OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sSB-734

AN ACT ESTABLISHING A TAX DEDUCTION FOR CONTRIBUTIONS TO A CITIZENS IN NEED ACCOUNT.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 18 $

FY 19 $

Comptroller

GF- Citizens In Need Account - Revenue Gain

300,000

300,000

Comptroller

GF - Cost

55,800

55,800

State Comptroller - Fringe Benefits1

GF - Cost

21,249

21,249

Department of Revenue Services

GF - Cost

40,000

None

Department of Revenue Services

GF - Revenue Loss

31,500

31,500

Note: GF=General Fund

Municipal Impact: None

Explanation

The bill, which establishes a “citizens in need account” that is funded through voluntary contributions for which a 200% state income tax deduction is available, is estimated to result in: 1) a $300,000 annual revenue gain to the “citizens in need account” within the General Fund beginning in FY 18, 2) a $31,500 annual General Fund revenue loss beginning in FY 18, 3) an annual cost to the Office of the State Comptroller (OSC) of approximately $77,049 beginning in FY 18, and 4) a one-time cost to the Department of Revenue Services (DRS) in FY 18 only.

The estimated $300,000 revenue gain to the “citizens in need account” is based on the average annual amount of voluntary contributions currently made to various charitable programs via state income tax refunds. The estimated revenue loss assumes an average effective income tax rate of 5.2% applied to the estimated $300,000 in voluntary contributions, the product of which is doubled to estimate the impact of the 200% deduction provision.

It is anticipated that the OSC would require one Assistant Accountant to administer the “citizens in need account” at an annual cost of $77,049 ($55,800 for salary and $21,249 for fringe benefits). Additionally, the bill results in a one-time cost of $40,000 in FY 18 for the DRS to establish a new subtraction modification and accompanying schedule on the income tax, as well as changes to the online Taxpayer Service Center and internal Integrated Tax Administration System.

The Out Years

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

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.