OLR Bill Analysis

SB 1503

Emergency Certification

AN ACT MAKING MINOR AND TECHNICAL CHANGES TO THE STATE BUDGET AND RELATED IMPLEMENTING PROVISIONS FOR THE BIENNIUM ENDING JUNE 30, 2019.

TABLE OF CONTENTS:

1-10, 15 & 28 — CHANGES TO THE HOSPITAL PROVIDER TAX AND USER FEES ON NURSING HOMES AND INTERMEDIATE CARE FACILITIES

Makes numerous changes to the hospital provider tax and user fees on nursing homes and intermediate care facilities, established under the FY 18-19 budget act

11, 13, 14 & 28 — HOSPITAL SUPPLEMENTAL PAYMENTS

Establishes a new schedule for Medicaid supplemental payments for FYs 18 and 19; generally makes such payments subject to federal approval; and eliminates a provision allowing hospitals to delay their provider tax payments for any quarter in which DSS delays supplemental pool payments

12 — HOSPITAL MEDICAID RATES

Removes dollar-amount increases for hospital Medicaid rates required under PA 17-2 and instead requires DSS to increase certain base rates and base conversion factors used to calculate the rates; establishes a schedule for the rate increase; and prohibits the DSS commissioner from removing the rate increases, subject to federal approval.

16 & 17 — APPROPRIATION AND REVENUE ESTIMATE ADJUSTMENTS

Please refer to the fiscal note for a summary of these sections

18 — SOCIAL SECURITY INCOME TAX EXEMPTION

Pushes out, from the 2018 tax year to the 2019 tax year, the start of the increase in the maximum income filers may have to qualify for the 100% income tax exemption for Social Security benefits

19 — CORPORATION INCOME TAX DEDUCTION FOR CERTAIN PUBLICLY-TRADED COMPANIES (FAS 109 DEDUCTION)

Pushes back, from the 2018 income year to the 2021 income year, the first year in which certain publicly-traded companies may claim the FAS 109 deduction

20 & 28 — LOCAL BUDGET AND TAX ADJUSTMENTS DUE TO INCREASED AID

Modifies a provision in the budget act that allows municipalities and regional boards of education to amend adopted budgets

21 — SUPPLEMENTAL MOTOR VEHICLE PROPERTY TAX GRANTS TO CERTAIN MUNICIPALITIES

Beginning in FY 18, authorizes certain municipalities that implemented a revaluation in 2014 or 2015 to apply to OPM for an additional motor vehicle property tax grant

22 — IMPAIRMENT OF CONTRACTS

Exempts the state treasurer's investments and the state's bonds, notes, and other obligations for borrowed money from a law which specifies when the state may enact legislation to impair its contracts

23-26 — RESPONSIBILITY FOR RENTERS' REBATE PROGRAM

Returns responsibility for administering the Renters' Rebate Program to OPM and creates a mechanism through which municipalities cover 50% of the cost of rebates, up to $250,000 per municipality per year

27 — CITIZENS' ELECTION PROGRAM (CEP)

Limits the CEP grant reduction schedule established in PA 17-2, JSS, to regular state elections and retains the grant amount a legislative candidate may receive in a special election at 75% of the amount authorized for that candidate in the general election

1-10, 15 & 28 — CHANGES TO THE HOSPITAL PROVIDER TAX AND USER FEES ON NURSING HOMES AND INTERMEDIATE CARE FACILITIES

Makes numerous changes to the hospital provider tax and user fees on nursing homes and intermediate care facilities, established under the FY 18-19 budget act

The FY 18-19 budget act sunset the prior tax on hospitals and user fees on nursing homes and intermediate care facilities for individuals with intellectual disabilities (ICF-IDs) and reestablished the tax and fees as part of a new tax and fee structure. The bill makes various changes to the newly established tax and fees.

Tax Rates

PA 17-2, JSS ( 602), establishes a formula for calculating the tax rate on inpatient and outpatient hospital services based on the amount of tax revenue specified for the given fiscal year. For FYs 18 and 19, the current rate for (1) inpatient hospital services is $306 million divided by the total audited net inpatient revenue for FY 16 for all hospitals subject to the tax and (2) outpatient hospital services is $594 million divided by the total FY 16 audited net outpatient revenue for FY 16 for all such hospitals.

The bill instead, for FYs 18 and 19, sets the tax rate for (1) inpatient hospital services at 6% of each hospital's FY 16 audited net revenue attributable to such services and (2) outpatient hospital services at $900 million minus the total tax imposed on all hospitals for providing inpatient hospital services, divided by the total FY 16 audited net revenue attributable to outpatient hospital services for all hospitals subject to the tax.

The bill retains the tax rate for FY 20 and thereafter for both inpatient and outpatient hospital services: $384 million divided by the total FY 16 audited net revenue for all hospitals subject to the tax.

Payments Made for the Prior Hospital Tax

The bill requires the DRS commissioner to apply any tax payments hospitals made for the prior hospital tax for the period ending September 30, 2017, as a partial payment of the hospital's estimated tax payment due December 15, 2017.

It also requires him to return to a hospital any tax credit the hospital claimed related to the prior hospital tax for the period ending September 30, 2017 so that they may be assigned. By law, unchanged by the bill, health care providers may not use tax credits to reduce their hospital tax or nursing home or ICF-ID user fee liability but may assign the credits to another taxpayer or taxpayers one time.

Calculating the Tax Due

For each fiscal year, beginning with FY 18, the bill requires each hospital required to pay tax on inpatient or outpatient hospital services to calculate the amount of tax due, on forms prescribed by the DRS commissioner, by multiplying the applicable rate described above by its audited net revenue for FY 16. As under current law, hospitals must make the required payments on forms provided by the commissioner and in accordance with procedures he establishes.

Exemptions for Certain Hospitals

The law requires the DSS commissioner to seek approval from the federal Centers for Medicare and Medicaid Services (CMS) to exempt from the tax (1) specialty hospitals; (2) children's general hospitals; and (3) hospitals operated exclusively by the state, other than those the state operates as a receiver. The bill specifies that any hospital for which CMS denies an exemption is deemed a hospital for purposes of the provider tax and, as under existing law, must pay the tax.

The law also requires the commissioner, before January 1, 2018, and every three years thereafter, to seek CMS approval to exempt financially distressed hospitals from the tax on outpatient hospital services. The bill increases the threshold at which a hospital is considered financially distressed to one that has experienced an average net loss of more than 5% of aggregate revenue over a five-year period, rather than more than 1%. As under existing law, the loss must be reflected in the five most recent years of financial reports made available by the Office of Health Care Access for such hospital as of July 1 of the year in which the exemption is requested.

Underreported Revenue

The bill requires the DRS commissioner, in consultation with certain state officials and entities, to determine if there is any underreporting of revenue on audited financial statements. He must do so (1) in consultation with the Department of Social Services (DSS) commissioner, Office of Policy and Management secretary, the Connecticut Hospital Association, and the hospitals subject to the provider tax and (2) only as he is authorized under the state law limiting the inspection and disclosure of tax returns and return information (described below). The bill also authorizes the commissioner to issue any necessary guidance to address the underreporting.

Under the bill, if the commissioner determines that a hospital underreported net revenue on its audited financial statement, the underreported amount must be added to the amount of net revenue reported on the hospital's audited financial statement in order to comply with federal law and the revised net revenue amount must be used in calculating the amount of tax the hospital owes.

The bill defines underreported net revenue as any revenue of a hospital subject to the hospital provider tax that (1) must be included in net revenue from providing inpatient and outpatient hospital services under federal laws establishing requirements for state health care-related taxes and (2) was not reported on the hospital's audited financial statement. The bill specifies that underreported net revenue must only include revenue of the hospital subject to the tax.

Disclosure and Inspection of Tax Information

The bill specifies that the hospital provider tax provisions do not affect the DRS commissioner's statutory obligations to keep confidential tax returns and return information, except under certain narrow conditions. By law, a “return” is any of the following filed with the commissioner by, on behalf of, or with respect to, anyone: (1) a tax or information return; (2) an estimated tax declaration; (3) a refund claim; or (4) any license, permit, registration, or other application. The term also covers amendments or supplements, including supporting schedules, attachments, or lists that supplement or are part of a filed return. “Return information” includes:

1. a taxpayer's identity;

2. the nature, source, or amount of the taxpayer's income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax collected or withheld, tax under- or over-reportings, or tax payments; and

3. any other data received, recorded, prepared, or collected by or furnished to the commissioner regarding (a) a return or (b) any determination of liability for a tax, penalty, interest, fine, forfeiture, or other imposition or offense (CGS 12-15(h)(1) & (2)).

Federal Waiver to Exempt Certain Facilities from the Nursing Home Resident Day Fee

Current law requires the DSS commissioner to seek approval from CMS to exempt continuing care retirement communities (CCRCs) from the nursing home resident day user fee. The bill instead requires the commissioner, before January 1, 2018, to seek approval to exempt each CCRC licensed on or before July 1, 2017, and registered with DSS on July 1, 2017, that is:

1. licensed for up to 75 beds;

2. licensed for 76 to 150 beds, provided the nursing home reported more than 6,500 days of care paid by Medicare in its most recent cost report filed with DSS, as of the date the commissioner submits the waiver request; or

3. not subject to statutory certificate of need requirements for nursing home facilities.

Additionally, the bill requires the commissioner to seek approval to exempt from the fee any CCRC licensed on or after July 2, 2017 that meets one of the criteria above.

Payment Extension

Current law allows hospitals, for FYs 18 and 19, to delay their tax payments for any quarter in which DSS delays supplemental payments, without incurring penalties or interest, until 14 days after getting the supplemental payments due for that quarter (PA 17-2, JSS ( 618)). The bill eliminates this provision and instead allows taxpayers subject to provider tax or fees to request a payment extension under certain circumstances.

The bill allows taxpayers to file, on or before the date a tax or fee payment is due, a request for a reasonable extension of time to pay the tax or fee due to undue hardship. Under the bill, undue hardship is demonstrated by a showing that the taxpayer is at substantial risk of defaulting on a bond covenant or a similar obligation if it were to make payment on the due date. A taxpayer must file the request on forms prescribed by the DRS commissioner and include complete information on its inability to make payment.

The bill authorizes the commissioner to grant an extension if he determines an undue hardship exists, but prohibits him from granting one for a general statement of hardship or for the taxpayer's convenience. The extension may not exceed three months from the payment's original due date, except that the commissioner may grant up to an additional three-month extension if the taxpayer (1) files a subsequent request for one by the extended due date and (2) demonstrates extraordinary circumstances, as determined by the commissioner.

If the commissioner grants an extension, no interest or penalties accrue during the extension period if the taxpayer pays the tax or fee due by the extended due date. Taxpayers that fail to do so are subject to a penalty of 10% of the unpaid tax or fee or $50, whichever is greater, plus 1% interest for each full or partial month that the tax or fee remains unpaid from the extended due date. A similar penalty and interest applies under existing law for unpaid hospital provider taxes and nursing home and ICF-ID fees.

Appeals of Commissioner's Decisions

Existing law authorizes any taxpayer aggrieved by an order, decision, determination, or disallowance of the commissioner to appeal for relief to the Superior Court for the judicial district of New Britain. The bill extends this authorization to include appeals of the commissioner's decisions with respect to taxpayer requests for a hearing and correction on the amount of any health provider tax, penalty, interest, or fee.

Enforcement

Under the bill, the DRS commissioner, and any duly authorized agent that may conduct inquiries, investigations, or hearings as authorized by the hospital provider tax and user fee law established under PA 17-2, JSS, may also administer oaths and take testimony under oath related to the matter being investigated. Under current law, he may do so under either the newly established tax and fee law or the prior hospital tax and user fee law.

Conditions for Terminating the Hospital Provider Tax

For FYs 18 and 19, the bill requires the tax on inpatient and outpatient hospital services to terminate if CMS (1) determines that the tax is an impermissible tax under federal health provider tax law ( 1903(w) of the Social Security Act) or (2) does not approve the applicable Medicaid state plan amendments necessary for the state to receive federal funds for the supplemental Medicaid payments to hospitals required under the bill. Within 60 days after the DRS commissioner receives notice of any such determination or denial by CMS, he must refund to taxpayers any hospital provider tax already collected.

The bill also requires the General Assembly, in the case of any such determination or denial by CMS, to consider amending the statutes in order to ensure compliance with federal law regarding the tax. It must do so during the next occurring regular or special session, whichever is sooner.

EFFECTIVE DATE: Upon passage

11, 13, 14 & 28 — HOSPITAL SUPPLEMENTAL PAYMENTS

Establishes a new schedule for Medicaid supplemental payments for FYs 18 and 19; generally makes such payments subject to federal approval; and eliminates a provision allowing hospitals to delay their provider tax payments for any quarter in which DSS delays supplemental pool payments

Supplemental Pools, Payment Amounts, and Schedules ( 11)

Current law requires DSS to establish certain supplemental pools. Under the bill, this requirement is subject to federal approval. Generally, “supplemental pools” refer to hospitals grouped for purposes of receiving supplemental Medicaid payments. Generally, under federal law, changes to Medicaid payments are subject to approval by CMS.

Existing law, unchanged by the bill, requires the amount of funds in the supplemental pools to total, in aggregate, $598,440,138 for FY 18 and $496,240,138 for FY 19.

Under current law, DSS must establish a supplemental:

1. inpatient pool;

2. outpatient pool;

3. small hospital pool, as determined by DSS in consultation with the Connecticut Hospital Association (CHA); and

4. mid-size hospital pool, as determined by DSS in consultation with CHA.

Under the bill, the requirement to establish such pools is subject to federal approval. The bill broadens the CHA consultation requirement to apply to all of the supplemental pools, not just the small and mid-sized hospital pools as under current law. Additionally, the bill requires DSS to publish public notice for all Medicaid state plan amendments necessary to establish the pools not later than 15 days after the bill's passage or December 1, 2017, whichever is sooner.

The bill delays the first supplemental payments due to hospitals under current law and establishes a new schedule for payments, shown in the table below. It also eliminates a provision allowing hospitals to delay their provider tax payments, without incurring penalties or interest, for any quarter in which DSS delays supplemental pool payments.

Under the bill, for the first 25% and third 25% of FY 18 payments, the due dates apply even if DSS has not yet received CMS approval for applicable Medicaid state plan amendments, but payments are subject to federal approval and DSS may recover those payments that CMS does not approve. For the second and fourth 25% of FY 18 payments and all FY 19 payments, DSS may delay payment until 14 days after CMS approves any necessary Medicaid state plan amendments, regardless of the due dates described below.

Table: Supplemental Payment Schedule

Under Current Law

Payment

Due Date

For the quarter ending September 30, 2017

October 31, 2017

For the quarter ending December 31, 2017

December 31, 2017, except DSS may delay payment until 14 days after CMS approves any necessary Medicaid state plan amendments

For quarters ending March 31, 2018 through June 30, 2019

The last day of each quarter

Under the Bill

Payment

Due Date

The first 25% of FY 18 payments

For the supplemental inpatient and small hospital pools, November 30, 2017

For the supplemental mid-size hospital and outpatient pools, 30 days after the bill's effective date and no later than January 1, 2018

For any other pool not described in the bill but necessary to comply with federal law, not later than 30 days after DSS submits the applicable Medicaid state plan amendments

The second 25% of FY 18 payments

December 31, 2017

The third 25% of FY 18 payments

March 31, 2018

The fourth 25% of FY 18 payments and subsequent payments for each 25% of the FY 19 amount

Corresponding installments by the last day of March, June, September, and December during each fiscal year

Existing law requires DSS to distribute supplemental payments to applicable hospitals based on criteria DSS determines in consultation with CHA. By law, the consultation requires DSS to send proposed distribution criteria to CHA at least 30 days before making payments based on those criteria. Current law creates an exception to this requirement for supplemental payments for the quarter ending September 30, 2017, requiring DSS to send distribution criteria to CHA at least seven days before making payments. The bill instead applies this exception to the first 25% of FY 18 supplemental payments, conforming to the changed schedule under the bill.

Distressed Hospitals ( 13 & 28)

The bill makes a change to conform to the new payment schedule by allowing DSS, for FY 18, to advance all or a portion of scheduled supplemental payments, rather than quarterly supplemental payments, to distressed hospitals. The bill makes this change by repealing the provision in current law ( 28) and replacing it with a similarly worded provision ( 14).

Limit on Governor's Rescission Authority ( 14 & 28)

For FYs 18 and 19, the law prohibits the governor from reducing any allotment requisition or allotment in force for DSS' hospital supplemental payments account. The bill specifies that DSS must make supplemental payments in accordance with the schedule described above. The bill makes this change by repealing the provision in current law ( 28) and replacing it with similar language that includes the requirement for DSS to follow the payment schedule ( 14).

EFFECTIVE DATE: Upon passage

12 — HOSPITAL MEDICAID RATES

Removes dollar-amount increases for hospital Medicaid rates required under PA 17-2 and instead requires DSS to increase certain base rates and base conversion factors used to calculate the rates; establishes a schedule for the rate increase; and prohibits the DSS commissioner from removing the rate increases, subject to federal approval.

By law, and with certain exceptions, Medicaid rates paid to acute care hospitals are based on diagnosis-related groups (DRG). Current law requires DSS, within available appropriations and at the commissioner's discretion, to transition hospital-specific DRG base rates to statewide DRG base rates over a four-year period. In practice, DSS is in the process of doing so.

The bill eliminates an additional requirement that DSS increase hospital Medicaid rates in effect for FY 17 by January 1, 2018 to result in an annualized, aggregate increase of $140.1 million for inpatient hospital services and $35 million for outpatient services. The bill also eliminates a related provision that, beginning in FY 18, prohibits DSS from giving any hospital subject to the provider tax a rate lower than that in effect on January 1, 2018.

Instead, the bill requires DSS to increase rates effective January 1, 2018 for hospitals, subject to federal approval. Specifically, the bill requires DSS to increase:

1. the DRG group base rate for inpatient hospital services provided by privately operated acute care general hospitals by 31.65% from the level in effect on July 1, 2017 and

2. the ambulatory payment classification base conversion factor for outpatient hospital services provided by acute care general hospitals by 6.5% from the level in effect July 1, 2017.

Generally, under federal law, changes to Medicaid payments require amending the Medicaid state plan and such amendments are subject to approval by the federal Centers for Medicare and Medicaid Services (CMS). To implement this rate increase, the bill requires the DSS commissioner to:

1. publish public notice of the intent to submit a Medicaid state plan amendment for the rate increases within 15 days after the bill's passage and no later than December 1, 2017;

2. submit the Medicaid state plan amendment to CMS within five days of the expiration of the 30-day public comment period for the Medicaid state plan amendment; and

3. implement the increases on the earliest available date.

The bill establishes separate deadlines for implementing the rate increase based on dates of service and CMS approval. For services provided between January 1, 2018 and June 30 2018, the bill requires DSS to pay the increased rates beginning January 1, 2018, even if CMS has not yet approved the applicable Medicaid state plan amendment, but DSS may later recover payment for the increased rates from the hospitals if CMS does not approve them. For services provided after June 30, 2018, the bill requires DSS to implement the rate increases within 30 days of receiving CMS approval of applicable Medicaid state plan amendments.

The bill prohibits the DSS commissioner from removing the rate increases required under the bill, subject to continuing CMS approval and ongoing compliance with applicable federal Medicaid requirements for FY 18 and subsequent years.

The bill prohibits implementation of its provisions from affecting implementation of statewide DRG base rates required under existing law.

EFFECTIVE DATE: Upon passage

16 & 17 — APPROPRIATION AND REVENUE ESTIMATE ADJUSTMENTS

Please refer to the fiscal note for a summary of these sections

18 — SOCIAL SECURITY INCOME TAX EXEMPTION

Pushes out, from the 2018 tax year to the 2019 tax year, the start of the increase in the maximum income filers may have to qualify for the 100% income tax exemption for Social Security benefits

The law currently allows a 100% social security income exemption for single filers and married people filing separately with federal adjusted gross incomes (AGI) of less than $50,000 and joint filers and heads of household with federal AGIs of less than $60,000. Beginning with the 2018 tax year, PA 17-2, JSS, 641 increases these income thresholds to $75,000 and $100,000, respectively.

The bill delays the start of the threshold increases to the 2019 tax year. In doing so, the bill extends the current thresholds to the 2018 income year. As under existing law, taxpayers with incomes equal to or greater than these thresholds qualify for a 75% exemption.

EFFECTIVE DATE: Upon passage

19 — CORPORATION INCOME TAX DEDUCTION FOR CERTAIN PUBLICLY TRADED COMPANIES (FAS 109 DEDUCTION)

Pushes back, from the 2018 income year to the 2021 income year, the first year in which certain publicly traded companies may claim the FAS 109 deduction

Existing law authorizes a corporate income tax deduction for certain companies for whose combined reporting triggered an aggregate (1) increase in their net deferred tax liabilities, (2) decrease in their net deferred tax assets, or (3) change from a net deferred tax asset to a net deferred tax liability. The deduction is available to publicly traded companies, including affiliated corporations participating in a publicly-traded company's financial statements, prepared according to GAAP, as of January 1, 2016. This deduction is referred to as a “FAS 109” deduction, based on a financial accounting and reporting standard for income taxes (Financial Accounting Standards No. 109, “Accounting for Income Taxes”).

The bill pushes back the first year in which the deduction can be claimed from the 2018 income year to the 2021 income year.

Changes in PA 17-2, JSS

PA 17-2, JSS, extended, from seven to 30 years, the period over which companies may claim this deduction. It correspondingly changes the amount companies can deduct from their annual net income to 1/30, instead of 1/7, of the amount necessary to offset the (1) increase in net deferred tax liability, (2) decrease in net deferred tax asset resulting from combined reporting, or (3) aggregate change thereof if the group's net income changes from a net deferred tax asset to a net deferred tax liability.

 EFFECTIVE DATE: Upon passage

20 & 28 — LOCAL BUDGET AND TAX ADJUSTMENTS DUE TO INCREASED AID

Modifies a provision in the budget act that allows municipalities and regional boards of education to amend adopted budgets

PA 17-2, JSS, includes a provision that allows municipalities and regional boards of education that adopted a budget or levied taxes for FY 18 before the state adopted its FY 18 budget to change their budgets and levies if the state's budget provides over $100,000 more in state aid than the board or municipality projected.

The bill modifies this provision by:

1. extending, from January 1, 2018 to February 1, 2018, the date by which such municipalities and boards must adjust tax levies if they choose to do so;

2. allowing municipalities and boards, by February 1, 2018, to issue tax refunds or rebates for excess taxes paid, according to the newly adopted budget;

3. requiring that any budget amendments, levy adjustments, or refunds be done by a vote of (a) the municipality's or board's legislative body or (b) the board of selectmen, in the case of a municipality whose legislative body is a town meeting; and

4. eliminating the requirement that such budgets be amended in the same manner in which they were originally adopted.

The bill also makes a technical change by eliminating a provision related to supplemental tax bills.

EFFECTIVE DATE: Upon passage

21 — SUPPLEMENTAL MOTOR VEHICLE PROPERTY TAX GRANTS TO CERTAIN MUNICIPALITIES

Beginning in FY 18, authorizes certain municipalities that implemented a revaluation in 2014 or 2015 to apply to OPM for an additional motor vehicle property tax grant

The bill allows, beginning in FY 18, certain municipalities that had a mill rate of more than 39 mills in FY 17 to apply to OPM for a supplemental motor vehicle property tax grant. To qualify, a municipality (1) must have implemented a real property revaluation in the 2014 or 2015 assessment year and (2) its mill rate must have increased by at least four mills over the previous year as a result. OPM may provide such supplemental grants within available appropriations, provided the grant does not reduce the grants OPM gives to other municipalities. The bill does not specify how OPM must calculate the grant amount. It also makes a conforming change.

Existing law subjects municipalities and special taxing districts to a motor vehicle property tax cap and makes them eligible for state grants to mitigate the revenue loss attributed to the cap. The grant is equal to the difference between the (1) amount of property taxes a municipality and any district located within it levied on motor vehicles in the 2013 assessment year (FY 15) and (2) amount that would have been levied at the capped mill rate. Under PA 17-2 (JSS) ( 699-700), the cap is set at 39 mills for FY 18, but rises to 45 mills for the assessment year commencing October 1, 2017 (i.e., FY 19).

EFFECTIVE DATE: Upon passage

22 — IMPAIRMENT OF CONTRACTS

Exempts the state treasurer's investments and the state's bonds, notes, and other obligations for borrowed money from a law which specifies when the state may enact legislation to impair its contracts

The U.S. Constitution's Contracts Clause generally prohibits states from enacting laws that impair their contractual obligations (U.S. Const. art. I, 10, cl. 1). In interpreting the clause, however, federal courts have developed a series of tests and standards that allow a state to impair its contracts under certain limited conditions. Section 221 of PA 17-2 (JSS) broadly codified these tests and standards to specify the conditions under which the state may enact laws impairing its contracts and, in effect, exempt itself from the Contracts Clause.

The bill specifies that this exemption from the Contracts Clause does not apply to (1) investments by, or administered by, the state treasurer, or any related contracts, or (2) bonds, notes, evidences of indebtedness, or other direct or contingent state obligations for borrowed money, or any related contracts. (As with 221 of PA 17-2, JSS, it appears that the above provision has no legal effect because decisions regarding when a state may impair its contracts are made by federal courts' interpreting the Contracts Clause and state laws cannot dictate how courts must interpret the U.S. Constitution.)

EFFECTIVE DATE: Upon passage

23-26 — RESPONSIBILITY FOR RENTERS' REBATE PROGRAM

Returns responsibility for administering the Renters' Rebate Program to OPM and creates a mechanism through which municipalities cover 50% of the cost of rebates, up to $250,000 per municipality per year

The budget act shifted, from the Office of Policy and Management (OPM) to municipalities, responsibility for issuing rebates under the Renters' Rebate Program (PA 17-2, (JSS) ( 1 & 563-565)). The bill returns responsibility for administering the program to OPM. It requires municipalities to bear half the cost of renters' rebates, up to $250,000 a year.

For calendar year 2016 rebates, OPM must prepare a list of approved rebates by November 30, 2017, and supplement such list monthly. In future years, OPM must prepare such list by October 15, as required under prior law.

The bill also makes conforming changes.

EFFECTIVE DATE: Upon passage

Municipalities' Financial Responsibility

Under the bill, OPM can recoup from municipalities 50% of the cost of issuing rebates to the municipality's residents through grant withholdings or reductions. Beginning in FY 18, OPM must select at least one state grant per municipality from which to withhold up to $250,000 per year. The amount of money withheld or reduced must be based on rebates for the most recent application period.

OPM can only opt to withhold or reduce “state financial assistance” grants, which are grants funded by an appropriation, excluding any grant or loan financed by the proceeds of state GO bonds.

Background

The state's Renters' Rebate Program provides rebates to older adult or totally disabled renters whose incomes do not exceed certain limits (CGS 12-170d et seq., as amended by PA 17-222 and PA 17-2, (JSS) ( 1 & 563-565)). The FY 18-19 budget act (1) made municipalities, instead of the state, responsible for funding the grants under the program beginning October 31, 2017.

It also appropriated $12,685,377 in FY 18 and $13,666,177 in FY 19 to OPM for the program (PA 17-2, JSS ( 1)). But OPM recently determined that it could not use the appropriation to issue rebates or distribute the funds to municipalities because it was no longer legally authorized to administer the program.

Individuals apply annually to local assessors or their agents between April 1 and October 1 for reimbursement for payments made in the preceding calendar year. The budget act did not specify how rebates for calendar year 2016, for which OPM received applications in 2017 but has not yet issued rebates for, would be handled.

27 — CITIZENS' ELECTION PROGRAM (CEP)

Limits the CEP grant reduction schedule established in PA 17-2, JSS, to regular state elections and retains the grant amount a legislative candidate may receive in a special election at 75% of the amount authorized for that candidate in the general election

● PA 17-2, JSS, established a four-step grant reduction schedule under which legislative and state office candidates receive reduced general election grants, beginning 70 days before the election (the closer to the election that they submit their application, the greater the grant reduction)

● For legislative candidates, the bill limits the grant reduction schedule to regular state elections

● Retains the grant amount for a legislative candidate in a special election at 75% of the amount authorized for that candidate in the general election, whether major, minor, or petitioning party

● Makes several related technical and conforming changes regarding grants for minor and petitioning party candidates

● CEP is a voluntary state program that provides public financing to qualified candidates for statewide and legislative offices

EFFECTIVE DATE: Upon passage