OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sHB-6313

AN ACT ESTABLISHING A TAX ON SINGLE-USE PLASTIC AND PAPER BAGS.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 18 $

FY 19 $

Department of Energy and Environmental Protection

GF-Maintenance, Repair, and Improvement Account - Revenue Gain

12 million

16 million

Department of Revenue Services

GF - Cost

218,640

124,853

State Comptroller - Fringe Benefits1

GF - Cost

35,658

47,544

Note: GF=General Fund

Municipal Impact: None

Explanation

The bill establishes a 5-cent fee on single-use bags at certain retail stores. This results in an estimated revenue gain of $12 million in FY 18 (partial year) and $16 million annually thereafter, as well as a cost to the Department of Revenue Services (DRS) of $254,298 in FY 18 and $172,397 annually thereafter.  The bill specifies that all revenue from the fee is deposited in the General Fund's maintenance, repair, and improvement account (MRI) for state parks, administered by the Department of Energy and Environmental Protection (DEEP).2

To administer the newly established fee, DRS would require one Tax Corrections Examiner ($58,640 for salary and $22,330 for fringe costs) to verify the accuracy of return information and one Revenue Examiner ($66,213 for salary and $25,214 for fringe costs) for audit and enforcement.  This estimate is based on the administrative requirements of other state trust taxes.

The DRS would also incur a one-time cost of approximately $125,000 in FY 18 for form development and printing, changes to the online Taxpayer Service Center (TSC) associated with electronic filing, programming changes to the agency's Integrated Tax Administration System (ITAS), and mailing expenses.

The revenue estimate is based on data from the Citizens Campaign for the Environment indicating that Connecticut residents use approximately 800 million to 1 billion single-use bags every year. Additionally, a 60% reduction in consumption of single-use bags is assumed based on actual data from Washington, D.C., which instituted a similar measure.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to fluctuation in the number of single-use bags utilized in Connecticut.

Sources:

Citizens Campaign for the Environment 2/22/17 Public Hearing Testimony

 

Washington, D.C. Department of Energy & Environment Anacostia River Cleanup and Protection Act of 2009 survey

1 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes is 38.08% of payroll in FY 18 and FY 19.

2 The current balance in the MRI account is $1,849,556.