OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sSB-821

AN ACT CONCERNING ROOFING, WINDOW AND SIDING CONSUMER WARRANTIES AND POST-SALE WARRANTY WORK REIMBURSEMENT FOR POWER EQUIPMENT DEALERS.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 18 $

FY 19 $

Consumer Protection, Dept.

GF - Cost

29,179

58,357

Consumer Protection, Dept.

GF: Various Guaranty Funds - Potential Cost

20,000 - 40,000

40,000 - 80,000

State Comptroller - Fringe Benefits1

GF - Cost

8,867

17,733

Note: GF=General Fund

Municipal Impact: None

Explanation

The bill results in costs to General Fund of $38,045 in FY 18 and $76,090 in FY 19, as well as potential costs to two Department of Consumer Protection (DCP) guaranty funds of $20,000 to $40,000 in FY 18 and $40,000 to $80,000 in FY 19, due to expected enforcement costs and consumer settlements generated by the bill's expansion of certain home warranties. The impact is higher in FY 19 because the bill takes effect on January 1, 2018, which means half of annual costs are considered for FY 18.

Investigating and resolving consumer complaints for roofing, windows, and siding suppliers is anticipated by DCP to generate ten to 20 claims to the applicable guaranty funds described below, as well as numerous consumer complaints outside guaranty fund eligibility. Two part-time additional staff are needed, a Special Investigator (0.5 FTE) and a Paralegal Specialist (0.25 FTE). These part-time positions have salary costs of $23,285 in FY 18 and $46,569 in FY 19, and fringe benefit costs of $8,867 in FY 18 and $17,733 in FY 19. Other expenses and equipment costs associated with the positions, such as computers, total $5,894 in FY 18 and $11,788 in FY 19.

The Home Improvement Guaranty Fund and New Home Construction Guaranty Fund, which are funded by licensing fees from relevant professionals, are likely to receive ten to 20 more claims. Most of the additional claims will be for $4,000 to $6,000, for a total annual impact to both guaranty funds of $40,000 to $80,000. Fund balances were $701,966 for the Home Improvement fund and $763,332 for the New Construction Fund, as of February 28, 2017.

The bill also clarifies warranty claim payment requirements for farm, forestry, yard, and garden equipment warranties, which has no fiscal impact.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation, the volume of complaints, and the number of relevant guaranty fund claims.

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.