OLR Bill Analysis

sSB 787

AN ACT CONCERNING REVENUE.

TABLE OF CONTENTS:

SUMMARY

1 — FRESH START PROGRAM

Authorizes the DRS commissioner to establish a fresh start program for qualified taxpayers who owe Connecticut state taxes

2 — EARNED INCOME TAX CREDIT (EITC)

Reduces the EITC from 30% to 27.5%

3 — COLLEGE GRADUATE TAX CREDIT

Creates a refundable personal income tax credit for qualifying college graduates

4 — SOCIAL SECURITY EXEMPTION

Fully exempts Social Security benefits from state income tax

5-8 — ESTATE AND GIFT TAX

Increases the estate and gift tax threshold over three years; as of January 1, 2020, eliminates the gift tax and limits the taxable gifts included in a decedent's estate to those made during the three years preceding death; lowers, from $20 million to $15 million, the cap on the maximum estate and gift tax imposed

9 — INSURANCE PREMIUMS TAX CREDIT CAP

Makes the tax credit cap for insurance premium taxpayers permanent

10, 11 & 15 — FILM AND DIGITAL MEDIA PRODUCTION TAX CREDITS

Makes permanent the moratorium on issuing film and digital media production tax credits to certain motion pictures; allows credits to be claimed against the sales and use tax and the gross earnings tax on cable, satellite, and competitive video services

12 — SALES AND USE TAX ON SERVICES RENDERED BETWEEN PARENT COMPANIES AND SUBSIDIARIES

Expands the number of affiliated businesses that qualify for the sales and use tax exemption on sales of services between affiliates

13 — STRANDED TAX CREDITS AND CAPITAL PROJECTS

Requires DECD to create a program to allow businesses to use stranded R&D tax credits for eligible capital projects that generate enough state revenue to cover the credits' cost

14 & 17 — STRANDED TAX CREDIT AUCTIONS

Requires DECD to hold auctions to allow businesses to use stranded tax credits in exchange for investments in technical education initiatives or their own venture capital funds

16 — ESTATE TAX CREDIT FOR TEC INITIATIVE OR INNOVATION INVESTMENT FUND INVESTMENTS

Allows an estate tax deduction for investments in the TEC initiative or an innovation investment fund

18-20 — INSURANCE PREMIUM TAX REDUCTION

Reduces the tax rate for insurance premium and health care centers taxes

21 — HOSPITAL TAX CREDIT

Authorizes a credit against the hospital provider tax during years when the difference between the taxes a hospital owed and supplemental Medicaid payments it received exceeds the FY 17 difference between these two amounts

22 — HOSPITAL VOLUNTARY CONTRIBUTIONS FOR MUNICIPAL SERVICES

Authorizes nonprofit hospitals to make voluntary public service payments to their host municipalities

23 — HOSPITAL TAX PHASE-OUT

Phases out the hospital provider tax over seven years, starting in FY 21

24 — ADMISSIONS TAX

Exempts from the admissions tax events held at the Ballpark at Harbor Yard in Bridgeport and Oakdale Theatre in Wallingford

25 — LOCAL OPTION ADMISSIONS SURCHARGE

Exempts motion picture shows from the surcharge

26 — CAR WASH SERVICES

Exempts coin-operated car washes from the sales and use tax

27 — MARRIAGE LICENSE FEE AND SURCHARGE

Increases the total charge for a marriage license from $30 to $50

28 — STATE FEES

Requires state agencies to determine whether the fees they charge cover their administrative expenses

29 — SALES TAX REVENUE DIVERSION TO THE MUNICIPAL REVENUE SHARING ACCOUNT (MRSA)

Eliminates the sales tax diversion to MRSA beginning July 1, 2017

30 — MUNICIPAL REVENUE SHARING FUND (MRSF) TRANSFER

Transfers funds from the General Fund to MRSF for FYs 18 and 19

31 — BOND AUTHORIZATION LIMIT

Lowers, beginning July 1, 2019, the maximum amount of General Fund-supported debt the legislature may authorize

32 — SPEEDING FINES WORKING GROUP

Creates a working group to study whether fines effectively deter speeding

SUMMARY

This bill makes a number of unrelated changes concerning taxes and revenue. Among other things, the bill:

1. fully exempts Social Security benefits from the state personal income tax ( 4)

2. reduces the insurance premium and health care centers tax rate ( 18-20),

3. phases out the hospital tax over seven years, beginning in FY 21 ( 23),

4. makes various changes to the estate and gift tax, including increasing the estate and gift tax threshold over three years and eliminating the gift tax in 2020 ( 5-8),

5. allows taxpayers holding certain “stranded” R&D credits to use them if they undertake eligible capital projects or make certain investments ( 13, 14 & 17),

6. creates a refundable personal income tax credit for qualifying college graduates ( 3),

7. lowers, beginning July 1, 2019, the maximum amount of General Fund-supported debt the legislature may authorize ( 31).

EFFECTIVE DATE: Various, see below.

1 — FRESH START PROGRAM

Authorizes the DRS commissioner to establish a fresh start program for qualified taxpayers who owe Connecticut state taxes

The bill authorizes the DRS commissioner to establish a fresh start program in which he may, at his discretion, enter into agreements with qualified taxpayers to (1) waive all of the penalties and half of the interest due on delinquent state taxes (other than motor carrier road taxes) and (2) for taxpayers who failed to file a tax return, provide a limited look-back period (i.e., limiting the scope of DRS's review of prior year returns). In exchange, taxpayers must, among other things, disclose certain tax information to the commissioner, file any required returns or documents, and pay their liabilities. The program runs from July 1, 2017 to October 31, 2018 and covers any tax returns due on or before December 31, 2016.

Qualified Taxpayers

Under the bill, the program is open to taxpayers who apply for a fresh start agreement, in the form and manner the commissioner prescribes, and who:

1. failed to file a tax return, or failed to report the full amount of tax properly due on a previously filed return, that was due by December 31, 2016;

2. voluntarily come forward before receiving a billing notice or notice that DRS is conducting an audit for the tax type and taxable period for which the taxpayer is seeking a fresh start agreement;

3. are not parties to a closing agreement with the DRS commissioner for such taxes;

4. have not made an offer of compromise that has been accepted by the commissioner for such taxes;

5. have not protested an audit determination for such taxes; and

6. are not parties to litigation against the commissioner for such taxes.

Conditions

As part of any fresh start agreement, qualified taxpayers must:

1. voluntarily and fully disclose on the application all material facts relevant to their tax liability;

2. file any tax returns or documents that the commissioner requires;

3. pay in full the tax and interest as stated in the agreement in the form and manner the commissioner prescribes;

4. agree that for the three years after the agreement is signed they will timely file any required tax returns and pay any associated state taxes; and

5. waive all administrative and judicial rights of appeal that have not run or expired for the tax period or periods subject to the penalty and interest waiver.

Under the bill, the commissioner is not bound by the penalty and interest waivers in the bill or any fresh start agreement if he finds that the qualified taxpayer:

1. misrepresented material facts in applying for or entering into the agreement;

2. failed to provide any information required for the applicable tax periods by the required due date;

3. failed to pay any tax, penalty, or interest due in the time, form, or manner prescribed;

4. understated by 10% or more the tax due for any taxable period covered by the agreement, including any amount shown on an amended tax return, and cannot demonstrate to the commissioner's satisfaction that a good faith effort was made to accurately compute the tax; or

5. failed to timely file any required tax returns or pay any associated state taxes in the three years following the agreement's signing.

The bill prohibits any payment made by a qualified taxpayer for a tax period covered by an agreement to be refunded to the taxpayer or credited to any other tax period other than the one for which the payment was made.

EFFECTIVE DATE: Upon passage

2 — EARNED INCOME TAX CREDIT (EITC)

Reduces the EITC from 30% to 27.5%

The bill reduces the EITC from 30% to 27.5%. The credit was temporarily reduced to 27.5% for the 2014 through 2016 tax years, but under current law returns to 30% beginning with the 2017 tax year.

EFFECTIVE DATE: Upon passage, and applicable to tax years beginning on or after January 1, 2017.

3 — COLLEGE GRADUATE TAX CREDIT

Creates a refundable personal income tax credit for qualifying college graduates

The bill establishes a $500 personal income tax credit for qualifying college graduates, which they may claim in each of the five successive taxable years after they graduate.

To qualify, an individual must (1) graduate, on or after January 1, 2018, from an in-state or out-of-state college with a bachelor's, master's, or doctoral degree in a science, technology, engineering, or math-related field, (2) work in the state, and (3) live in the state or move to it within two years after graduating. Individuals must meet these criteria in each year they claim the credit. Any individual who claims the credit must provide any documentation the DRS commissioner requires in the form and manner he prescribes.

Under the bill, the DRS commissioner must refund, without interest, any amount of the tax credit that exceeds an individual's liability, unless the law allows him to retain the individual's income tax refund because he or she (1) owes state or municipal taxes or other obligations or (2) is in default of a student loan made by the Connecticut Student Loan Foundation or the Connecticut Higher Education Supplemental Loan Authority (CGS 12-739, -742).

EFFECTIVE DATE: January 1, 2018

4 — SOCIAL SECURITY EXEMPTION

Fully exempts Social Security benefits from state income tax

The bill fully exempts Social Security benefits from state income tax. Under current law, the exemption is 100% or 75% of federally taxable Social Security benefits, depending on income.

Specifically, current law allows a (1) 100% exemption for single filers and married people filing separately that have federal adjusted gross incomes (AGI) of less than $50,000 and joint filers and heads of household that have federal AGIs of less than $60,000 and (2) 75% exemption if the filer's federal AGI equals or exceeds these income thresholds. For federal tax purposes, Social Security benefits are partially taxable for a recipient whose income exceeds a specified amount.

EFFECTIVE DATE: January 1, 2019, and applicable to tax years beginning on or after that date.

5-8 — ESTATE AND GIFT TAX

Increases the estate and gift tax threshold over three years; as of January 1, 2020, eliminates the gift tax and limits the taxable gifts included in a decedent's estate to those made during the three years preceding death; lowers, from $20 million to $15 million, the cap on the maximum estate and gift tax imposed

Tax Threshold

The bill increases the estate and gift tax threshold over three years, from $2 million to the federal estate tax threshold (i.e., the “federal basic exclusion amount,” defined as the amount published annually by the Internal Revenue Service at which a decedent would be required to file a federal estate tax return based on the value of his or her gross estate and federal taxable gifts). The federal threshold is $5.49 million for 2017. The bill also modifies the marginal rate schedule for gifts and estates over $5.1 million, as shown in Table 1.

Table 1: Estate and Gift Tax Rates

Value of Taxable Estate or Gift

Marginal Rates

Current Law

Bill

2018

2019

2020 and after

(estate tax only)

Up to $2,000,000

None

None

None

None

$2,000,001 to $2,600,000

7.2%

$2,600,001 to $3,600,000

7.2%

$3,600,001 to $4,100,000

7.8%

7.8%

7.8%

$4,100,001 to $5,100,000

8.4%

8.4%

8.4%

$5,100,001 to federal threshold

9.0%

10.0%

10.0%

Federal threshold to $6,100,000

10%

$6,100,001 to $7,100,000

9.6%

10.4%

10.4%

10.4%

$7,100,001 to $8,100,000

10.2%

10.8%

10.8%

10.8%

$8,100,001 to $9,100,000

10.8%

11.2%

11.2%

11.2%

$9,100,001 to $10,100,000

11.4%

11.6%

11.6%

11.6%

$10,100,001 and greater

12%

12%

12%

12%

Tax Cap

The bill lowers, from $20 million to $15 million, the cap on the maximum (1) estate tax imposed on the estates of decedents dying on or after January 1, 2018 and (2) gift tax imposed on taxable gifts donors make from January 1, 2018 to January 1, 2020.

Gift Tax Repeal and Three-Year Lookback for Estate Tax

Beginning January 1, 2020, the bill eliminates the gift tax and, for estate tax purposes, limits the taxable gifts included in a decedent's estate to those made during the three years preceding his or her death.

Under current law, the gift tax is unified with the estate tax, meaning that taxable gifts a decedent made during his or her lifetime are treated as part of the estate. For those who die on or after January 1, 2020, the bill limits the gifts included in a decedent's Connecticut taxable estate to federally taxable gifts made by the decedent during the three-year period preceding his or her death, excluding gifts (1) included in the gross estate for federal estate tax purposes, (2) of real estate or tangible personal property located outside the state, and (3) made by a nonresident of property other than real estate or tangible personal property located in Connecticut.

As under current law, a Connecticut taxable estate also includes the amount of any Connecticut gift tax the decedent or his or her estate paid during the three years preceding the decedent's death for gifts the decedent or his or her spouse made. The taxpayer must disregard the federal deduction for state death taxes.

EFFECTIVE DATE: January 1, 2018, and applicable to estates of decedents dying on or after January 1, 2018, except the provisions eliminating the gift tax are effective January 1, 2018.

9 — INSURANCE PREMIUMS TAX CREDIT CAP

Makes the tax credit cap for insurance premium taxpayers permanent

The bill makes permanent the cap on the maximum insurance premium tax liability that an insurer may offset with tax credits. Under current law, the cap expires December 31, 2016.

The cap is part of a structure that (1) classifies the credits insurers may apply to insurance premium tax credits into three types, (2) specifies the order in which they must apply each type to reduce their liability, and (3) establishes the maximum liability that an insurer can offset by claiming one or more of these types of credits.

EFFECTIVE DATE: Upon passage

10, 11 & 15 — FILM AND DIGITAL MEDIA PRODUCTION TAX CREDITS

Makes permanent the moratorium on issuing film and digital media production tax credits to certain motion pictures; allows credits to be claimed against the sales and use tax and the gross earnings tax on cable, satellite, and competitive video services

Permanent Moratorium for Certain Motion Pictures ( 10)

The bill permanently bars, with one exception, the issuance of film and digital media production tax credit vouchers for motion pictures that were not designated as state-certified qualified productions before July 1, 2013. Current law imposes a moratorium on issuing credits to such productions through FY 17.

Under the bill, credit vouchers may be issued for motion pictures that conduct at least 25% of their principal photography days in a Connecticut facility that (1) receives at least $25 million in private investment and (2) opens for business on or after July 1, 2013. These motion pictures are excluded from the moratorium under current law.

As under existing law, other types of qualified productions continue to be eligible for tax credits, such as documentaries, specified television programming, relocated television productions, and video games.

Claiming Against Other Taxes ( 11 & 15)

Beginning with the 2018 income year, the bill allows film and digital media production tax credits to be claimed against the gross earnings tax on cable, satellite, and competitive video services ( 11) and the sales and use tax ( 15), but at less than face value in some circumstances.

Under the bill, a credit applied to such gross earnings tax is valued at (1) 92% of its face value if there is at least 50% common ownership between the transferee and transferor and (2) 95% of its face value if it is transferred to any other taxpayer. For credits applied against the sales and use tax, the bill requires the taxpayer (i.e., the production company or transferee) to pay a fee of six cents on each dollar of tax credit it claims. DRS must deposit fee revenue into the Technical Education Cooperative (TEC) initiative account (see below).

As under existing law, film and digital media production tax credits may also be claimed against the corporation business and insurance premiums taxes at full face value and may be sold, assigned, or otherwise transferred to other taxpayers up to three times.

EFFECTIVE DATE: July 1, 2017, except that provisions making the moratorium permanent are effective upon passage.

12 — SALES AND USE TAX ON SERVICES RENDERED BETWEEN PARENT COMPANIES AND SUBSIDIARIES

Expands the number of affiliated businesses that qualify for the sales and use tax exemption on sales of services between affiliates

Under current law, sales of services between affiliated businesses are generally exempt from the state's sales and use tax when (1) one business owns a 100% controlling interest in the other or (2) the same parent company owns a 100% controlling interest in both. The bill expands the number of affiliated businesses qualifying for the exemption by lowering the ownership threshold, from 100% to at least 80%, for businesses organized as corporations or limited liability companies with more than one member. The 100% threshold continues to apply to businesses organized as partnerships, limited partnerships, limited liability partnerships, trusts, estates, sole proprietorships, single member LLCs, and nonstock corporations.

By lowering the ownership threshold for affiliated businesses, the bill also expands the number of affiliated businesses that may not purchase certain taxable services on “resale.” (Sales on resale are exempt from sales and use tax because the purchaser intends to transfer the service as an integral, inseparable component of another taxable service to a final consumer.) By law, affiliated businesses are barred from purchasing taxable services under the resale exemption when the services are purchased for resale to an affiliate.

EFFECTIVE DATE: July 1, 2017

13 — STRANDED TAX CREDITS AND CAPITAL PROJECTS

Requires DECD to create a program to allow businesses to use stranded R&D tax credits for eligible capital projects that generate enough state revenue to cover the credits' cost

The bill requires DECD to establish, administer, and adopt regulations to implement a program that allows in-state businesses to use certain stranded tax credits (“accumulated credits” under the bill) for eligible in-state capital projects. Under this section of the bill, “accumulated credits” are nonincremental R&D credits that have not been taken through the business's last complete income year prior to its program application date (therefore, the credits are “stranded”).

The eligible projects may be planned or currently underway and must (1) expand the business's scale or scope, (2) increase employment at the business, or (3) generate a substantial return to the state's economy.

Application and Review

Under the bill, businesses must apply to DECD, on forms the commissioner provides, to use their stranded credits under the program. The application must include (1) a detailed plan of the capital project, (2) the project's term and estimated cost, and (3) the amount of stranded tax credits the business proposes to use.

The bill requires the DECD commissioner to (1) perform an econometric analysis of each proposed project and (2) approve only those projects that she determines will generate state revenue in excess of the amount of stranded tax credits proposed for use. Stranded tax credit amounts must be confirmed by DRS in consultation with the DECD commissioner.

Claiming Schedule

Under the bill, the DECD commissioner, in consultation with DRS, must determine when a business may claim their stranded tax credits. The bill prohibits her from approving a business's use of the credits before its capital project has generated enough revenue to cover the credits' cost to the state. Stranded credits may be claimed against the corporation business and sales and use taxes.

Reporting

Starting by July 1, 2018, DECD must annually report on the program to the Commerce and Finance, Revenue, and Bonding committees. The report must include:

1. the number of applications received and approved under the program;

2. the status of approved capital projects,

3. the amount of stranded tax credits proposed for use under the program, and

4. for each approved project, the amount and type of state revenue (a) generated to date and (b) projected for the five years after the project's completion.

EFFECTIVE DATE: July 1, 2017

14 & 17 — STRANDED TAX CREDIT AUCTIONS

Requires DECD to hold auctions to allow businesses to use stranded tax credits in exchange for investments in technical education initiatives or their own venture capital funds

The bill requires the DECD commissioner, in consultation with the DRS commissioner and Connecticut Innovations (CI) Chief Executive Officer (CEO), to hold tax credit auctions to allow taxpayers holding certain stranded tax credits (i.e., “accumulated credits”) to use the credits in exchange for making specified investments. With respect to such auctions, “accumulated credits” means nonincremental R&D and incremental R&D tax credits that have not been taken through the last complete income year prior to the auction's date (therefore, the credits are “stranded”).

Auctions

Under the bill, the DECD commissioner must hold two types of tax credit auctions when, and as often as, she deems appropriate and effective: (1) TEC initiative tax credit auctions and (2) innovation investment fund tax credit auctions. The bill limits the total amount of credits that may be exchanged through this process to $50 million dollars.

Process. For each auction, the DECD commissioner, in consultation with the CI CEO, must specify the information that a bid must include and the deadline for submitting it. Bidders must submit sealed bids, and the minimum bid for each auction is 80 cents for each dollar of stranded tax credits proposed for exchange.

The DECD commissioner, in consultation with the CI CEO, must select the winning bid or bids based on the amount the bidder proposes to invest and the amount of stranded tax credits the bidder proposes to exchange, as well as any other criteria the DECD commissioner and CI CEO deem appropriate, considering the total amount of investment sought, if any, from each auction.

Claiming Credits. The bill allows stranded tax credits exchanged through an auction to be used only against the insurance premiums, hospital, and sales and use taxes. However, incremental R&D and non-incremental R&D tax credits are earned by corporation business taxpayers and are not transferrable. It is therefore unclear if credits exchanged through the auction may be claimed against the insurance premiums or hospital taxes. It also appears that tax credits exchanged through a tax credit auction can no longer be applied to the corporation business tax.

Credits awarded through the auction must be claimed according to the schedule below. (Year 1 is the year in which the investment was made. Credit percentage refers to the percent of the total value of the credits awarded through the auction that may be claimed in that year.)

Year

1

2

3

4

5

6

7

8

Credit %

0%

0%

0%

20%

20%

20%

20%

20%

TEC Initiative

Account. The bill establishes a “TEC initiative account” as a separate, nonlapsing account within the General Fund. It requires the account to contain any money required by law, and requires the DECD commissioner to deposit any money received through a TEC initiative auction into the fund. The TEC initiative account must also include revenue from (1) fees for using film production tax credits against the sales tax ( 15) and (2) investments made in the account for purposes of the estate tax credit ( 16).

It requires the DECD commissioner, in consultation with the CI CEO, to administer the TEC initiative account to provide funding and expand education and training opportunities, as the bill specifies, to (1) prepare the state's workforce for existing and anticipated manufacturing jobs and (2) increase the number of high school and community college graduates with training and experience in manufacturing, computer programming, information technology, and data management.

TEC Initiative Components. Under the bill, TEC initiative, in consultation with the Connecticut Center for Advanced Technology (CCAT), must provide funds to (1) expand and enhance manufacturing technology and support programs and services for in-state manufacturers and (2) expand to additional schools programs to encourage students to consider technical education as a highly successful and desirable career path. It must build new, proactive partnerships with employers and manufacturers in the state by:

1. establishing employer-led job pipeline initiatives in each of the state's workforce development board regions to match open jobs with qualified workers the board identifies,

2. providing funds to support apprenticeship programs and the Subsidized Training and Employment Program, and

3. providing funds to expand adult education programs and classes for workers seeking new careers.

It must also provide grants to partnerships between local school districts, technical schools, or community colleges and private businesses, with a preference for businesses who provide matching funds, which are seeking to create or expand a technical education program at a public high school, technical school, or community college.

Innovation Investment Funds

Under the bill, investment amounts received from the winning bidder or bidders of an innovation investment tax credit auction must be deposited in the winning bidder's corporate venture fund. The bill requires that the amount invested in a corporate venture fund be between $5 million and $10 million dollars. (Presumably, this implicitly imposes a floor and a cap on a bidder's bid.)

Under the bill, all such amounts invested must be invested in in-state startup businesses or spin-off companies from the bidder's R&D department. All profits received from such investments must be divided equally between the state and the bidder; the state must invest such profits in the general fund, and the bidder must agree to reinvest its profits in the venture fund. It is unclear whether these provisions apply to the total amount of funds invested in the winning bidder's fund or only to the amount invested pursuant to the auction. If it is the latter, it is unclear how the amount of profit attributable to that investment would be determined.

The bill also requires all investments to be made with a CI representative, who must be a member of the corporate venture fund's investment committee. (Presumably, this requirement applies to all investments from the bidder's fund and not just those related to the investment from the auction.)

EFFECTIVE DATE: July 1, 2017

16 — ESTATE TAX CREDIT FOR TEC INITIATIVE OR INNOVATION INVESTMENT FUND INVESTMENTS

Allows an estate tax deduction for investments in the TEC initiative or an innovation investment fund

Current law allows a Connecticut estate tax reduction for decedents who made qualifying investments through CI's investment program for state residents (CGS 32-39(43)). The bill (1) expands investments that qualify for the deduction to include those in the TEC initiative or an innovation investment fund (presumably, this refers to the corporate venture funds of winning bidders under 14) and (2) reduces, from 10 years to 4 years, the length of time an investment must be in the funds to qualify for the reduction. As under existing law, the deduction applies only to decedents who die on or after January 1, 2021.

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

EFFECTIVE DATE: July 1, 2017

18-20 — INSURANCE PREMIUM TAX REDUCTION

Reduces the tax rate for insurance premium and health care centers taxes

Beginning January 1, 2018, the bill reduces, from 1.75% to 1.50%, the tax on (1) subscriber charges that health care centers imposed on contracts they enter into or renew during the year and (2) insurance premiums paid to Connecticut insurers and out-of-state and foreign insurers doing business in Connecticut.

EFFECTIVE DATE: Upon passage

21 — HOSPITAL TAX CREDIT

Authorizes a credit against the hospital provider tax during years when the difference between the taxes a hospital owed and supplemental Medicaid payments it received exceeds the FY 17 difference between these two amounts

Starting with FY 18, the bill authorizes a credit against the hospital provider tax during those fiscal years when the difference between the (1) amount of hospital tax a hospital owed prior to the application of tax credits and (2) amount of supplemental Medicaid payments it received exceeds the FY 17 difference between these two amounts. The credit equals the difference between the total amount of state and federal supplemental Medicaid payments the hospital would have received during the fiscal year under the budget the legislature adopted and the amount it actually received.

This credit is not subject to the statutory cap on the amount of urban reinvestment tax credits hospitals can claim each year to offset their tax liability. Hospitals acquire these urban reinvestment tax credits from developers that, by law, can transfer them to other taxpayers liable for various taxes, including insurance premium, corporation business, and hospital and ambulatory surgical center taxes.

EFFECTIVE DATE: July 1, 2017

22 — HOSPITAL VOLUNTARY CONTRIBUTIONS FOR MUNICIPAL SERVICES

Authorizes nonprofit hospitals to make voluntary public service payments to their host municipalities

The bill authorizes nonprofit hospitals to make voluntary public service payments to their host municipalities equal to the property taxes they would have paid if their property had been subject to the property tax. A hospital that chooses to make such payments must do so by entering into an agreement with its host municipality.

EFFECTIVE DATE: July 1, 2017

23 — HOSPITAL TAX PHASE-OUT

Phases out the hospital provider tax over seven years, starting in FY 21

Beginning in FY 21 the bill phases out, over seven years, the tax on hospital net patient revenue. The social services commissioner must reduce the tax over this period in equal increments. The commissioner must base the annual reductions on the taxes hospitals pay in FY 20.

During the phase-out period, the commissioner (1) must promptly notify each hospital of the taxes it owes and (2) may, in consultation with the Office of Policy and Management secretary and as federal law allows, exempt a hospital from the tax on payments it earns for providing outpatient services based on financial hardship. Similar provisions apply under current law.

EFFECTIVE DATE: July 1, 2017

24 — ADMISSIONS TAX

Exempts from the admissions tax events held at the Ballpark at Harbor Yard in Bridgeport and Oakdale Theatre in Wallingford

The bill exempts from the state's 10% admissions tax any (1) athletic event presented by an Atlantic League of Professional Baseball member team at Bridgeport's Harbor Yard Ballpark and (2) event at the Oakdale Theatre in Wallingford. Under current law, athletic events at the Harbor Yard Ballpark are temporarily exempt until June 30, 2017.

EFFECTIVE DATE: January 1, 2018

25 — LOCAL OPTION ADMISSIONS SURCHARGE

Exempts motion picture shows from the surcharge

The bill exempts motion picture shows from the local option admissions surcharge. By law, municipalities may impose a surcharge (generally 5%) on admission charges to events held at a range of amusement, entertainment, or recreation facilities located within the municipalities.

EFFECTIVE DATE: July 1, 2017

26 — CAR WASH SERVICES

Exempts coin-operated car washes from the sales and use tax

The bill exempts coin-operated car washes from the sales and use tax. As under existing law, all other car wash services are subject to the tax.

EFFECTIVE DATE: July 1, 2017

27 — MARRIAGE LICENSE FEE AND SURCHARGE

Increases the total charge for a marriage license from $30 to $50

Under current law, the $30 marriage license fee consists of a (1) base $10 fee, which is retained by the municipality issuing the license and (2) $20 surcharge, which is split between the municipality ($1) and the state ($19). Under the bill, the marriage license fee becomes $50, with the base fee increasing from $10 to $15 and the surcharge from $20 to $35. Since the bill retains the municipality's share of the surcharge at $1, it increases the state's share from $19 to $34.

By law, the state's share of the surcharge is credited to an account used to fund shelter services for domestic violence victims and rape crisis services.

EFFECTIVE DATE: July 1, 2017

28 — STATE FEES

Requires state agencies to determine whether the fees they charge cover their administrative expenses

The bill establishes a procedure and timeframe for reviewing state fees and recommending fee increases to the Finance, Revenue and Bonding Committee. It requires each agency, except the Office of Policy and Management (OPM), to determine if the fees they charge cover the collection costs and the associated administrative expenses and report any recommended fee increases to OPM by December 1, 2017.

OPM must report to the Finance Committee by February 7, 2018 any recommended increases of up to 50% of any existing fee, but the total amount of the fee increase cannot exceed $20 million.

EFFECTIVE DATE: Upon passage

29 — SALES TAX REVENUE DIVERSION TO THE MUNICIPAL REVENUE SHARING ACCOUNT (MRSA)

Eliminates the sales tax diversion to MRSA beginning July 1, 2017

The bill eliminates the requirement that the DRS commissioner deposit in MRSA 7.9% of the sales tax revenue received by the state for calendar months beginning July 1, 2017.

EFFECTIVE DATE: July 1, 2017

30 — MUNICIPAL REVENUE SHARING FUND (MRSF) TRANSFER

Transfers funds from the General Fund to MRSF for FYs 18 and 19

The bill transfers from the General Fund to MRSF $264.9 million each year in FY 18 and FY 19.

EFFECTIVE DATE: July 1, 2017

31 — BOND AUTHORIZATION LIMIT

Lowers, beginning July 1, 2019, the maximum amount of General Fund-supported debt the legislature may authorize

Beginning July 1, 2019, the bill lowers the maximum amount of General Fund-supported state debt the General Assembly may authorize to 1.575 times, rather than 1.6 times, the estimated net General Fund tax receipts for the fiscal year of the authorization. By law, the limit must be calculated using the Finance Committee's estimates of annual General Fund tax revenue included in the state budget.

EFFECTIVE DATE: July 1, 2017

32 — SPEEDING FINES WORKING GROUP

Creates a working group to study whether fines effectively deter speeding

The bill creates a 25-member working group to analyze the efficacy of fines in deterring excessive speeding. The group is comprised of the following:

1. the DRS, Department of Motor Vehicles, and Department of Emergency Services and Public Protection commissioners or their designees;

2. the OPM secretary or his designee;

3. the Chief State's Attorney or his designee;

4. the Chief Public Defender or her designee;

5. a clerk from the Centralized Infractions Bureau designated by the Chief Court Administrator;

6. a municipal police department representative designated by the Connecticut Police Chiefs Association president;

7. a state police representative designated by the Connecticut State Police Union president; and

8. the chairs and ranking members of the Judiciary, Public Safety, Transportation, and Finance, Revenue and Bonding committees.

Group's Charge

The group must examine available data related to the following specified factors:

1. how frequently fines are imposed for speeding violations,

2. the percentage of speeding fines that are (a) paid or (b) contested,

3. the average amount of such fines collected in a fiscal year,

4. the estimated costs associated with imposing and collecting the fines,

5. procedures used by police with respect to drivers who are speeding,

6. statistical comparisons with other states and nationally, and

7. any other information that may assist the working group in carrying out its analysis.

The bill allows the group to consult with any individuals or entities it deems appropriate to (1) conduct its analysis and (2) determine alternative methods and systems that may be considered for implementation to more effectively promote safe driving.

The bill does not provide a reporting deadline for the working group or state who the group must report to.

EFFECTIVE DATE: Upon passage

COMMITTEE ACTION

Finance, Revenue and Bonding Committee

Joint Favorable Substitute

Yea

51

Nay

0

(04/27/2017)