Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200



OFA Fiscal Note

State Impact: See below

Municipal Impact: See below


The bill makes various changes as described below.

General Fund Revenue Impacts in the Biennium

FY 18

FY 19

Sec. 1 Authorize “Fresh Start” initiative by the DRS



Sec. 2 Reduce the Earned Income Tax Credit to 27.5% of the federal rate



Sec. 3 Establish a $500 Tax Credit for certain College Graduates



Sec. 4 Exempt Social Security, effective 1/1/19



Sec. 5-6 Lower lifetime cap on Gift & Estate Tax



Sec. 5-7 Phase-in (over 3 years) federal exemption levels for Estate Tax



Sec. 9 Make 3-tier tax credit cap permanent



Sec. 10 Make moratorium on film production tax credit permanent



Sec. 12 Exempt Sales of Services between certain Parent/Subsidiaries



Sec. 18-20 Lower Insurance Premiums Tax Rate from 1.75% to 1.50%



Sec. 24 Exempt from Admissions Tax Harbor Yard and Oakdale Theater



Sec. 26 Repeal Sales Tax on coin-operated car washes



Sec. 28 Increase fees to cover various administration costs



Sec. 29 Eliminate Sales Tax transfer to Muni. Revenue Sharing Account



Sec. 30 Transfer out to the Municipal Revenue Sharing Fund






Sections 5 through 8 repeal the Gift Tax in 2020 and establish a 3-year lookback under the Estate Tax.  This results in a revenue loss of less than $2 million annually beginning in FY 21.

Section 13 authorizes the Commissioner of the Department of Economic and Community Development (DECD) to create a program allowing a business that holds stranded Research & Development (R&D) tax credits to use them against the corporation business or sales and use tax if it undertakes a capital project.  The bill requires that no credits be claimed before the project generates revenue that exceeds the amount of credits to be claimed; to the extent the DECD commissioner ensures that the timing of revenue generation and credit utilization are consistent this does not result in any fiscal impact.

Sections 14 and 17 establishes tax credit auctions to allow taxpayers with R&D tax credits to use them in exchange for making an investment in the Technical Education Cooperative (TEC) Fund or a corporate venture fund established by the taxpayers themselves.  This could result in a revenue loss of up to $5 million annually from FY 21 through FY 24, and up to $10 million annually from FY 25 through FY 27.  The actual revenue impact is dependent on the amount and timing of investments made through the auctions.

Section 15 allows taxpayers to use film production tax credits against the sales and use tax if the taxpayer pays a fee of six cents for each dollar of credit it claims.  This results in a potential revenue gain to the TEC account.

Section 16 expands eligibility for an Estate Tax deduction, which could result in a significant revenue loss to the extent that additional credits are utilized that otherwise would not be.

Section 21 establishes a Hospital Tax credit which could result in a state revenue loss to the extent that the difference between the total Hospital Tax owed prior to the application of currently available credits and supplemental Medicaid grants to hospitals increases.

Section 22 allows nonprofit hospitals to make voluntary service payments to their host municipalities, equal to the property taxes that would have been paid if their property had been subject to property taxes.

The revenue gain to municipalities will vary based on the terms of any agreements entered into with hospitals. It is estimated, that, in FY 17, nonprofit hospitals would have paid approximately $208 million in property taxes, if they were not exempt from taxation.

Section 23 results in a revenue loss of approximately $80 million beginning in FY 21 by phasing out the hospital tax in equal increments over seven years. The revenue loss will increase incrementally by $80 million each year thereafter with a total revenue loss of $556 million in the seventh year.

Section 25 exempts movie theatres from the local option admissions tax. It is not known how many municipalities have implemented this tax. Any revenue loss is expected to be minimal.

Section 27 increases the marriage license fee, which is retained by the municipality issuing the license, from $10 to $15, resulting in a revenue gain of approximately $96,920 annually across various municipalities.

It also increases the marriage license surcharge from $20 to $35, resulting in an increase of approximately $300,000 in program funding annually: approximately $174,456 for the Department of Social Services (DSS) and approximately $116,304 for the Department of Public Health (DPH). Municipal registrars retain $1 of the marriage license surcharge. The rest ($19 currently and $34 under the bill) is sent to DPH for deposit into an account of the State Treasurer to be credited to the General Fund for distribution to DSS (60%) for shelter services for victims of domestic violence and to DPH (40%) for rape crisis services. There were 19,384 marriages in Connecticut in FY 16, according to the State Vital Records Office.

Section 30 requires a transfer to the Municipal Revenue Sharing Fund of $264.9 million in each of FY 18 and FY 19. This supplants a revenue diversion to the non-appropriated Municipal Revenue Sharing Account, provided under current law, of $340.1 million in FY 18 and $349 million in FY 19. As a result, Sec. 30 results in a revenue loss to municipalities of $75 million in FY 18 and $84 million in FY 19.

Section 31 reduces the multiplier used in the statutory bond cap effective July 1, 2019. To the extent that this change leads to a reduction in bond authorizations, it may also reduce bond allocations and related bond issuances thus generating debt service savings.

Section 32 establishes a working group to analyze the efficacy of fines in deterring excessive speeding. There may be a cost of less than $1,000 in FY 18 to reimburse any state agency officials that may participate in the working group for mileage expenses, currently at 53.5 cents/mile.

The Out Years

State Impact: The net State impact of the changes in the bill is estimated to be $14.7 million in FY 20, ($90.3) million in FY 21 and ($170.6) million in FY 22. The out-year negative estimate is primarily due to full realization of estimated revenue losses related to the Social Security exemption and Estate Tax policy changes, as well as the beginning of the phasing out of the Hospital Tax over seven years.

Municipal Impact: The impacts indicated above are anticipated to remain constant into the out years.