OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sHB-5580

AN ACT ESTABLISHING A FARM BREWERY MANUFACTURER PERMIT.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 17 $

FY 18 $

FY 19 $

Department of Revenue Services

GF - Revenue Gain

None

None

Potential Minimal

Consumer Protection, Dept.

GF - Revenue Gain

None

None

less than 1,200

Note: GF=General Fund

Municipal Impact: None

Explanation

The bill may result in potential minimal revenue gain in sales tax and alcoholic beverages tax by creating a farm brewery manufacturing permit. The actual revenue gain is dependent upon (1) the number of establishments that would qualify for the permit and (2) the size of the establishment's production.

It is anticipated that any revenue gain would occur in the out years of FY 19 and beyond due to the nature of the cultivation of associated crops. The bill requires a farm to grow at least 25% of the hops and barley it uses in the manufacturing process within the first year of the issuance of the permit. However, such crops take multiple years to cultivate. Assuming no farms are currently producing at or near this level, there may be a lag in the time needed to meet the required production thresholds in the bill.

To the extent that farms are currently producing at or near this level, the timing of the fiscal impact may occur sooner than FY 19.

The impacts to the sales tax listed above would also result in corresponding impacts to the Municipal Revenue Sharing Account and the Special Transportation Fund.1

Additionally the bill results in a revenue gain beginning in FY 19 of less than $1,200 based on the establishment of a farm brewery permit of $300 and an estimated four initial permittees.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation and the number of permittees.

1 PA 15-244, as amended by PA 15-5 JSS and PA 15-1 DSS, requires a monthly transfer of a portion of the sales tax generated into the Municipal Revenue Sharing Account and the Special Transportation Fund. The general sales and use tax rate, from which the diversion occurs, remains at 6.35%.