Connecticut Seal

General Assembly

File No. 366

    February Session, 2018

Substitute House Bill No. 5391

House of Representatives, April 10, 2018

The Committee on Transportation reported through REP. GUERRERA of the 29th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT CONCERNING THE PREPARATION OF A TOLLING PROPOSAL AND SUPPORT FOR TRANSPORTATION INFRASTRUCTURE.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective from passage) As used in this section and sections 2 to 9, inclusive, of this act:

(1) "Electronic tolling system" means an electronic system for recording, monitoring, collecting and paying for tolls on the highways of this state, including, but not limited to, transponders or other electronic transaction or payment technology devices or video toll transaction systems;

(2) "Department" means the Department of Transportation; and

(3) "Toll operator" means a private entity that operates an electronic tolling system, which duties may include, but need not be limited to, collecting tolls, administrative charges and penalties.

Sec. 2. (NEW) (Effective from passage) (a) The Commissioner of Transportation shall (1) conduct studies and satisfy other requirements pursuant to the National Environmental Policy Act for the purposes of developing electronic tolling systems on the highways of this state, (2) procure a program manager and other consultants or experts as needed to assist in the development of the electronic tolling systems, and (3) prepare a tolling proposal that (A) implements electronic tolling systems on Interstate 95, Interstate 91, Interstate 84, the Wilbur Cross Parkway and the Merritt Parkway, (B) identifies the specific locations where the proposed tolls may be charged, the toll amounts that may be charged, including the use of value pricing and discounts, if any, and the time periods for peak and off-peak travel, and (C) estimates the capital and operating costs associated with the electronic tolling systems.

(b) (1) The commissioner shall file the tolling proposal with the clerks of the House of Representatives and the Senate. If the tolling proposal is filed when the General Assembly is in session, not later than five days after receiving the tolling proposal, the clerks of the House of Representatives and the Senate shall refer the tolling proposal to the joint standing committee of the General Assembly having cognizance of matters relating to transportation. If the tolling proposal is filed when the General Assembly is not in session, the clerks of the House of Representatives and the Senate shall refer the tolling proposal to the joint standing committee of the General Assembly having cognizance of matters relating to transportation not later than five days after the first day of the next regular session. The committee shall hold a public hearing regarding the tolling proposal not later than ten days after such referral. Not later than five days after the hearing, the committee shall (A) hold a roll-call vote to approve or reject the tolling proposal, and (B) forward the tolling proposal and a record of the committee's vote to the General Assembly.

(2) Not later than thirty days after the tolling proposal is forwarded to the General Assembly, the General Assembly may approve or reject the tolling proposal. The tolling proposal shall be approved in whole by a majority vote of each house or rejected by a majority vote in either house. If both houses fail to vote during such thirty-day period, the tolling proposal shall be deemed approved by the General Assembly. Such thirty-day period shall not begin or expire unless the General Assembly is in regular session. If the regular session adjourns prior to such thirtieth day and the tolling proposal has not been acted upon, the tolling proposal shall be deemed filed on the first day of the next regular session.

(c) If the tolling proposal is rejected in accordance with the provisions of subsection (b) of this section, the commissioner may revise the tolling proposal. Any such revised tolling proposal shall be submitted to the clerks of the House of Representatives and the Senate and subject to a public hearing and approval or rejection by the General Assembly in the same manner as described in subsection (b) of this section.

(d) If the tolling proposal is approved or deemed approved by the General Assembly, the commissioner shall submit the tolling proposal to the Federal Highway Administration. In no event shall the commissioner submit a tolling proposal to the Federal Highway Administration unless the tolling proposal is approved or deemed approved by the General Assembly.

Sec. 3. (NEW) (Effective from passage) (a) The provisions of this section shall not be effective unless a tolling proposal to implement electronic tolling systems is approved or deemed approved by the General Assembly pursuant to section 2 of this act.

(b) The department may construct, maintain and operate electronic tolling systems. The department may operate such electronic tolling systems or contract with a toll operator to operate such systems. To carry out its duties and responsibilities under this section and sections 4 to 9, inclusive, of this act, and any regulations adopted under section 8 of this act, the department may enter into tolling agreements with the Federal Highway Administration and coordination agreements, intergovernmental agreements or other implementation agreements with any other federal, state or municipal entity or agency.

(c) The department may retain and expend funds for technical, traffic, revenue, financial, legal and other consultants and experts to assist in the development and implementation of electronic tolling systems.

(d) The department may procure, retain and expend funds for toll operators, vendors, suppliers, designers, engineers, software designers, installers, contractors, maintenance personnel, back-office and customer service personnel, collections, enforcement and for other equipment, materials, personnel and services in order to assist in the development and implementation of electronic tolling systems.

(e) (1) The department and the Department of Motor Vehicles may enter into reciprocal agreements with other states, jurisdictions and operators of toll facilities in other states that will enable said departments to obtain and share with said departments and any toll operator information regarding an out-of-state registered owner of a vehicle that has used a tolled highway, including the make of the vehicle, the vehicle's license plate and the name and address of the registered owner of the vehicle.

(2) The department and the Department of Motor Vehicles may enter into, or cause the toll operator on behalf of such departments to enter into, reciprocal agreements with other states, jurisdictions and operators of toll facilities in other states allowing for additional enforcement mechanisms for the efficient collection of tolls incurred by residents of states other than this state.

(3) The department and the Department of Emergency Services and Public Protection may enter into an agreement with each other for the provision of law enforcement assistance by the state police on tolled highways that are not otherwise provided by the state police on state roads and highways. All law enforcement officers of the state and any political subdivision of the state shall have the same powers and jurisdiction within the limits of a tolled highway as such officers have in their respective areas of jurisdiction, including the roads and highways of this state.

Sec. 4. (NEW) (Effective from passage) (a) The provisions of this section shall not be effective unless a tolling proposal to implement electronic tolling systems is approved or deemed approved by the General Assembly pursuant to section 2 of this act.

(b) The department may charge, collect, retain and fix the amount of all tolls for transit over or use of such highways, or portions thereof, as may be determined by the department. The department may retain and employ such assistance as may be necessary for the collection thereof. Toll amounts shall be fixed and changed by the department, so as to provide, at a minimum, funding that is sufficient to: (1) Pay costs related to tolled highways in this state, including, but not limited to, the cost of owning, maintaining, repairing, reconstructing, improving, rehabilitating, using, administering, controlling and operating such highways; (2) pay the principal of, redemption premium, if any, and interest on notes or bonds relating to tolled highways, as such principal, premium or interest become due and payable; and (3) create and maintain reserves established for any of the department's highway and bridge responsibilities under titles 13a and 13b of the general statutes for the operation and maintenance of tolled highways. Such sufficiency of funding may take into account the availability of funds from other sources.

(c) The department shall provide advance notice of the tolls that will be charged and the option for payment to motor vehicle operators before such operators enter a tolled highway, or portion thereof.

(d) Tolls established by the department under this section shall not be subject to supervision or regulation, except as otherwise provided by law, by any other commission, board, bureau, authority or agency of this state, or by any political subdivision of the state.

(e) All revenues received by the department from tolls shall be deposited into the Special Transportation Fund, established under section 13b-68 of the general statutes, and shall not be commingled with other funds and revenues. Such revenues shall be expended only for the purposes and subject to the provisions of 23 USC 129 (a)(3), as amended from time to time.

(f) Tolls shall not be subject to and shall be exempt from any sales, use, excise, gross receipts or any similar taxes.

Sec. 5. (NEW) (Effective from passage) (a) The provisions of this section shall not be effective unless a tolling proposal to implement electronic tolling systems is approved or deemed approved by the General Assembly pursuant to section 2 of this act.

(b) If an electronic tolling system uses a transponder or other electronic transaction or payment technology device, the device shall be located in or on the motor vehicle entering the electronic tolling system in a manner prescribed by the department or toll operator and consistent with applicable law.

(c) All electronic tolling systems operated by the department or a toll operator shall be interoperable with all other electronic tolling systems in this state and shall otherwise comply with all state and federal interoperability requirements and standards. Such tolling system interoperability shall extend to system technology and the transfer of funds. The provisions of chapters 61 and 61b of the general statutes shall not apply to this subsection. The Commissioners of Transportation and Motor Vehicles shall consult with the Commissioner of Administrative Services to ensure the coordination and compatibility of information system technology and data of any electronic tolling system.

Sec. 6. (NEW) (Effective from passage) (a) The provisions of this section shall not be effective unless a tolling proposal to implement electronic tolling systems is approved or deemed approved by the General Assembly pursuant to section 2 of this act.

(b) Prior to commencing construction of an electronic tolling system on any highway, or portion thereof, of this state, the department shall hold at least one public informational meeting in the general vicinity of the proposed toll location to receive comments on the proposed toll, methodology for setting and changing the tolls and user classifications.

Sec. 7. (NEW) (Effective from passage) (a) The provisions of this section shall not be effective unless a tolling proposal to implement electronic tolling systems is approved or deemed approved by the General Assembly pursuant to section 2 of this act.

(b) The department shall develop and implement a privacy policy relating to any toll customer information and other data collected, received, maintained, archived, accessed and disclosed by the department to a toll operator.

(c) The department shall implement a privacy protocol to protect and appropriately limit access to toll customer information and other data collected, received, maintained and archived.

(d) Neither the department nor any toll operator shall sell or use any toll customer information or other data for commercial purposes unrelated to the charging, collection and enforcement of tolls, administrative fees and penalties. The prohibition set forth in this subsection shall not apply to toll customer information or other data that does not directly or indirectly identify a toll customer used for research purposes authorized by the department.

(e) (1) Except as required by applicable law or in connection with an administrative or court proceeding, all information that specifically identifies a toll customer and relates to a specific tolling transaction shall be destroyed not later than one year after the later of the tolling transaction or collection of the toll, whether through normal processes or enforcement.

(2) Except as required by applicable law or in connection with an administrative or court proceeding, all information relating to a toll customer account that specifically identifies a toll customer shall be destroyed not later than one year after the collection of all tolls and fees incurred by such toll customer, whether through normal processes, enforcement or closing of such account.

(f) Toll customer information and data shall not be deemed a public record, as defined in section 1-200 of the general statutes. The department may release toll customer information and data that does not directly or indirectly identify a toll customer for research purposes authorized by the department.

(g) Toll operators shall be subject to the provisions of chapter 62a of the general statutes.

Sec. 8. (NEW) (Effective from passage) (a) The provisions of this section shall not be effective unless a tolling proposal to implement electronic tolling systems is approved or deemed approved by the General Assembly pursuant to section 2 of this act.

(b) The Commissioner of Transportation shall adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to carry out the provisions of sections 3 to 7, inclusive, of this act.

(c) Such regulations may include, but need not be limited to: (1) Establishment of variable or dynamic toll rates that take into consideration the day of the week, level of congestion or anticipated congestions; (2) establishment of different fees based on the type of vehicle classification, size, weight, number of axles or vehicle occupancy; (3) establishment of reduced or discounted tolls for toll road users or classes of users registered in the state that are equipped with transponders or similar technology and have valid toll customer accounts with the department or the toll operator, as the case may be; (4) exemptions for high-occupancy commuter vehicles and motor vehicles leased to an agency of this state, owned by the state, used by a law enforcement unit, as defined in section 7-294a of the general statutes, used by a member of an emergency medical service organization, as defined in section 19a-175 of the general statutes, while responding to emergencies and used to provide public transit services; (5) the imposition of surcharges, premiums or additional fees for designated users or classes of users of a tolled highway who travel on such highway without a valid transponder or similar technology; and (6) the imposition of administrative charges and penalties for late payment and toll evasion.

(d) Such regulations shall include: (1) Due process procedures that include notice, the right to challenge a toll and associated charges, the opportunity for a hearing and a right to appeal; and (2) procedures for enforcement of any administrative decision.

(e) The Commissioner of Motor Vehicles shall adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, consistent with its duties and responsibilities under sections 3 to 7, inclusive, of this act and shall coordinate and consult with the Commissioner of Transportation in the development of such regulations.

Sec. 9. (NEW) (Effective from passage) (a) The provisions of this section shall not be effective unless a tolling proposal to implement electronic tolling systems is approved or deemed approved by the General Assembly pursuant to section 2 of this act.

(b) The department, after notice and hearing, may impose a civil penalty of not more than one hundred dollars for each violation of a provision of the regulations adopted pursuant to section 8 of this act on any of the following persons with respect to toll nonpayment, toll evasion and related fees imposed pursuant to sections 3 to 8, inclusive, of this act: (1) The operator of a motor vehicle on a tolled highway; (2) the registered owner of a motor vehicle operated on a tolled highway, if other than the operator, if such vehicle was used or operated with the express or implied permission of the registered owner at the time of the tolling transaction; (3) the lessee of a motor vehicle operated on a tolled highway, if other than the operator, if such vehicle was used or operated with the express or implied permission of the lessee at the time of the tolling transaction; and (4) the lessor of a motor vehicle operated on a tolled highway.

(c) A copy of the motor vehicle rental agreement, lease, other contract document or affidavit identifying the lessee of the motor vehicle at the time of the tolling transaction shall be prima facie evidence that the person named in the rental agreement, lease, other contract document or affidavit was operating the motor vehicle at all relevant times relating to the tolling transaction. A lessor shall cooperate with the department or the toll operator, as the case may be, in providing the department or toll operator any requested information concerning the lessee contained in the lessor's record.

(d) The Department of Motor Vehicles shall provide the department and any toll operator with the information necessary to collect tolls and enforce penalties for toll nonpayment, toll evasion or other toll-related violations, including, but not limited to, information regarding the registered owner of a motor vehicle that was operated on a tolled highway and the make of the motor vehicle, the motor vehicle's license plate and the address of the registered owner of the motor vehicle.

Sec. 10. (NEW) (Effective from passage) (a) (1) When the Treasurer determines the pledged revenues, as defined in section 13b-75 of the general statutes, credited to the Special Transportation Fund exceed two and one-half times the debt service requirements, as defined in said section, the Treasurer shall provide written notice to the Commissioner of Revenue Services of such determination.

(2) Not later than fifteen days after commencement of the collection of tolls through the use of any electronic tolling system, as defined in section 1 of this act, on the highways of this state, the Commissioner of Transportation shall provide written notice to the Commissioner of Revenue Services of the date of such commencement.

(b) Notwithstanding the provisions of subdivision (2) of subsection (a) of section 12-458 and section 12-458h of the general statutes, on July first of the first full fiscal year that follows the later of the notices required under subdivisions (1) and (2) of subsection (a) of this section, the amount of the tax imposed under subdivision (2) of subsection (a) of section 12-458 of the general statutes shall be decreased by one cent and for each of the immediately succeeding four fiscal years, the amount of such tax shall be decreased by an additional one cent. For each fiscal year thereafter, the amount of such tax shall be the same as for the fifth fiscal year. The Commissioner of Revenue Services shall calculate the applicable tax rate per gallon of fuel, as defined in section 12-455a of the general statutes, that is sold or used in this state for each such fiscal year and notify each distributor, the chairpersons and ranking members of the joint standing committee of the General Assembly having cognizance of matters relating to finance, revenue and bonding and the Secretary of the Office of Policy and Management of the applicable tax rate for each such fiscal year.

Sec. 11. Subparagraph (L) of subdivision (1) of section 12-408 of the 2018 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018, and applicable to sales occurring on or after July 1, 2018):

(L) (i) For calendar months commencing on or after July 1, 2017, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 seven and nine-tenths per cent of the amounts received by the state from the tax imposed under subparagraph (A) of this subdivision;

(ii) For calendar months commencing on or after July 1, [2020] 2018, but prior to July 1, [2021] 2019, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 twenty per cent of the amounts received by the state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the sale of a motor vehicle;

(iii) For calendar months commencing on or after July 1, [2021] 2019, but prior to July 1, [2022] 2020, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 forty per cent of the amounts received by the state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the sale of a motor vehicle;

(iv) For calendar months commencing on or after July 1, [2022] 2020, but prior to July 1, [2023] 2021, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 sixty per cent of the amounts received by the state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the sale of a motor vehicle;

(v) For calendar months commencing on or after July 1, [2023] 2021, but prior to July 1, [2024] 2022, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 eighty per cent of the amounts received by the state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the sale of a motor vehicle; and

(vi) For calendar months commencing on or after July 1, [2024] 2022, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 one hundred per cent of the amounts received by the state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the sale of a motor vehicle.

Sec. 12. Subparagraph (K) of subdivision (1) of section 12-411 of the 2018 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018, and applicable to sales occurring on or after July 1, 2018):

(K) (i) For calendar months commencing on or after July 1, 2017, the commissioner shall deposit into said Special Transportation Fund seven and nine-tenths per cent of the amounts received by the state from the tax imposed under subparagraph (A) of this subdivision;

(ii) For calendar months commencing on or after July 1, [2020] 2018, but prior to July 1, [2021] 2019, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 twenty per cent of the amounts received by the state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the sale of a motor vehicle;

(iii) For calendar months commencing on or after July 1, [2021] 2019, but prior to July 1, [2022] 2020, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 forty per cent of the amounts received by the state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the sale of a motor vehicle;

(iv) For calendar months commencing on or after July 1, [2022] 2020, but prior to July 1, [2023] 2021, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 sixty per cent of the amounts received by the state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the sale of a motor vehicle;

(v) For calendar months commencing on or after July 1, [2023] 2021, but prior to July 1, [2024] 2022, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 eighty per cent of the amounts received by the state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the sale of a motor vehicle; and

(vi) For calendar months commencing on or after July 1, [2024] 2022, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 one hundred per cent of the amounts received by the state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the [sale] acceptance or receipt in this state of a motor vehicle.

This act shall take effect as follows and shall amend the following sections:

Section 1

from passage

New section

Sec. 2

from passage

New section

Sec. 3

from passage

New section

Sec. 4

from passage

New section

Sec. 5

from passage

New section

Sec. 6

from passage

New section

Sec. 7

from passage

New section

Sec. 8

from passage

New section

Sec. 9

from passage

New section

Sec. 10

from passage

New section

Sec. 11

July 1, 2018, and applicable to sales occurring on or after July 1, 2018

12-408(1)(L)

Sec. 12

July 1, 2018, and applicable to sales occurring on or after July 1, 2018

12-411(1)(K)

TRA

Joint Favorable Subst.

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 19 $

FY 20 $

Resources of the General Fund

GF - Revenue Loss

66.9 million

145.6 million

Resources of the Special Transportation Fund

TF - Revenue Gain

66.9 million

145.6 million

Treasurer, Debt Serv.

TF - Cost

See Below

See Below

Note: TF=Transportation Fund; GF=General Fund

Municipal Impact: None

Explanation

The bill requires the Department of Transportation (DOT) to conduct National Environmental Policy Act studies in order to develop electronic tolling on state highways. The bill may result in an initial cost of up to $5 million to the Special Transportation Fund through Special Tax Obligation (STO) bond debt service for the study, although the state may be eligible to use Federal Funds if available.

After the study is completed, the DOT must file the toll proposal with the House and Senate clerks, which must be voted on by the Transportation Committee and the General Assembly. If the toll proposal is accepted by these governing bodies and by the Federal Highway Administration (FHWA), it is estimated that the annual toll revenue may be between $600-$800 million, which is dependent on several factors relating to toll rates and how many miles will be tolled. The bill specifies that the toll revenue will be used according to federal law and be used for any debt service payments on the STO bonds.

The bill also reduces by one half cent annually for five years the motor vehicles fuel tax which includes: (1) the gasoline tax, (2) the propane and natural gas tax and (3) the diesel fuel tax. This tax is currently 25 cents per gallon for gasoline and gasohol; 26 cents per gallon for propane and natural gas; and a rate set annually by the Commissioner of Revenue Services for diesel fuel. For FY 18, the diesel tax is 41.7 cents per gallon. Under the bill, the reduction starts when a 2.5 revenue to debt repayment threshold within the STF is exceeded. The bill requires a single year of exceeding the specified revenue to debt ratio to institute multiple automatic revenue collection rate decreases over the course of 5 subsequent fiscal years and is silent on what happens if revenues decrease below the 2.5 revenue to debt ratio in subsequent years.

The Special Tax Obligation (STO) bonds used to fund transportation projects require a minimum revenue to debt ratio of 2.0. To the extent that the automatic provisions might decrease expected revenues to below the 2.0 ratio requirement, there is the potential for significant increases in debt service costs, expenses related to mitigation of contractual requirements, or similar repayment penalties. Similarly, while the 2.0 revenue to debt service requirement is a required minimum when bonds are issued, bond markets respond to variation in actual revenue levels. To the extent that the bill decreases single year or near future ratio levels below where they otherwise would have been absent the provisions of the bill, or limits the funds ability to reach a ratio beyond 2.5, there is the potential for increased costs of borrowing.

The bill also allows DOT to impose a civil penalty of up to $100 for each violation related to toll evasion which will result in increased toll revenue dependent on the number of violations.

Lastly, the bill starts the five year phase in of the new car sales tax in FY 19 instead of FY 21. This will increase revenue to the Special Transportation Fund by $66.9 million in FY 19 and $145.6 million in FY 20 which will also be a corresponding revenue loss to the General Fund.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future, which will fully phase in the sales tax on new cars to the STF in FY 23. Also, if passed by the legislature and the FHWA, toll revenue will be collected to at least cover the debt service on the construction and maintenance of the electronic toll facilities.

OLR Bill Analysis

sHB 5391

AN ACT CONCERNING THE PREPARATION OF A TOLLING PROPOSAL AND SUPPORT FOR TRANSPORTATION INFRASTRUCTURE.

SUMMARY

This bill requires the Department of Transportation (DOT) to:

The bill establishes a legislative hearing and approval process for DOT's proposal. Under the bill, the proposal is (1) approved upon a majority vote of both houses or (2) deemed approved if the legislature does not vote within the required timeframe.

After a proposal is approved, the bill authorizes DOT to build, maintain, and operate electronic tolls, or contract with a private entity (toll operator) to operate them. The bill includes toll implementation and administration language ( 3-9), which the bill specifies is not effective until a toll proposal is approved or deemed approved. The language covers contracting and procurement; toll collection and revenue; toll rates, discounts, and exemptions; enforcement and penalties; data privacy; and system interoperability. Under the bill, toll revenue must be deposited into the Special Transportation Fund (STF) and spent only as federal law allows (see BACKGROUND).

The bill also makes two transportation-related revenue changes. It requires that the Department of Revenue Services (DRS) commissioner begin diverting a portion of motor vehicles sales and use tax revenue to the STF in FY 19, rather than in FY 21. It also reduces the motor fuels tax by five cents over a five-year period, beginning after DOT starts collecting tolls and other conditions are met.

EFFECTIVE DATE: Upon passage, except that the sales and use tax provisions are effective July 1, 2018 and applicable to sales occurring on or after that date.

2 — TOLLING PROPOSAL

Proposal Contents

The proposal DOT prepares must:

Legislative Approval Process

Under the bill, the DOT commissioner must file the toll proposal with the House and Senate clerks. The clerks must refer it to the Transportation Committee (1) within five days after receiving it or (2) if they receive it when the legislature is not in session, within five days after the first day of the next regular session.

The bill requires the Transportation Committee to hold a public hearing on the proposal within ten days after its referral. Within five days after the hearing, the committee must (1) hold a roll-call vote to approve or reject the proposal and (2) forward the proposal and the vote record to the General Assembly.

Within 30 days after the proposal is forwarded, the General Assembly may approve the proposal, in whole, or reject it. The proposal is:

Under the bill, the 30-day timeframe does not start or end unless the legislature is in regular session. If the session adjourns before the 30th day and the legislature has not acted on the proposal, the proposal is deemed filed on the first day of the next regular session.

The bill allows the DOT commissioner to revise the proposal if it is rejected by the legislature. After revising it, he must submit it to the clerks, and it follows the same approval process as for the initial proposal.

Federal Approval

Under the bill, once a toll proposal is approved or deemed approved, the DOT commissioner must also submit the proposal to the Federal Highway Administration (FHWA). The bill prohibits him from submitting a tolling proposal to the FHWA unless it is approved or deemed approved.

Under federal law, DOT may not implement tolls until it receives federal approval and executes a tolling agreement with the FHWA (see BACKGROUND).

3-9 — TOLL IMPLEMENTATION AND ADMINISTRATION

Upon the approval of DOT's tolling proposal, the bill allows DOT to implement electronic tolling in the state. Under the bill, an “electronic tolling system” records, monitors, collects, and enables payment of tolls. It includes transponders or other electronic transaction or payment technology devices or video toll transaction systems. If transponders or similar devices are used, the bill requires them to be placed in or on motor vehicles in the way DOT or a toll operator prescribes.

Tolling Agreements and Authorizations

Under the bill, DOT may:

The bill authorizes DOT and the Department of Motor Vehicles (DMV) to enter into reciprocal agreements with other states and jurisdictions, and with toll operators in other states, to share information on out-of-state vehicle owners who have used a tolled highway, including the name and address of the vehicle owner and the vehicle's make and license plate number. DOT, DMV, and the toll operator may enter into agreements with other states and toll operators for additional enforcement mechanisms to efficiently collect tolls from out-of-state residents.

The bill also allows DOT and the Department of Emergency Services and Public Protection to enter into an agreement to have state police enforce laws on tolled highways that they do not enforce elsewhere (e.g., laws on toll evasion). It gives state and local police the same powers on tolled roads as they have in their respective jurisdictions.

Toll Collection and Revenue

Under the bill, DOT may charge, collect, retain, and set the amount of tolls on highways or portions of highways, and retain and employ the assistance it needs to collect the tolls. Toll revenue (1) must be deposited into the STF, (2) cannot be commingled with other funds and revenues, and (3) must be spent only as federal law allows (see BACKGROUND).

The department must set the toll amounts to provide sufficient funding to cover specified costs, but it may consider the availability of funds from other sources in doing so. Under the bill, the revenue generated by tolls, plus such other available funding, must cover, at a minimum, the following costs:

Tolls DOT establishes are not subject to supervision or regulation by any other commission, board, bureau, authority, state agency or political subdivision, except as otherwise provided by law.

Under the bill, tolls are not subject to, and are exempt from, the sales and use, excise, gross receipts, or similar taxes.

Regulations

Toll Rates, Application, and Exemptions. The bill requires DOT to adopt implementing regulations, which must cover the following:

Due Process. DOT's regulations must include procedures for due process that include notice, the right to challenge a toll and associated charges, the opportunity for a hearing and right to appeal, and procedures for enforcing administrative decisions.

DMV. The bill also requires the DMV commissioner, in consultation with the DOT commissioner, to adopt regulations to carry out its responsibilities under the bill.

Notice and Privacy

The bill requires DOT to notify drivers in advance of (1) the toll rates and (2) how to pay them. It must hold at least one public informational meeting near the proposed toll location before building a toll system, during which it must receive comments on the proposed toll, rate-setting methodology and user classifications.

DOT must develop and implement a (1) privacy policy for toll customer information and other data, collected, received, maintained, archived, accessed, and disclosed by DOT to a toll operator, and (2) protocol to protect and limit access to toll customer information and other data collected, received, maintained, and archived.

Except as required by law or an administrative or court proceeding, all information relating to a specific transaction of a toll customer or to a “toll customer account” that specifically identifies the toll customer must be destroyed. In the case of a specific transaction, this information must be destroyed within one year after the later of the tolling transaction or toll collection, whether through normal processes or enforcement. In the case of a customer account, such information must be destroyed within one year after the collection of all tolls and fees the customer incurred, whether through normal processes, enforcement, or the account's closing. “Toll customer account” apparently refers to a billing account the customer establishes.

The bill prohibits DOT or a toll operator from selling or using any toll customer information or other data for commercial purposes unrelated to the charging, collection, and enforcement of tolls, administrative fees, and penalties. It exempts toll customer data and information from disclosure under the Freedom of Information Act and subjects toll operators to laws that apply to state contractors who receive confidential information. However, DOT may release customer information or other data that does not directly or indirectly identify a customer and is used for department-authorized research purposes.

Enforcement and Penalties

Under the bill, DOT, after notice and a hearing, may impose a civil penalty of up to $100 for each violation of the regulations related to not paying a toll, toll evasion, or any related fees. It may impose the penalty on (1) a vehicle's driver or (2) its owner or lessee if the vehicle was operated by someone else with the owner's or lessee's permission. The penalty also may be imposed on a vehicle's lessor. A copy of a motor vehicle rental agreement, lease, or other contract or affidavit identifying the lessee at the time of the tolling transaction is prima facie evidence that the person named in the agreement was operating the vehicle at all relevant times related to the toll.

The bill requires vehicle lessors to cooperate with DOT or the toll operator in providing any information about the lessee that DOT or the toll operator requests from the lessor's record (presumably the lease agreement or contract). DMV must provide DOT or the toll operator any information it needs to collect tolls and enforce penalties for nonpayment, toll evasion, or other violations, including information on the vehicle's owner and his or her address, and the vehicle's make and license plate number.

Toll System Interoperability

The bill requires that the tolling system be compatible with other electronic tolling systems in the state and comply with all state and federal interoperability requirements and standards, including system technology and fund transfers. (Interoperability refers to the ability of computer systems to exchange and use information.) The DOT and DMV commissioners must consult with the administrative services commissioner to ensure coordination and compatibility of information system technology and data. The bill specifies that, for purposes of interoperability, state laws on state information and telecommunications systems and geospatial information systems do not apply to electronic tolling systems. These include laws on, among other things, interagency agreements, legislative access to state agency records, and hiring of state employees by, and disqualification of, contractors and subcontractors.

10 — GAS TAX REDUCTION

The bill requires the state treasurer to notify the DRS commissioner, in writing, when she determines that revenue credited to the STF (i.e., “pledged revenues”) exceed two and one-half times the debt service owed on transportation Special Tax Obligation (STO) bonds. It also requires the DOT commissioner to notify the DRS commissioner, in writing, of the date DOT begins collecting tolls, within 15 days after such collection begins.

The bill gradually reduces the motor fuels tax by five cents over five years (one cent in each fiscal year). The initial one-cent reduction starts on July 1 of the first full fiscal year following DRS' receipt of the later of the two above required notices.

Under the bill, DRS must calculate, for each fiscal year, the applicable tax rate per gallon of fuel and provide notice of the tax rate to each distributor, the policy and management secretary, and the Finance, Revenue and Bonding Committee chairpersons.

11 & 12 — SALES AND USE TAX REVENUE DIVERSION FROM CERTAIN MOTOR VEHICLE SALES

Current law phases in over five years a diversion of the motor vehicles sales and use tax to the STF according to a specified schedule that begins in FY 21. The bill phases in the diversion earlier, beginning in FY 19, and adjusts the schedule accordingly. Table 1 provides the amount of the diversion under current law and under the bill.

As under existing law, the revenue diversion applies to revenue from motor vehicle sales subject to the 6.35% rate or 7.75% luxury tax rate (generally for those costing more than $50,000).

Table 1: Schedule of Motor Vehicle Sales and Use Tax Diversion to STF

Fiscal Year

% of Revenue Diverted to STF

Current Law

Bill

19

--

20

20

--

40

21

20

60

22

40

80

23

60

100

24

80

100

25 and thereafter

100

100

BACKGROUND

National Environmental Policy Act (NEPA)

NEPA requires federal agencies to consider the environmental effects of their proposals and actions, including the projects they fund (42 U.S.C 4321 et seq.). Federal regulations specify the basic requirements for making decisions under NEPA, which include (1) assessing social, economic, and environmental impacts; (2) analyzing a project alternatives; (3) considering appropriate impact mitigation; and (4) providing opportunities for public participation (40 C.F.R.  1500-1508).

Tolling and Federal Law

Although states are free to toll roads, bridges, and tunnels built without federal funds, federal law limits the imposition of tolls on existing federal-aid highways, especially interstate highways. But recent federal laws have expanded states' abilities to allow tolling in certain instances, such as when building new interstate routes or when adding a new lane to an existing interstate highway (23 U.S.C. 129).

Federal law also has several pilot programs, such as the Value Pricing Pilot Program, in which participating states use “congestion pricing” to try to manage traffic flow and reduce traffic congestion. (Congestion pricing is the practice of charging higher tolls when traffic is heaviest and lower or no tolls at other times.) Connecticut is participating in the Value Pricing Pilot Program.

Toll Revenue Restrictions

Under federal law, toll revenue must be used first on the facility being tolled, including (1) debt service for the tolled road; (2) a reasonable return on investment of any private person financing the road; (3) road maintenance, operating, and improvement costs; and (4) if applicable, payments that the entity that controls tolling revenue owes to another party under a public-private partnership agreement (23 U.S.C.  129(a)(3)(A)).

If the public authority with jurisdiction over the toll road has met the annual financial obligations related to the toll road and certifies that the road is adequately maintained, any additional toll revenue may be used for other roads and other uses allowed under federal highway law (e.g., maintenance and improvement of other highways, congestion mitigation and air quality improvements, highway safety initiatives, and certain public transit improvements).

Special Transportation Fund

The STF is a dedicated fund used to finance the state's transportation infrastructure program and operate DOT and DMV (CGS 13b-68). The law requires specified tax revenue (e.g., fuel taxes and a portion of sales and use tax revenue) and various transportation-related fees, fines, and charges to be credited to the STF. By law, STF revenue is pledged to STO bonds issued for transportation projects through DOT's capital program (CGS 13b-74 to 13b-77), and its resources must be used first to pay off STO bond debt service.

Connecticut statutes contain a “lockbox” provision, which makes the STF a perpetual fund, requires its current revenue sources to continue to be placed in the fund as long as the state collects them, and restricts the use of its resources to transportation purposes (CGS 13b-68(b)). In 2017, the legislature approved a constitutional amendment to provide these “lockbox” protections in the constitution. The amendment will be placed on the November 2018 general election ballot.

Related Bills

Several bills favorably reported by the Transportation Committee contain provisions related to tolling:

COMMITTEE ACTION

Transportation Committee

Joint Favorable Substitute

Yea

19

Nay

17

(03/23/2018)

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