on certain criteria. The bill modifies this mechanism for FY 17.

First, instead of the October 1, 2013 baseline for calculating payments, the bill allows SDE to limit payments to the amount the school was eligible to receive based on its enrollment on October 1, 2013 or October 1, 2015, whichever is lower.

Second, it eliminates some of the criteria that permits additional funding for enrollment above the baseline for (1) a school moving into a permanent facility for the school year starting July 1, 2014 and (2) new enrollments for a new magnet school starting operation on or after July 1, 2014, to help meet the 2013 Sheff stipulation on school desegregation.

The bill keeps the remaining criteria for SDE to prioritize additional magnet school funding and adds a provision for planned new grade levels for the school year starting July 1, 2015 (number 3 below). The bill provides the following priority order:

1. increases in enrollment for a school adding planned new grade levels for school years beginning July 1, 2015 and July 1, 2016;

2. increases in enrollment for a school that added planned new grade levels for school years beginning July 1, 2014 and that was funded during FY 15;

3. increases in enrollment for a school that added planned new grade levels for school years beginning July 1, 2015 and that was funded during FY 16; and

4. increases in enrollment for a school to ensure compliance with the state magnet school law's requirements for racial and economic diversity, special curriculum, and at least a half-time educational program.

The bill also allows magnet school grants to be paid to each magnet school operator as an aggregate total of the amount each operator is eligible to receive under state law. It provides that each operator may distribute the aggregate grant among its magnet schools according to a distribution plan that the education commissioner approves.

EFFECTIVE DATE: July 1, 2016

67-74 & 210 — OFFICE OF GOVERNMENTAL ACCOUNTABILITY (OGA)

By law, OGA consists of independent divisions for which it provides consolidated personnel, payroll, affirmative action, and administrative and business office functions, including information technology associated with these functions. The divisions have independent decision-making authority, including decisions on budgetary issues and employing necessary staff.

The bill removes the Office of State Ethics (OSE), State Elections Enforcement Commission (SEEC), and Freedom of Information Commission (FOIC) from OGA, thus making them each responsible for the functions listed above. It also removes the chairpersons of the Citizen's Ethics Advisory Board, SEEC, and FOIC from the Governmental Accountability Commission (GAC), thus reducing its membership to six. By law, GAC is within OGA and is responsible for (1) recommending OGA executive administrator candidates to the governor and (2) terminating the executive administrator's employment, if necessary.

Under the bill, the following six divisions remain in OGA:

1. Judicial Review Council,

2. Judicial Selection Commission,

3. Board of Firearms Permit Examiners,

4. Office of the Child Advocate,

5. Office of the Victim Advocate, and

6. State Contracting Standards Board.

The bill makes several technical and conforming changes, including requiring OSE's, SEEC's, and FOIC's executive directors, rather than the OGA executive administrator, to transmit their respective agencies' budget requests to OPM. It also repeals an obsolete provision ( 210).

EFFECTIVE DATE: July 1, 2016

76 & 77 — STATE BOARD OF ACCOUNTANCY

The bill transfers the State Board of Accountancy from the Secretary of the State's Office to the Department of Consumer Protection (DCP). The nine-member board, appointed by the governor, regulates the practice of public accountancy in the state.

In the transfer, the bill eliminates the board's ability to reimburse board members for expenses incurred performing their duties. Instead, DCP must provide office space for the board and board members must not be compensated for their services or reimbursed for necessary expenses.

The bill also eliminates the board's ability to (1) recommend personnel needed to carry out its duties and contract with such individuals and (2) appoint committees or people to advise or assist in administering or enforcing public accountancy law.

The bill makes other minor and technical changes.

EFFECTIVE DATE: July 1, 2016

78 — OFFICE OF FISCAL ANALYSIS (OFA) AND OPM ANNUAL EXPENDITURE REPORTS

By law, OFA and OPM must annually submit, by November 15, certain information on spending to the Appropriations and Finance, Revenue and Bonding committees. The bill eliminates a requirement that OFA and OPM each submit, for the current biennium and the three following fiscal years, estimates of the spending and ending balance for each fund, with the assumptions used to make the estimates. Under the bill, they must instead each report, for the same time period, (1) the level of spending changes from current year spending allowed by consensus revenue estimates in each fund, (2) any changes to current year spending necessary because of “fixed cost drivers,” and (3) the total change to current year spending required to accommodate fixed cost drivers without exceeding current revenue estimates.

Under the bill, “fixed cost drivers” may include debt service, pension contributions, retiree health care, entitlement program, and federal mandate costs.

EFFECTIVE DATE: July 1, 2016

79 — DELETED BY SENATE AMENDMENT “A”

80 — DEAF AND HARD OF HEARING INTERPRETING

The bill allows, rather than requires, DORS to provide deaf or hard of hearing interpreting services to any person or entity upon request. By law, unchanged by the bill, anyone receiving interpreting services through DORS must reimburse the agency at rates it establishes.

EFFECTIVE DATE: July 1, 2016

81 — EDUCATIONAL AID FOR BLIND CHILDREN

The bill allows, rather than requires, DORS to use funds appropriated to its Educational Aid for the Blind and Visually Handicapped Children account to provide the following for blind or visually impaired children: (1) specialized books, materials, equipment, and supplies; (2) adaptive technology services and devices; (3) specialist examinations and aids; and (4) preschool programs and vision-related independent living services, excluding primary education placement.

Under current law, DORS must spend funds appropriated to the account on these supplies, services, and programs first, before spending funds in other ways allowed by law (e.g., to pay for teaching services). The bill removes this requirement.

EFFECTIVE DATE: July 1, 2016

82 — TAX FREEZE PROGRAM REIMBURSEMENTS

The bill requires the Office of Policy and Management (OPM) to proportionately reduce reimbursements it issues to municipalities under the Tax Freeze Program if appropriations for the program are less than the amount required for full reimbursements.

Under the Tax Freeze Program (1) municipalities freeze at a specific year's level the amount of property taxes owed by certain qualified elderly homeowners and (2) OPM reimburses municipalities for the resulting lost tax revenue. The program has been closed to new applicants since 1979.

EFFECTIVE DATE: July 1, 2016

83 — RENTERS' REBATE PROGRAM GRANTS

The bill requires the OPM secretary to reduce Renters' Rebate Program grants as necessary to keep within available appropriations. If reductions must be made, such reductions must be implemented by a percentage reduction to all grants.

Under the Renters' Rebate Program, the state provides grants to qualified low-income renters who are elderly or totally disabled. Grants are based on income and rent and utility expenses.

The secretary must make this determination annually and send notice of the percentage reduction to the comptroller along with the certificates approved for payment. As under existing law, he must do this within 120 days of receiving the applications.

EFFECTIVE DATE: July 1, 2016

84 — PAYMENT IN LIEU OF TAXES (PILOT) PAYMENTS FOR TOWNS WITH CERTAIN AIRPORTS

By law, the state makes annual PILOT payments to municipalities to reimburse them for a part of the revenue loss from certain tax-exempt property. The 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.

The bill conforms law to current practice by allowing municipalities with airports owned by the Connecticut Airport Authority (other than Bradley) to receive PILOTs for such property. Current law already allows municipalities to receive PILOT payments for municipally-owned airports.

Under the bill, from January 1, 2015 through FY 16, the PILOT reimbursement rate to municipalities for such airports is 45%. By law, PILOTs are proportionately reduced if the amount appropriated is insufficient to fund the full amount of such payments to all recipients.

The bill does not makes corresponding changes to the statute on PILOT reimbursement for FY 17 and beyond (CGS 12-18b).

EFFECTIVE DATE: January 1, 2015

85-86 — TOURISM WELCOME CENTERS

Under current law, the Department of Economic and Community Development's (DECD) tourism promotion duties include maintaining, operating, and managing the state's six visitor welcome centers (Danbury, Darien, Greenwich, North Stonington, Westbrook and West Willington) and performing the following tasks:

1. providing space for listing events and promoting attractions at these centers;

2. developing, in consultation with the Department of Transportation (DOT), plans for (a) consistent signage for the centers and (b) regulating highway signage for privately operated centers;

3. establishing, with DOT, a program under which local civic organizations help maintain and operate a center (i.e., Adopt a Visitor Welcome Center program); and

4. placing a full-time year-round supervisor and a part-time assistant supervisor at the Danbury, Darien, North Stonington, and West Willington centers.

The bill requires DECD to perform these visitor welcome center duties and tasks within available appropriations.

By law, subject to available funds, DECD must (1) place a seasonal full-time supervisor and a seasonal part-time assistant at the Greenwich and Westbrook centers and (2) provide training for center supervisors.

EFFECTIVE DATE: July 1, 2016

87 — SUPPLEMENTAL MAGNET SCHOOL TRANSPORTATION GRANTS

The bill extends for FY 16, the education commissioner's authority to make supplemental magnet school transportation grants, within available appropriations, to assist Sheff stipulation school integration goals (i.e., Capitol Region Education Council) and to EASTCONN, a regional education service center. For FY 16 up to 50% of the grant is paid on or before June 30, 2016 and the remainder is paid on or before September 1, 2016 after completion of a comprehensive financial review. The review must be funded by part of the grant amount.

It also deletes obsolete language.

EFFECTIVE DATE: Upon passage

88 & 89 — HOSPITAL RATES

By law, Medicaid rates paid to acute care hospitals must be based on diagnostic-related groups (DRGs) the DSS commissioner establishes and periodically rebases after completing a fiscal analysis of the payment system's impact on each hospital. The bill specifies that the commissioner must establish and rebase the DRGs in accordance with certain federal law provisions. Such provisions generally require that payments:

1. be consistent with efficiency, economy, and quality of care;

2. be sufficient to enlist enough providers so that care and services are available under the state's Medicaid plan to the same extent they are available to the general public; and

3. safeguard against using unnecessary care and services (42 USC 1396(a)(3)(A).)

It also requires DSS, for inpatient services that are not appropriate for DRG-based reimbursement, to reimburse the hospitals using any other methodology that complies with those federal requirements.

Payments for Special Services

The bill also eliminates a requirement for the commissioner to annually establish rates for special services hospitals provide based on each hospital's reasonable cost to provide those services. It instead requires the commissioner to annually establish those rates pursuant to federal law and, as under current law, within available appropriations.

Outpatient and Emergency Department (ED) Visit Payment Rates

Current law requires DSS to adopt a payment rate system for hospital outpatient and ED visits based on the Medicare Ambulatory Payment Classification (MAPC) system with a state conversion factor. Until it does so, DSS must pay hospitals a rate established annually for each outpatient and ED visit (1) based on the reasonable cost of the services and (2) within available appropriations. The bill instead requires DSS to pay hospitals for such services at rates that comply with the federal law requirements described above and within available appropriations until it adopts a payment rate system based on an unspecified ambulatory payment classification system. It also eliminates the requirement that such rates be established annually.

Under the bill, the ambulatory payment classification system may include one or more peer groups (i.e., hospital categories such as privately operated acute care hospitals) DSS establishes. The bill makes a conforming change by eliminating a requirement that DSS augment the MAPC system to provide payment for services the system does not generally cover.

Once DSS implements the payment classification system required under the bill, a covered outpatient hospital service that is not reimbursed using the system must be paid in accordance with a fee schedule or alternative payment methodology the commissioner determines. Currently, a similar requirement is in place for outpatient hospital services that do not have an established MAPC code.

The bill allows the commissioner, within available funding for implementing the new ambulatory payment classification methodology, to establish a supplemental pool to provide payments to DPH-licensed publicly operated acute care hospitals and children's hospitals to offset losses the facilities incur because of the new classification system's implementation.

The bill allows ED physicians, concurrent with the implementation of the ambulatory payment classification methodology, to enroll separately as Medicaid providers and qualify for direct reimbursement for the professional services he or she provides to a Medicaid recipient in the ED.

Nonemergency ED Visits

The bill eliminates a requirement that DSS pay hospitals for nonemergency visits to emergency departments (EDs) at the same rate it pays for outpatient clinical services. It instead requires the commissioner to determine the rate for such visits in compliance with federal law as described above and within available appropriations until the bill's new ambulatory payment classification system is implemented.

The bill also allows, rather than requires, the DSS commissioner to (1) impose Medicaid cost-sharing requirements for nonemergency use of hospital ED services and (2) adopt regulations establishing criteria for defining emergency and nonemergency visits to hospital emergency rooms.

Permitted Hospital Rate Increases

Currently, DSS is not required to increase rates paid, or set rates to be paid, to hospitals based on inflation, including any current payments or adjustments that are being made based on service dates in previous years. The bill specifies that DSS is also not required to (1) increase or set such rates based on an inflationary factor and (2) adjust upward any hospital payment method based on inflation or an inflationary factor. Additionally, the bill prohibits DSS from increasing or adjusting upward any rates or payment methods to hospitals based on inflation or an inflationary factor unless the approved state budget includes appropriations for such increases or upward adjustments.

The bill also makes technical and conforming changes and removes obsolete provisions.

EFFECTIVE DATE: Upon passage

90-93 — JUDICIAL COMPENSATION

The bill delays by one year a scheduled 3% increase in salaries for judges and family support magistrates and per diem rates for family support referees and judge trial referees. Under the bill, the increases take effect July 1, 2017 instead of July 1, 2016.

It similarly delays a scheduled increase in the additional amounts that certain judges receive for performing administrative duties. It also delays a scheduled increase in the salary or per diem rate of certain officials whose compensation, by law, is determined in relation to a Superior Court judge's salary or state referee's per-diem rate.

EFFECTIVE DATE: Upon passage

Judicial Salaries

Table 5 shows the salaries or per diem rates affected by the bill.

Table 5: Judicial Salaries

Position

Current Salary

Salary Starting July 1, 2016 Under Current Law; Delayed to July 1, 2017 by the Bill

Supreme Court chief justice

$200,599

$206,617

Chief court administrator (if a judge)

192,763

198,545

Supreme Court associate judge

185,610

191,178

Appellate Court chief judge

183,556

189,063

Appellate Court judge

174,323

179,552

Deputy chief court administrator (if a Superior Court Judge)

171,143

176,277

Superior Court judge

167,634

172,663

Chief family support magistrate

145,936

150,314

Family support magistrate

138,893

143,060

Family support referee

217/ day*

223/ day*

Judge trial referee

251/ day*

259/ day*

*Plus expenses, mileage, and retirement pay

Administrative Judges

In addition to their annual salaries, the law provides extra compensation to judges who take on certain administrative duties. These amounts are currently scheduled to increase from $1,142 to $1,177 starting July 1, 2016. The bill delays the increase by one year, to July 1, 2017.

The judges who receive this additional amount are (1) the appellate system's administrative judge; (2) each judicial district's administrative judge; and (3) each chief administrative judge for (a) facilities, administrative appeals, the judicial marshal service, or judge trial referees, and (b) the Superior Court's Family, Juvenile, Criminal, and Civil divisions.

Related Delayed Increases

The bill's provisions also result in one-year delays for salary or rate increases for other officials or judges whose compensation is tied to those of Superior Court judges or judge trial referees. Specifically:

1. the salaries of workers' compensation commissioners vary depending on experience and are tied to those of Superior Court judges (CGS 31-277);

2. the salaries of probate court judges vary depending on probate district classification, and range from 45% to 75% of a Superior Court judge's salary (CGS 45a-95a);

3. senior judges receive the same per-diem rates as judge trial referees (CGS 51-47b & 52-434b); and

4. the probate court administrator's salary is the same as that of a Superior Court judge (CGS 45a-75).

94 — STATE AID FOR CHILD CARE CENTERS FOR DISADVANTAGED CHILDREN

Current law allows the state, through the Office of Early Childhood (OEC) commissioner, to contract with municipalities, human resource development agencies, or nonprofit corporations to develop and operate child care centers for disadvantaged children. The bill allows such contracts, which provide state grants for these purposes, to provide grants in an amount up to $8,927 for each child enrolled in the program aged three or four years, as well as for five-year-olds who are ineligible to enroll in kindergarten. Such centers must also maintain services to children under three years old.

EFFECTIVE DATE: July 1, 2016

95 — SCHOOL READINESS AND CHILD CARE FACILITY STUDY

The bill requires the OEC commissioner to submit a report to the Appropriations Committee by October 1, 2016 and quarterly thereafter, through the quarter ending December 31, 2018, about school readiness and state-funded child care facilities program capacity and utilization. Each report must include, for each program, information about the (1) number of spaces, by type, that are available and were filled and (2) rates being paid for each space type for each age group. Such information must be specific to the quarter for which each report is submitted.

EFFECTIVE DATE: July 1, 2016

96-109 & 208 — RETIREMENT SECURITY AUTHORITY

The bill makes numerous changes to PA 16-29, which creates the Connecticut Retirement Security Authority (“authority”) to establish a program for individual retirement accounts (IRAs) for eligible private-sector employees, who are automatically enrolled in the plan unless they opt out. The authority is administered by the Connecticut Retirement Security Authority Board, which the act establishes as a quasi-public authority under state law.

Among other things, the bill:

1. sets the default contribution rate at 3% of an employee's taxable wages for employees who do not select their own contribution rate ( 96);

2. expands the authority's board from nine to 15 members by adding the Office of Policy and Management (OPM) secretary, the Banking and Labor commissioners, and three additional members the governor appoints (bringing the total number appointed by the governor to four) ( 97);

3. eliminates the requirement that the General Assembly consent before the governor's choice of the chairman of the board is finalized ( 97);

4. requires that eight board members, rather than four, constitute a quorum to conduct business ( 97);

5. changes the name from “program” to “exchange”( 96);

6. authorizes the board to establish guidelines for the exchange to offer retirement investment choices from multiple vendors the authority selects ( 98);

7. requires the authority to minimize total annual fees and, beginning in year five of operation, annual fees cannot exceed 0.75% of the value of total program assets ( 100); and

8. requires the authority to establish and maintain a secure website to provide participants with information regarding approved vendors that offer IRAs through the program and the various investment options, including the investment performance history, that may be available for the IRAs ( 107).

It also makes numerous minor, technical, and conforming changes.

EFFECTIVE DATE: January 1, 2017 except the sections establishing the authority and changing the effective date of parts of PA 16-29 are upon passage, and the section requiring the website for participants is effective January 1, 2018.

Definitions ( 96)

The bill sets the default contribution rate at 3% of an employee's after tax wages when the employee does not select his or her own contribution rate. PA 16-29 allows the authority to determine a default rate up to 6%.

The bill's requirements apply to all “qualified employers,” i.e., private sector employers that employ at least five people each of whom was paid at least $5,000 in wages in the preceding calendar year. “Covered employees” are those who have worked for a qualified employer for a minimum of 120 days and are at least 19 years old.

Qualified employers must automatically enroll each covered employee in the program no later than 60 days after the employer provides the employee with informational material on the program the act requires. If the employee does not affirmatively opt in (contribution options are provided) the bill requires the employer to enroll the employee with a contribution of 3% of the employee's taxable wages (up to normal IRS limits). A covered employee may opt out of the program by electing a contribution level of zero.

Vendors

The bill modifies the two vendor definitions under the act. One requires them to be federally regulated retirement plan sponsors that include federally regulated investment companies or insurance companies. The act did not specify that they be federally regulated.

The second applies to payroll or recordkeeping businesses that also provide retirement plans or payroll deposit IRAs. The bill expands the definition to include businesses that provide ancillary services, including technological services, and offer retirement plans or payroll deposit IRA products of retirement plan sponsors.

Fees

The bill defines participant fees as investment management charges, administrative charges, investment advice charges, trading fees, marketing and sales fees, revenue sharing, broker fees and other costs necessary to administer the program.

Board of Directors ( 97)

In addition to adding the OPM secretary and the banking and labor commissioners, the bill adds three governor's appointees to the board. It specifies they must possess the following qualities:

1. one who has a favorable reputation for skill, knowledge, and experience in annuity products;

1. one who has a favorable reputation for skill, knowledge, and experience in retirement investment projects; and

2. one who has a favorable reputation of skill, knowledge and experience in actuarial science.

It also specifies that the House majority leader's appointee's favorable reputation for skill, knowledge, and experience in the interests of employers be specific to small employers. Other appointees must possess other related qualities.

The bill extends the deadline for making appointments from July 31, 2016 to January 1, 2017. The appointed members (i.e., those who are not ex officio) serve four year terms.

Under the act, the governor selects the board chairman. The bill removes the requirement that the selection is made with the advice and consent of both chambers of the legislature. It also removes the requirement for the secretary of the state to administer the oath to each member.

The bill requires eight, rather than four, members for a quorum to conduct authority business.

Retirement Security Exchange Guidelines and Fees ( 98 & 100)

The bill establishes the Connecticut Retirement Security Exchange (rather than program) to promote and enhance retirement savings for private sector employees in the state. While the act authorizes the authority board to establish criteria and guidelines for the retirement programs offered under the act, the bill specifies that the guidelines offer retirement choices provided by multiple vendors the authority selects. It also requires them to include a cap on the total annual fees and provide participants with information regarding each retirement choice's investment performance history.

The bill requires (1) the authority to minimize total annual fees that can be charged to participants and, (2) beginning in year five of operation, limits annual fees to 0.75% of the value of total program assets.

Transmitting Employee Contributions ( 102)

The bill shortens the deadline for an employer to transmit an employee's contribution after withholding it from the employee's pay.

The act requires qualified employers to transmit withheld employee contributions on the earliest day that the amount held can be segregated from the employer's assets, but no later than the 15th business day of the month following the month in which the covered employee's contribution amounts are withheld from his or her paycheck. The bill instead requires (1) transmitting the contribution on the earliest date it can be transmitted and (2) the transmittal be no more than 10 business days after the date the employee's contributions were withheld.

Program Design Features ( 103)

The act requires the authority to invest each participant's IRA in (1) an age-appropriate target date fund, (2) a vehicle designed for lifetime income investment to provide participants with a source of retirement income for life or (3) such other investment vehicles as the authority may prescribe.

The bill specifies that the investment fund must be with an investor selected by the participant, or when an employee does not affirmatively select a specific vendor or investment option within the program, the participant's contribution will be invested in an age-appropriate target date fund that most closely matches the participant's normal retirement age. In these cases, the vendor will be assigned on a rotating basis by the exchange.

110 — TWEED-NEW HAVEN AIRPORT OPERATIONS

The bill requires $1.48 million of the amount appropriated in the current session's budget bill (SB 501) to DOT for airport operations to be used for operating Tweed-New Haven airport in FY 17.

EFFECTIVE DATE: July 1, 2016

111—DELETED BY SENATE AMENDMENT “A”

112-116, 136 & 210 — ELIMINATING THE CONNECTICUT PUBLIC TRANSPORTATION COMMISSION

The bill eliminates the Connecticut Public Transportation Commission and makes conforming changes. The 19-member commission advises and assists the transportation commissioner, governor, and Transportation Committee in planning, developing, and maintaining public transportation facilities and services.

EFFECTIVE DATE: July 1, 2016

117 — NONUNION HEALTH INSURANCE PREMIUMS

The bill allows the Department of Administrative Services (DAS) commissioner and OPM secretary to establish health insurance benefit premium cost sharing requirements for all non-represented (presumably, nonunion) classified and unclassified state officers and employees. The cost sharing can be for up to 18% of the total premium equivalent, as determined by the comptroller. In general, state employees currently pay between 8.4% and 18% of their premium costs, depending on their plan and dependent coverage.

By law, the state must collectively negotiate with the State Employees Bargaining Agent Coalition (SEBAC) over health insurance for unionized state employees. Current law (1) allows the DAS commissioner to provide nonunion executive and judicial branch employees with benefits that are at least equal to those provided under unionized employees' collective bargaining agreements and (2) requires legislative employees and elected state officials to receive the same benefits provided under unionized employees' collective bargaining agreements (CGS 5-200).

EFFECTIVE DATE: July 1, 2016

118 — OPM STUDY ON COG REPRESENTATION

The bill requires the OPM secretary to conduct, within available appropriations, a study on increasing representation on regional councils of governments (COG) for municipalities with a population of at least 50,000. By law, each COG member municipality is entitled to one representative on the COG.

Specifically, the study must determine if:

1. these municipalities should have an additional representative for each 10,000 in additional population based on the most recent federal census,

2. an added representative should be appointed by the municipal chief executive officer or in a manner set out in a local ordinance, and

3. an added representative should be able to vote on COG matters.

The secretary must report the study's findings to the Planning and Development Committee by December 31, 2016.

EFFECTIVE DATE: Upon passage

119 & 120 — YOUTH SERVICES PREVENTION GRANTS

The bill (1) eliminates specified FY 17 appropriations to the Judicial Department's Youth Services Prevention (see Table 6) and (2) instead appropriates approximately $900,000 less for the same purpose to be distributed to certain governmental and non-governmental entities in FY 17 (see Table 7). In some cases the bill provides grants to the same recipients as under the previous appropriation, but in different amounts.

Table 6: Youth Services Prevention Grants Eliminated

Grant Recipient

Grant Amount

Boys and Girls Club of Stamford

$113,110

Archipelago Inc. – Project Music

35,000

Faith Tabernacle Baptist Church

148,110

Prudence Crandall Center, Inc.

16,788

Family Enrichment Center of the Hospital of Central Connecticut

16,788

OIC of New Britain Inc.- Project G.R.E.A.T.

50,000

Pathways/Senderos

50,000

Human Resources Agency of New Britain, Inc.

100,000

Mi Casa, Hispanic Health Council

35,000

Charter Oak Amateur Boxing Academy and Youth Development Program (COBA)

30,000

Southwest Boys and Girls Club/1 Chandler Street, Hartford

30,000

Youth Challenge

34,000

BSL Educational Foundation of Alpha Phi Alpha, Inc.

30,662

Town of Windsor - Collaborative

31,000

Supreme Being, Inc.

31,000

Phillips Metropolitan Christian Methodist Episcopal Church

25,000

Windsor Troop 49

5,000

North End Action Team

156,700

The Village Initiative Project, Inc. - VIP College Prep and Life Skills

111,975

Bridgeport Caribe Youth League, Inc.

80,000

McGivney Community Center, Inc.

31,975

Serving All Vessels Equally

211,151

Walnut Orange Walsh Neighborhood

60,394

St. Margaret Willow Plaza NRZ, Assoc., Inc.

60,394

Hispanic Coalition of Greater Waterbury

60,394

The Boys and Girls Club of Greater Waterbury

60,394

Waterbury Police Activity League, Inc.

60,394

Rivera Memorial Foundation, Inc.

60,394

Dixwell Children's Creative Arts Center

124,004

Police Athletic League of New Haven

50,000

Arte, Inc.

174,004

'r Kids Family Center

50,000

Guns Down, Books Up

74,004

EIR Urban Youth Boxing, Inc.

50,000

Foster Buddies Network/Hartford Boxing Center

45,986

Police Athletic League of Hartford

30,000

OPMAD, Inc.

20,000

Samuel V. Arroyo Center, Hartford

20,000

Wakeman Boys and Girls Club, Southport

20,000

Walter E. Luckett, Jr. Foundation

111,975

Little League Baseball, Inc.

40,538

New London Youth Football League

40,539

East Hartford Youth Services

85,150

Manchester Youth Service Bureau

85,150

Boys and Girls Club of Bridgeport, Inc.

61,975

Bridgeport Caribe Youth League, Inc.

50,000

Upper Albany Collaborative

32,662

C.U.R.E.T

20,000

Hartford Knights

50,000

Blue Hill Civic Association

20,000

Artists Collective

35,000

Ebony Horsewomen

35,000

Youth Challenge

25,000

Goodworks, Inc.

27,662

M.G.L.L, Inc.

62,000

City of Hartford Southend Boys Scouts

15,000

Department of Families, Children, Youth and Recreation/City of Hartford

45,000

Kenneth R. Jacksons Mentoring Services, Inc.

111,975

Mount Aery Development Corporation

111,975

Girls, Inc.

16,712

Boys and Girls Club of Meriden

16,712

Beat the Street Community Center

16,712

Meriden YMCA

16,712

Women and Families Center

16,712

City of Meriden/Youth Services Division

16,712

City of Meriden/Police Cadets

16,712

Rushford Hospital Youth Program

16,712

New Opportunities of Greater Meriden/Boys to Men Program

16,712

EFFECTIVE DATE: Upon passage

Table 7: FY 17 Authorized Youth Services Prevention Grants

Grant Recipient

Grant Amount

With These Hands, Inc.

$74,610

Community Action Agency of Western Connecticut

40,000

Foster Buddies Network/Hartford Boxing Center

31,617

Police Athletic League of Hartford

40,000

Catholic Charities Archdiocese of Hartford

30,000

Walter E. Luckett, Jr. Foundation

70,018

ACESS Educational Service

70,018

Buddy Jordan Foundation

25,000

Blessed Sacrament Church

70,018

Stratford PAL

25,000

Arte Inc.

134,691

Ebony Horsewomen

30,000

Goodworks, Inc.

12,000

Artists Collective

30,000

Passage, Inc.

12,000

C.U.R.E.T.

20,000

Hartford Knights

25,000

Upper Albany Collaborative

25,000

Our Piece of the Pie

20,000

BSL Educational Foundation of Alpha Phi Alpha, Inc.

30,000

Philips Metropolitan Christian Methodist Episcopal Church

15,000

Supreme Being, Inc.

20,000

Town of Windsor - Collaborative

10,735

Mount Olive Church Ministries

15,000

Hispanic Coalition of Greater Waterbury

46,742

Rivera Memorial Foundation, Inc.

46,740

St. Margaret Willow Plaza NRZ, Assoc., Inc.

46,740

The Boys and Girls Club of Greater Waterbury

46,740

Walnut Orange Walsh Neighborhood

46,740

Waterbury Police Activity League, Inc.

46,740

Friends of Pope Park (Computer Classes)

25,234

Friends of Pope Park (Troop 105)

20,000

M.G.L.L, Inc.

54,000

Mi Casa, Hispanic Health Council

54,000

Southwest Boys and Girls Club/ 1 Chandler Street, Hartford

25,000

OPMAD, INC.

25,000

Boys and Girls Club of Southeastern Connecticut

32,612

New London NAACP Youth Council

10,000

Garde Arts Center, Inc.

10,000

Historically Black College Alumni, Inc.

10,000

North End Action Team

4,854

Middlesex United Way

10,000

Cross Street Training and Academic Center, Inc.

5,000

Oddfellows Playhouse

30,000

Archipelago Inc.- Project Music

27,048

Boys and Girls Club of Stamford

87,561

Serving All Vessels Equally

163,341

Integrated Wellness Group - Vetts Program

134,691

East Hartford Youth Services

65,853

Manchester Youth Service Bureau

65,853

Bridgeport Caribe Youth League Inc.

99,420

McGivney Community Center Inc.

21,975

Boys and Girls Club of Bridgeport, Inc.

51,975

Human Resources Agency of New Britain, Inc.

85,000

OIC of New Britain Inc. Project G.R.E.A.T.

40,000

Pathways/Senderos

40,000

Prudence Crandall Center Inc.

7,854

Family Enrichment Center of the Hospital of Central Connecticut

7,854

Beat the Street Community Center

12,926

Boys and Girls Club of Meriden

12,922

City of Meriden/Police Cadets

12,922

City of Meriden/Youth Services Division

12,922

Girls, Inc.

12,922

Meriden YMCA

12,922

New Opportunities of Greater Meriden/Boys to Men Program

12,922

Rushford Hospital Youth Program

12,922

Women and Families Center

12,922

The Village Initiative Project, Inc., - VIP College Prep and Life Skills

86,685

Police Athletic League of New Haven

30,000

Solar Youth

54,692

Youth Development Mentoring Through Fitness Sheridan Middle School After School Program

15,000

New Haven Symphony

35,000

EFFECTIVE DATE: July 1, 2016

121-123 — HOSPITAL TAX

Since July 1, 2011, the law imposes a quarterly tax on hospital net patient revenue at a rate up to the maximum allowed by federal law and using a base year as determined by the Department of Social Services (DSS) commissioner.

The bill states that it was the intention of the 2011 public acts establishing this tax that:

1. beginning July 1, 2011, the legislature would set the tax rate on hospitals' net patient revenue by setting forth the amount of funds the tax would generate through codifying the revenue estimates as documented in the final version of each state budget prepared by the Office of Fiscal Analysis;

2. the definition of “net patient revenue” in statute complies with federal laws and regulations that, among other things, limit certain provider-specific taxes and define inpatient and outpatient hospital services.

3. the DSS commissioner, in consultation with the Office of Policy Management (OPM), calculates the amount of the tax due from each hospital within certain limitations and parameters under federal law, including determining the tax base year, to obtain the funds the General Assembly set forth in the budget;

4. the DSS commissioner was required to notify the hospitals of the taxes due and neither the calculations above nor the notice requirements constitute regulations under the Uniform Administrative Procedures Act; and

5. the primary purpose of the hospital tax was to raise revenues from uniquely situated health care providers that receive certain benefits under the state's Medicaid program.

Under the bill, effective and applicable to quarters beginning on July 1, 2011, (1) the hospital tax rate conforms with the state budget adopted by the legislature and (2) when determining the tax assessment base year, the DSS commissioner ensures it conforms with the adopted budget. The bill requires the DSS commissioner to promptly notify hospitals of the amount of tax due.

EFFECTIVE DATE: Upon passage, and, as stated above, certain provisions are applicable to calendar quarters beginning on or after July 1, 2011.

124—LOBBYISTS FILINGS

This bill extends, from 30 to 45 days, the deadline by which a lobbyist who pays or reimburses a public official or state employee $10 or more for necessary expenses must file a statement with the Office of State Ethics showing the recipient's name and the amount of the expenses.

EFFECTIVE DATE: Upon passage

125 TWO-GENERATION POVERTY REDUCTION ACCOUNT

The bill establishes a separate, nonlapsing two-generation poverty reduction account in the General Fund. The account may receive (1) transfers of lapsing funds from General Fund operations or DSS poverty reduction accounts and (2) funds from public and philanthropic sources or the federal government for the fund's purposes. All money deposited in the account must be used by DSS or DSS-contracted persons to fund services to support two-generation poverty reduction programs.

EFFECTIVE DATE: July 1, 2016

126 — CALCULATIONS FOR EDUCATION COST SHARING (ECS) GRANT INCREASES AND DECREASES

Current law provides a formula for calculating whether a town has received an increase in ECS aid during a fiscal year: a town has received an ECS increase if the amount paid to the town in the current FY exceeds the amount paid in the prior FY.

The bill specifies that the ECS increase formula is limited to FY 17, using FY 17 as the current ECS amount and FY 16 as the prior ECS amount. It also specifies that if the amount received in FY 17 is greater than the FY 16 amount, the FY 17 amount minus the FY 16 amount yields the ECS increase amount.

The bill establishes a similar formula for calculating whether a town has received an ECS decrease in FY 17. Under the bill, a town has received an ECS decrease if the amount paid to the town in FY 16 exceeds the amount paid in FY 17. The FY 16 amount minus the FY 17 amount yields the ECS decrease amount.

EFFECTIVE DATE: July 1, 2016

127 — MINIMUM BUDGET REQUIREMENT (MBR) REDUCTIONS AND EXEMPTIONS

MBR Reductions

By law, a town is prohibited from budgeting less for education than it did in the previous FY, unless it can demonstrate specific achievements or changes within its school district. This prohibition is commonly referred to as the minimum budget requirement (MBR).

The bill allows a town to reduce its MBR when it experiences an ECS decrease in a fiscal year in an amount equal to the ECS decrease, as calculated under the bill and described above. By law and unchanged by the bill, alliance districts are prohibited from reducing their MBR in FYs 16 and 17.

MBR Exemptions

Current law allows towns to claim an MBR exemption for earning district performance index (DPI) scores among the top 10% of all districts; however, DPI has been eliminated from statute and replaced with other measures that the State Department of Education (SDE) uses to rank school districts. The bill specifies that accountability index scores instead be used to rank districts when determining MBR relief.

By law, SDE may calculate accountability index scores for each public school district and school using multiple student, school, or district-level measures, as weighted by SDE. Such measures must include the performance index score and high school graduation rates and may include (1) academic growth over time, (2) attendance and chronic absenteeism, (3) postsecondary education and career readiness, (4) enrollment in and graduation from higher education institutions and postsecondary education programs, (5) civic and arts education, and (6) physical fitness. SDE has announced all the factors it now uses in the accountability index, and they include additional factors such as standardized testing participation rates.

EFFECTIVE DATE: July 1, 2016

128 — ALLIANCE DISTRICT FUNDING

Current law requires the comptroller to hold back any ECS grant increase in FYs 14-17 over FY 12's amount that is payable to an alliance district (one of the 30 lowest performing districts). The comptroller must transfer the money to the education commissioner, who can withhold it until the alliance district supplies her with a plan that addresses objectives and targets to improve student achievement.

The bill revises the alliance district holdback requirement for FY 17. It requires the comptroller to withhold from an alliance district any ECS grant increase received in FY 17 over FY 12's amount, minus any ECS decrease received in FY 17 compared with FY 16.

EFFECTIVE DATE: July 1, 2016

129-177 & 210 — CONSOLIDATION OF LEGISLATIVE COMMISSIONS

The bill eliminates the six legislative commissions and replaces them with a (1) 63-member Commission on Equity and Opportunity and (2) 63-member Commission on Women, Children, and Seniors. With the exception of continuity of authority and transfer of officers and employees, the (1) former constitutes a successor to the African-American Affairs Commission, Latino and Puerto Rican Affairs Commission, and Asian Pacific American Affairs Commission and (2) latter constitutes a successor to the Permanent Commission on the Status of Women, Commission on Children, and Commission on Aging. Both are part of the legislative department.

The bill establishes the same duties for the Commission on Equity and Opportunity as it establishes for the Commission on Women, Children, and Seniors, but it targets them to their respective constituencies. Generally, these duties parallel the six legislative commissions' current duties.

Under the bill, the Commission on Equity and Opportunity must be organized into three policy divisions focusing on issues affecting the following underrepresented and underserved populations: African Americans, Asian Pacific Americans, and Latinos and Puerto Ricans. Similarly, the Commission on Women, Children and Seniors must be organized into three policy divisions focusing on issues affecting the following underrepresented and underserved populations: women, children and families, and elderly individuals. Both commissions may adopt regulations to carry out their duties.

The bill makes several minor, technical, and conforming changes to implement its provisions.

EFFECTIVE DATE: July 1, 2016, except that a technical provision substituting the names of the successor commissions for the eliminated commissions in 2016 regular and special acts is effective upon passage ( 133).

Transition ( 129 & 131)

Under the bill, the new commissions become successor agencies for purposes of existing orders and regulations, pending civil or criminal actions or proceedings, existing contracts and rights of action, and federal aid. They do not constitute successor agencies for purposes of continuity of authority or transfer of officers and employees.

The heads of the six current legislative commissions must deliver to the applicable successor commission all records and property pertaining to their functions.

Membership and Organization ( 129 & 131)

Under the bill, both the Commission on Equity and Opportunity and the Commission on Women, Children and Seniors consist of 63 members. The bill specifies that any person appointed to one of the six current commissions before July 1, 2016 whose term has not expired by that date is deemed appointed to serve on the successor commission until his or her term expires or a vacancy occurs, whichever is first. Upon such a vacancy or expiration, the appointing authority that made the original appointment must make a new appointment, as described below.

For members appointed on or after July 1, 2016, the bill requires (1) each of the six legislative leaders to make nine appointments and (2) the House speaker and Senate president pro tempore to also make nine joint appointments. The appointing authorities must allocate their appointments evenly across each commission's three constituencies. For the Commission on Equity and Opportunity, each appointing authority must appoint three members with experience in African-American affairs, three with experience in Asian Pacific-American affairs, and three with experience in Latino and Puerto Rican affairs. For the Commission on Women, Children and Seniors, each appointing authority must appoint three members with expertise in issues concerning women, three with expertise in issues concerning children or the family, and three with expertise in issues concerning elderly persons.

Additionally, for certain appointing authorities, the bill applies geographical requirements to some of their appointments, as shown in Table 8.

Table 8: Geographical Requirements for Commission Appointees

Appointing Authority

Geographical Requirement (applies to both commissions)

Joint appointments by House speaker and Senate president pro tempore

At least three must be from the state's central region

Senate president pro tempore

At least three must be from the state's northeastern region

House speaker

At least three must be from the state's southeastern region

Senate majority leader

N/A

House majority leader

N/A

Senate minority leader

At least three must be from the state's northwestern region

House minority leader

At least three must be from the state's southwestern region

Term Lengths. The bill requires appointing authorities to make their initial appointments by July 31, 2016 and their members' terms end June 30, 2018, regardless of the appointment date. Members who are appointed on or after July 1, 2018 must serve two-year terms beginning on the date they are appointed. The appointing authority must fill any vacancies for the balance of the unexpired term, and members to continue to serve until their successors are appointed.

Meetings. The bill requires the House speaker and Senate president pro tempore to jointly select a chairperson for each commission from among the commissions' members. It requires the (1) chairperson to schedule the first meeting and (2) commissions to meet as often as the chairperson or a majority of the commission deems necessary. For both commissions, the bill specifies that a majority of the membership constitutes a quorum to do business. Under the bill, a member is deemed to have resigned if he or she misses three consecutive meetings or 50% of all meetings held during any calendar year.

Organization. The bill organizes both commissions into three policy divisions, with one division for each constituency. The bill grants the Legislative Management Committee authority over the hiring, termination, and performance reviews of the executive director and staff and specifies that the commissions have no authority over staffing and personnel matters. Commission members must serve without compensation but, within the limits of available funds, must be reimbursed for necessary expenses.

Duties and Responsibilities ( 130 & 132)

The bill establishes duties and responsibilities for the successor commissions, targeted to their respective constituencies, that parallel the duties and responsibilities that the six legislative commissions currently have. Specifically the successor commissions must:

1. focus their efforts on specified “quality of life desired results” for members of their constituencies (i.e., that they are healthy, safe, achieve educational success, are free from poverty and discrimination);

2. recommend to the General Assembly and governor strategies for achieving the quality of life desired results (see below);

3. review and comment, as necessary, on proposed state legislation or recommendations affecting their constituencies and provide copies of the comments to General Assembly members;

4. advise the General Assembly on the coordination and administration of state programs affecting their constituencies;

5. gather and maintain, as necessary, current information about their constituencies to better understand their status, condition, and contributions;

6. include the current information in their annual status reports, as appropriate and pertinent to the quality of life desired results, and make it available upon request to legislators and other interested parties;

7. maintain liaisons between their constituencies and government agencies, including the General Assembly; and

8. conduct educational and outreach activities to raise awareness of and address critical issues for their constituencies.

Recommendations on Quality of Life Desired Results. The commissions must make recommendations to the General Assembly and governor on new or enhanced policies, programs, and services that foster progress in achieving the quality of life desired results. The recommendations must, where applicable, include:

1. systems innovations, model policies, and practices that embed two-generational practice in program, policy, and systems change on the state and local levels;

2. strategies for reducing family poverty, promoting parent leadership, and family civics;

3. the promotion of youth leadership opportunities that keep youth engaged in the community; and

4. strategies and programs that address equitable access, impede bias, and narrow the opportunity gap for their constituencies.

The recommendations may include other state and national best practices, and recommendations for maximizing federal funding.

Other Powers ( 130 & 132)

The bill establishes powers for the successor commissions that parallel those that the six legislative commissions currently have. Specifically, it authorizes the successor commissions to:

1. request and receive from any state agency information and assistance as they may require;

2. use any funds available to them from the federal or state government, or other sources;

3. enter into contracts to carry out their purposes;

4. utilize voluntary and uncompensated services, as necessary, from private individuals, state or federal agencies, or organizations;

5. recommend policies to federal agencies and political subdivisions of the state relative to their constituencies;

6. accept gifts, donations, or bequests to perform their duties;

7. hold public hearings;

8. establish task forces or advisory committees, as necessary, to perform their duties; and

9. inform business, education, and state and local government leaders and the media of the nature and scope of the problems faced by their constituencies.

In addition, the commissions may enter into agreements with state agencies to maximize federal funds received by the agencies. Under such an agreement, the (1) state agency must use any funds it receives to perform its statutory duties that relate to the commission's duties and (2) commission may accept the portion of federal funds the agency receives through the agreement, as permitted by federal law.

Annual Status Reports ( 130 & 132)

Annually by January 1, the commissions must submit to the Appropriations Committee a status report, organized by policy division, concerning their efforts and any progress made in achieving the quality of life desired results.

Conforming Changes ( 133-177)

Current law establishes various reporting and training requirements for the six current commissions and grants them representation on numerous state boards and committees. The bill generally transfers these provisions to the two successor commissions. For example, current law requires the Permanent Commission on the Status of Women, together with the Commission on Human Rights and Opportunities (CHRO), to provide training on state and federal discrimination laws to certain state employees. The bill instead requires the Commission on Women, Children and Seniors to provide this training with CHRO.

If two or more of the current commissions are represented on a board or committee, the bill grants the same level of representation to the successor commission. For example, under current law the chairpersons of the African-American Affairs, Latino and Puerto Rican Affairs, and Asian Pacific American Affairs commissions, or their designees, are members of the Commission on Racial and Ethnic Disparity in the Criminal Justice System. The bill instead requires the chairperson of the Commission on Equity and Opportunity (or a designee), plus two other commission members designated by the chairperson, to serve on this commission.

178 — STUDY OF EMERGENCY POWER NEEDS IN ELDERLY PUBLIC HOUSING

The bill requires the Commission on Women, Children and Seniors to study the need for emergency power generators at Connecticut's elderly public housing sites. It defines “elderly public housing” as any building where at least 50% of the units are rented to individuals ages 62 and older under any state affordable housing program.

The study must include:

1. an inventory of elderly public housing in each municipality that includes (a) the total number of housing units, (b) a description of the type and location of each housing unit, and (c) whether emergency power generators are provided for these units;

2. recommendations for providing emergency power generators;

3. the estimated cost of providing these generators; and

4. the availability of grants for these generators through DESPP's Division of Emergency Management and Homeland Security or any other state or federally funded grant.

Under the bill, the commission must report on the study to the Aging, Housing, and Public Safety committees by January 1, 2017.

EFFECTIVE DATE: July 1, 2016

179 — BRIDGEPORT PAYMENTS TO MUNICIPAL EMPLOYEES' RETIREMENT SYSTEM

SB 42, as passed by the General Assembly, allows Bridgeport to defer paying a certain portion of its amortization payments for the unfunded accrued liability of its police and fire members in the Municipal Employees' Retirement System (MERS) through FY 22, with increased payments to make up the difference from FY 25 through FY 43.

The bill instead limits Bridgeport's reduced payments to FY 17 and FY 18 and requires increased payments to make up the difference in FY 21 through FY 23. Specifically, in FY 17 and FY 18, it allows the city to pay 35% of the amortization amount required by the State Retirement Commission and in FY 21 through FY 23 it requires the city to pay the full amount required by the commission plus one-third of the amount deferred in FY 17 and FY 18.

The bill also requires the retirement commission, by January 1, 2018 and upon Bridgeport's request to modify the amortization schedule, to conduct an actuarial analysis of the request. The analysis must take into account the overall impact on MERS, including the funding ratio, the projected rate of return, and whether the amortization method increases the unfunded accrued liability's costs. It may provide for alternative methods of amortizing the unfunded liability.

EFFECTIVE DATE: Upon passage

180 — PERMIT FEES FOR OVERSIZE AND OVERWEIGHT VEHICLES

The bill increases, starting July 1, 2016, Department of Transportation (DOT) permit fees for motor vehicles, including trucks and trailers, exceeding certain height, width, length, or weight limits, and specifies that these vehicles include “self-propelled vehicles.”

It requires the DOT commissioner to waive, between July 1, 2016 and June 30, 2017, these higher fees for anyone who shows, to the commissioner's satisfaction, that (1) the increased fee affects a material term in a contract for services in effect on July 1, 2016 or subject to competitive bidding on that date and (2) the person seeking the waiver is a party to the contract or a participant in the competitive bidding process.

Current law limits the permits issued for overweight vehicles to the gross weight shown on the vehicle's registration certificate. The bill specifies that these registration certificates are for commercial vehicles (large trucks or buses) and that the permit must be limited to the gross weight shown on its commercial registration certificate or a commercial registration certificate issued on an apportionment basis. (Apportionment refers to the system in which commercial vehicles pay registration fees based on the distance they travel in each state). The bill also makes conforming changes.

The bill increases fees as shown in Table 9.

Table 9: Oversize or Overweight Vehicle Fees

 

Current Fee

Fee Under the bill

Single Trip Permit

$23

$30

Transmittal Fee*

3

5

Annual Permit (per 1,000 pounds)

7

9

Incremental Fee for Annual Permit**

One-tenth of the annual fee per month

100 per month

Annual Fee for Oversize Indivisible Loads (a load that cannot be broken down into smaller loads to meet weight or size limits)

500

650

* Under current law, this fee applies to permits transmitted by transceiver or fax; under the bill this fee applies to any permit transmitted electronically.

** The bill specifically applies this fee to (1) vehicles and (2) vehicles and trailers; under current law it applies to vehicles only.

EFFECTIVE DATE: July 1, 2016

181 — STATE BOARD OF MEDIATION AND ARBITRATION FEE

The bill increases, from $25 to $200, the fee an employer and its employee must each pay when submitting a grievance or dispute to the State Board of Mediation and Arbitration. By law, the board assigns the case to one of its two three-member panels, each consisting of one labor, business, and public member. The board must refund the fee if the parties agree to have the public member arbitrate the matter.

EFFECTIVE DATE: July 1, 2016

182 — SALES TAX ON PARKING FEES AT CERTAIN STATE AND MUNICIPAL LOTS

The bill exempts from sales and use tax non-metered motor vehicle parking in (1) seasonal lots with 30 or more spaces operated by the state or political subdivisions and (2) municipally-owned lots with 30 or more spaces. As under existing law, parking in metered lots or lots with fewer than 30 spaces is exempt from the tax.

PA 15-244, June Special Session ( 75) eliminated an exemption for seasonal lots operated by (1) the state or political subdivisions; (2) federal tax-exempt nonprofit organizations; and (3) nonprofit charitable hospitals, nursing homes, rest homes, residential care homes, and certain acute-care hospitals.

EFFECTIVE DATE: Upon passage and applicable to sales made on or after that date.

183 — REGIONAL GREENHOUSE GAS INITIATIVE (RGGI) FUND SWEEPS

The bill diverts the first $3.3 million from the proceeds of the RGGI auction occurring on or after January 1, 2017 for deposit in the General Fund in FY 17. Once the $3.3 million has been diverted, any subsequent auction proceeds must be calculated and allocated as required by current law and regulations.

RGGI is a regional interstate “cap and trade” program to reduce greenhouse gas emissions. The program subjects the region's power plants to a declining cap on the amount of CO2 they can emit and requires them to purchase emission allowances at quarterly auctions. Those that exceed the cap may also buy credits from those that do not. The proceeds from the auction sales fund energy efficiency and renewable energy programs.

EFFECTIVE DATE: Upon passage

184 — PAYMENT SETTLEMENT ENTITIES

The bill requires the Department of Revenue Services (DRS) commissioner to make reasonable efforts to facilitate the issuance of tax warrants on “payment settlement entities” (i.e., banks or third-party settlement organizations, such as MasterCard, Paypal, and Visa) for payments they made to Connecticut retailers.

EFFECTIVE DATE: Upon passage

185 — ANGEL INVESTOR TAX CREDIT

The bill extends the sunset date for the angel investor tax credit by three years, from July 1, 2016 to July 1, 2019, and allows taxpayers to sell, assign, or transfer all or part of the credit to other taxpayers.

The credits, which are available through CI, apply against the personal income tax and equal 25% of the amount taxpayers invest in technology-based businesses, up to $250,000.

EFFECTIVE DATE: July 1, 2016 and applicable to taxable years beginning on or after January 1, 2016.

186 — AMORTIZED FY 14 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) DEFICIT

Current law requires the state to pay off the General Fund's unreserved negative unassigned balance for FY 14, identified based on GAAP, and to do so over 12 years in equal increments, starting in FY 17 and ending in FY 28. The bill delays the start of these payments by one year and requires them to be amortized over 11 years in equal increments, from FY 18 to FY 28.

EFFECTIVE DATE: Upon passage

187 & 188 — ADMISSIONS TAX EXEMPTION AND LOCAL OPTION ADMISSIONS SURCHARGE

Exemptions

The bill exempts from the 10% admissions tax any (1) event at the Dunkin' Donuts Park in Hartford, beginning with the date of the bill's passage, and (2) athletic event at the New Britain Stadium presented by an Atlantic League of Professional Baseball member team, beginning July 1, 2017.

Local Option Admissions Surcharge

The bill allows a municipality, by ordinance, to impose a surcharge on the admission charges to events held at facilities located in the municipality. Under the bill, the surcharge may be up of to 5% of the admissions charge, except for the surcharge on events held at Dunkin' Donuts Park in Hartford, which may be up to 10%.

The bill prohibits municipalities from imposing a surcharge on (1) events from which all proceeds go exclusively to a federally tax-exempt organization, provided that organization actively engages in and assumes the financial risk of presenting the event, and (2) pari-mutuel or off-track betting facilities already subject to a local admissions tax. It allows the ordinances to exclude additional events or facilities from the surcharge.

The surcharge applies to amounts paid for tickets; licenses; skybox, luxury suite, or club seat rentals or purchases; and any other admission charges, including any charges for the right to buy seats. It covers theaters; lecture and concert halls; amusement parks and fairgrounds; dance halls; sporting facilities, such as ball parks, race tracks, tennis courts, golf and miniature golf courses, skating rinks, beaches, swimming pools, and gyms; stadiums and amphitheaters; convention centers; auto, boat, camping, home, dog, and antique shows; and other similar venues and events. It applies in addition to any applicable tax (i.e., admissions tax).

Under the bill, the surcharge (1) applies to the facilities at which the events take place, which must collect the surcharge from purchasers upon payment, and (2) is a recoverable debt from the purchaser to the facility.

The same administrative, enforcement, liability, and appeal process requirements established in statute for the local option pari-mutuel or off-track betting facility admissions tax apply to the surcharge.

EFFECTIVE DATE: Upon passage

189 — MOTOR VEHICLE MILL RATES

Mill Rate Cap

The bill increases the cap on motor vehicle mill rates from (1) 32 to 37 mills for the 2015 assessment year and (2) 29.36 mills to 32 mills for the 2016 assessment year and thereafter.

Municipalities, Districts, and Boroughs that Previously Set a Mill Rate for 2015 Assessment Year

The bill establishes the motor vehicle mill rate for certain municipalities, districts, and boroughs that set a mill rate for the 2015 assessment year prior to the bill's passage. For municipalities that set the rate at 32 mills, their motor vehicle mill rate is the lesser of:

1. the mill rate they previously set for real and personal property other than motor vehicles for the 2015 assessment year,

2. a rate they set after the bill's passage that is less than 37 mills, or

3. 37 mills.

For any borough or district that, prior to the bill's passage, set a motor vehicle mill rate for the 2015 assessment year that if combined with the municipality's motor vehicle mill rate would result in 32 mills, the motor vehicle mill rate is the lesser of:

1. a rate that if combined with the municipality's motor vehicle mill rate would result in 37 mills,

2. the rate it previously set for real and personal property other than motor vehicles for the 2015 assessment year, or

3. a rate it sets after the bill's passage that if combined with the municipality's motor vehicle mill rate is less than 37 mills.

Current law bars districts and boroughs from setting a mill rate for the 2015 and 2016 assessment years that, if combined with the municipality's motor vehicle mill rate, would exceed the capped rate. The bill extends this provision to the 2017 assessment year and thereafter, thus aligning it with the cap on municipalities for those assessment years.

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

190 — MUNICIPAL REVENUE SHARING FUND

The budget bill (SB 501, May Special Session, 46) transfers a specified amount from the General Fund to a new Municipal Revenue Sharing Fund for FY 17 and each fiscal year thereafter. The bill limits this transfer to FY 17. It also makes a technical change.

EFFECTIVE DATE: July 1, 2016

191-193 — MUNICIPAL GRANT PROGRAMS

Regional Services Grants

Beginning in FY 17, the law requires OPM to distribute regional services grants to councils of governments (COGs), based on a formula determined by the OPM secretary. Beginning in FY 18, the bill requires COGs to use 35% of these grant funds to help regional education service centers merge their human resource, finance, or technology services with such services provided by municipalities in the region.

Municipal Revenue Sharing Grants

Beginning in FY 20, the law requires OPM to distribute municipal revenue sharing grants to municipalities according to a statutory formula. (The grant amounts are specified in statute for FYs 17 to 19.) Under current law, the formula for calculating each municipality's grant amount depends on its motor vehicle mill rate. The bill instead bases the formula on the mill rate for real and personal property other than motor vehicles.

Municipal Spending Cap

By law, beginning in FY 18, OPM must reduce municipal revenue sharing grant amounts for those municipalities whose spending, with certain exceptions, exceeds a spending cap. Under current law, the cap is the greater of the inflation rate or 2.5% or more of the prior fiscal year's authorized general budget expenditures. The bill specifies that the cap is based on a municipality's adopted budget expenditures, rather than general budget expenditures. Under the bill, “adopted budget expenditures” include expenditures from a municipality's general fund and any nonbudgeted funds.

The bill expands the types of expenditures excluded from the cap to include (1) budgeting for an audited deficit, (2) nonrecurring grants, (3) capital expenditures, and (4) payments on unfunded pension liabilities.

The bill also bars OPM from reducing a municipality's grant in any year in which its adopted budget expenditures exceed the cap by an amount proportionate to its population increase over the previous fiscal year (based on the most recent Department of Public Health population estimate).

Payment in Lieu of Taxes (PILOT) for FYs 18 and 19

The bill extends, to FYs 18 and 19, the same requirements that currently apply to FY 17 for proportionately reducing PILOT grants if the amount appropriated is not enough to fund the full amount to every municipality and district. Under those requirements, (1) municipalities and districts must receive PILOTs that equal or exceed the reimbursement rates they received in FY 15 and (2) certain municipalities and districts receive a specified supplemental PILOT grant. (SB 501, May Special Session, reduces FY 17 supplemental PILOT grant amounts and requires that they be funded through a new Municipal Revenue Sharing Fund.)

In doing so, the bill delays, from FY 18 to FY 20, the implementation of a mechanism for increasing PILOT grants to municipalities with mill rates of at least 25 and a relatively high percentage of tax-exempt property on their grand lists (e.g., state-owned and nonprofit college and hospital property).

The bill also corrects a statutory reference in the PILOT program statutes and makes a conforming change.

EFFECTIVE DATE: July 1, 2016

194 — DRS TAX INCIDENCE STUDY

The bill delays by one year, from February 15, 2017 to February 15, 2018, the deadline by which DRS must submit its next tax incidence report to the legislature. By law, DRS must biennially submit to the Finance, Revenue and Bonding Committee, and post on DRS' website, a report on the overall incidence of the income tax, sales and excise taxes, corporation business tax, and property tax.

EFFECTIVE DATE: Upon passage

195 & 196 — PROBATE ESTATE SETTLEMENT FEES

The bill caps at $40,000 the probate fees for settling estates valued at $8.877 million and greater, as shown in Table 10. The fee changes apply to estate proceedings for people who die on or after July 1, 2016. The bill also makes conforming changes.

Table 10: Probate Fees for Settling Estates (Ranges Changed by the Bill)

Current Law

Bill

Estate Value

Fee

Estate Value

Fee

At least $2 million

$5,615, plus 0.5% of the excess over $2 mil.

$2 million to $8.877 million

$5,615, plus 0.5% of the excess over $2 mil.

At least $8.877 million

$40,000

EFFECTIVE DATE: Upon passage, except the conforming change is effective July 1, 2016.

197 — DELETED BY SENATE AMENDMENT “A”

198 & 199 — AMBULATORY SURGICAL CENTERS (ASC)

Under federal law, ASCs qualify for Medicare payments if, among other things, they provide surgical services to patients who require no more than 24 hours postoperative care at the center without subsequent hospitalization (42 CFR 416.2). Under state law, outpatient surgical facilities are licensed by DPH. The bill specifies that those facilities operating as ASCs may provide surgical services to patients who require no more than 24 hours of postoperative observation without hospitalization.

The bill requires the DPH commissioner, by July 1, 2016, to study the implications of this change and determine if regulations are needed to implement them. If they are, the bill authorizes him to adopt them. Until he does, he must adopt and implement policies and procedures needed to carry out this change. DPH must post any such policies and procedures on the e Regulations System within 20 days after they are implemented.

EFFECTIVE DATE: July 1, 2016, except the requirement for the commissioner's study takes effect upon passage.

200 — IMPACT OF GROSS RECEIPTS TAX ON ASCs

The bill requires the OPM secretary, in consultation with the revenue services and social services commissioners, to study the impact of the gross receipts tax on ASCs and report the results to the Public Health and Finance, Revenue and Bonding committees by February 1, 2017. At a minimum, the study must review and make recommendations regarding the following issues:

1. the tax rate and the amount of exemptions under the tax,

2. whether the tax is fair for ASCs of different sizes and capacities,

3. the relationship between the tax and the cost of operating ASCs,

4. how the tax affects ASCs' ability to pay debts and make capital improvements,

5. how the tax affects the ASCs' hours of operation, and

6. other possible tax structures.

EFFECTIVE DATE: Upon passage

201 — FILING OUTSTANDING RETURNS AS A CONDITION OF LICENSE OR PERMIT ISSUANCE OR RENEWAL

The bill bars the DRS commissioner from issuing or renewing a (1) cigarette dealer, distributor, or manufacturer license; (2) tobacco product distributor or unclassified importer license; or (3) sales tax seller's permit, for anyone who he determines has failed to file any required tax returns. Under the bill, the applicant must file or arrange to file all outstanding returns to the commissioner's satisfaction before the commissioner may issue or renew the license or permit.

Existing law bars the commissioner from issuing or renewing such licenses or permits for anyone who he determines owes any state taxes for which all administrative or judicial remedies have expired or been exhausted. 

EFFECTIVE DATE: January 1, 2017

202 & 203 — MARKET-BASED SOURCING FOR CORPORATION AND PERSONAL INCOME TAX PURPOSES

By law, multistate companies must determine where their sales are made in order to calculate the portion of their income that is attributed to Connecticut and thus subject to tax. Current law establishes “sourcing rules” that companies must use to determine which sales are sourced (i.e., assigned) to Connecticut. The bill requires companies to use market-based sourcing to determine which service sales are attributable to Connecticut for corporation and personal income tax purposes. Under market-based sourcing rules, companies source service sales based on where their customers are located or receive the benefit of the services. Current law requires them to source service sales based on where the services are performed (i.e., origination-based sourcing).

The bill generally applies the same sourcing rules to the corporation and personal income tax, with the exception of sourcing receipts derived from real property sales, rentals, leases, and licenses.

By law, unchanged by the bill, companies must use destination-based sourcing to determine how sales of tangible personal property are sourced to Connecticut for both corporation and personal income tax purposes. Under these rules, sales are sourced to the state if the property is delivered or shipped to a purchaser here.

Corporation Income Tax Sourcing Rules

The bill requires corporation income taxpayers to use market-based sourcing to assign gross receipts from service sales to the state (i.e., source such receipts to Connecticut if the market for the services is here). Under the bill, the market for a service is in Connecticut if and to the extent the service is used here. Current law requires companies to source service sales to Connecticut if the services are performed here.

The bill also assigns gross receipts from the following sources to Connecticut:

1. Real or tangible personal property rentals, leases, or licenses are assignable to Connecticut to the extent the property is located here. Under current law, rentals and royalties from properties located in Connecticut are assignable to the state.

2. Intangible property rentals, leases, or licenses are assignable to Connecticut if and to the extent the property is used here. Under the bill, intangible property used to market a good or service to a consumer is used in Connecticut if the good or service is purchased by a consumer in the state. Under current law, royalties from the use of patents or copyrights within the state are assignable to Connecticut.

3. Interest managed or controlled in Connecticut is assignable to the state, as under current law.

4. Other sources not specified under the bill or existing law are assignable to Connecticut to the extent the market for the sales is here. Current law specifies that all other receipts earned in Connecticut are sourced here.

The bill excludes gross receipts from the sale or disposition of real property, tangible personal property, or intangible property from a corporation's apportionment fraction (i.e., the ratio corporations use to determine the portion of their income attributable to Connecticut and thus subject to taxation) if the property is not held by the taxpayer primarily for sale to customers in the ordinary course of business. Under current law, net gains from the sale or disposition of intangible assets managed or controlled in Connecticut and tangible assets situated in Connecticut are sourced here and thus included in a corporation's apportionment fraction.

Personal Income Tax Sourcing Rules

The bill similarly requires personal income taxpayers to use market-based sourcing to determine which gross receipts from service sales are earned in Connecticut (i.e., source such receipts to the state if the market for the services is here). Under the bill, the market for a service is in Connecticut if and to the extent the service is used here. Current law requires taxpayers to source service sales to the state if they are performed by an employee, agent, agency, or independent contractor chiefly situated at, contracted with, or sent from the taxpayer's Connecticut offices or branches.

The bill also assigns gross receipts from the following sources to Connecticut for personal income tax purposes:

1. Tangible personal property rentals, leases, or licenses are considered earned in Connecticut to the extent the property is located here. Under current regulations, rental income from tangible personal property in Connecticut or any interest in it is attributed to Connecticut (Conn. Agencies Reg. 12-711(b)-3).

2. Intangible property rentals, leases, or licenses are considered earned in Connecticut if and to the extent the property is used here. Intangible property used to market a good or service to a consumer is used in Connecticut if the good or service is purchased by a consumer in the state.

3. Other sources not specified under the bill or existing law are considered earned in Connecticut to the extent the market for the sales is here.

The bill excludes from a company's gross income percentage (see 203 & 204 below) receipts from real property sales, rentals, leases, or licenses. Under existing regulations, income from, and deductions connected with, real property rentals and sales are not subject to apportionment. Rather, such income or deductions are considered to be derived from or connected with Connecticut if the property is located here (Conn. Agencies Reg. 12-711(b)-8).

The bill also excludes, from the gross income percentage, receipts from the sale or disposition of tangible personal property or intangible property if the property is not held by the taxpayer primarily for sale to customers in the ordinary course of business.

Alternative Sourcing Methodology

Under the bill, if a corporate or personal income taxpayer concludes that it cannot reasonably assign its receipts using the sourcing rules established under existing law and the bill, it may petition the DRS commissioner to use an alternate methodology that reasonably approximates these sourcing rules. The taxpayer must submit such a petition no earlier than 60 days before its tax return is due for the first income year to which the petition applies, including any filing deadline extensions. The DRS commissioner must grant or deny the petition before the return is due.

EFFECTIVE DATE: The corporation income tax provisions are effective upon passage and applicable to income years beginning on or after January 1, 2016 and the personal income tax provisions are effective January 1, 2017 and applicable to income years beginning on or after that date.

203 & 204 — SINGLE SALES APPORTIONMENT FOR PERSONAL INCOME TAX PURPOSES

By law, multistate businesses operating in Connecticut must determine how much of their gains and losses is attributable to Connecticut for personal income tax purposes. Current law requires businesses to calculate this proportion by multiplying their net income by the average of the percentage of property, payroll, and gross sales in Connecticut. The bill removes the property and payroll percentage from this calculation. As under existing law, businesses must calculate the gross income percentage by dividing their gross receipts in Connecticut by all of their gross receipts.

The bill requires that the portion of a nonresident partner's, shareholder's, or beneficiary's share of income derived from or connected with sources in the state be determined according to these statutory apportionment provisions, rather than DRS regulations consistent with them.

EFFECTIVE DATE: January 1, 2017 and applicable to income years beginning on or after that date.

205 — SALES AND USE TAX EXEMPTIONS

The bill exempts from the sales and use tax sales of feminine hygiene products and disposable and reusable diapers.

EFFECTIVE DATE: July 1, 2018 and applicable to sales occurring on or after that date.

206 — PROPERTY TAX EXEMPTION FOR REAL ESTATE SIGNS

The bill exempts from the property tax signs placed on properties indicating that the properties are for sale or lease.

EFFECTIVE DATE: July 1, 2016

207 — AUTHORITY TO AMEND ADOPTED MUNICIPAL BUDGETS

The bill authorizes municipalities, from the bill's passage through June 30, 2017, to amended an adopted budget if (1) state aid to the municipality is reduced below the amount projected for the adopted budget, (2) the budget amendment does not exceed the amount of the reduced state aid, and (3) the budget amendment is approved in the same manner as the original budget.

This authorization applies to towns, cities, boroughs, consolidated towns and cities, and consolidated towns and boroughs. It applies regardless of conflicting (1) statutes affecting boards of education, municipalities, and property tax levy and collection; (2) special acts; or (3) municipal charters or home rule ordinances.

EFFECTIVE DATE: Upon passage

209 — COMMISSION ON HEALTH EQUITY ELIMINATED

The bill eliminates the 32-member Commission on Health Equity. The commission is currently in the Office of the Healthcare Advocate for administrative purposes only. It works to eliminate disparities in health status based on race, ethnicity, gender, and linguistic ability and improve the quality of health for all state residents.

EFFECTIVE DATE: July 1, 2016

210 — HEALTHY START PROGRAM

The bill eliminates a requirement that the DSS commissioner, in consultation with the DPH commissioner, develop a plan to maximize federal Medicaid reimbursements for Healthy Start in Connecticut and expand services within available state appropriations. Healthy Start is a service delivery program for low-income pregnant women that promotes and supports positive maternal and neonatal health outcomes. The bill also repeals obsolete provisions requiring the commissioners to evaluate the program in 2013 and 2014.

EFFECTIVE DATE: July 1, 2016

501 & 502 — ELECTRONIC NICOTINE DELIVERY SYSTEM OR VAPOR PRODUCT DEALERS AND MANUFACTURERS

The bill makes various changes to the laws requiring electronic nicotine delivery system or vapor product dealers and manufacturers to register with DCP and annually renew their registrations in order to sell or manufacture these products.

By law, an electronic nicotine delivery system is an electronic device used to simulate smoking while delivering nicotine or another substance to a person who inhales from it. By law, this includes (1) electronic cigarettes, cigars, cigarillos, pipes, and hookahs and (2) related devices, cartridges, liquid, or other components. A vapor product uses a heating element; power source; electronic circuit; or other electronic, chemical, or mechanical means, regardless of shape or size, to produce a vapor the user inhales. The vapor may or may not include nicotine (CGS 53-344b).

Dealer and Manufacturer Registration

The bill limits the manufacturers' registration requirement to business owners and dealers' registration requirement to business owners or their authorized designees. Under current law, the requirement applies to any “person” selling or manufacturing these products. Under the bill, each affiliate under the business's common control or ownership must obtain its own permit.

The bill eliminates provisions (1) requiring partnerships to submit new applications and pay new fees if they add one or more new partners and (2) specifying that the remaining partners need not file a new application or pay an additional fee if one or more of the partners dies or retires.

The bill also specifies that the dealer registration requirement applies to retailers, wholesalers, and dealers.

Application

The bill requires the application for a dealer or manufacturer registration to include the applicant's email address. It eliminates requirements that the applications include (1) a financial statement detailing any business transactions connected to the application and (2) the applicant's criminal convictions. It also allows, rather than requires, DCP to require applicants to provide proof that the business location will meet state and local building, fire, and zoning requirements.

Notice of Violations

The law makes it illegal to manufacture, sell, offer for sale, or possess with intent to sell an electronic nicotine delivery system or vapor product without a manufacturer or dealer registration requirement and establishes fines and penalties for violations.

Current law requires the DCP commissioner to notify a dealer or manufacturer of a violation before imposing a penalty. The bill eliminates a requirement that he do so within available appropriations and allows him to send the notice by email to the email address designated on the dealer's or manufacturer's application or renewal form. As under existing law, he may also send the notice with a certificate of mailing or a similar U.S. Postal Service form that verifies the date on which it was sent.

EFFECTIVE DATE: Upon passage