OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sHB-5590

AN ACT CONCERNING BOND COVENANTS AND THE BOND ISSUANCE CAP AND REQUIRING A STUDY OF BOND COVENANTS.

AMENDMENT

LCO No.: 4794

File Copy No.: 643

House Calendar No.: 423


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 19 $

FY 20 $

Treasurer, Debt Serv.

GF - Potential Savings

See Below

See Below

Note: GF=General Fund

Municipal Impact: None

Explanation

The amendment is a strike all amendment and eliminates the fiscal impact indicated in the underlying bill.

Current law requires the state to enter into a bond covenant on May 15, 2018 which requires the state to comply with seven specific caps on appropriations and bonding as they are currently written. The amendment maintains that the bond covenant requirement pertaining to the volatility cap begins on May 15, 2018. For the remaining caps the bond covenant requirement is delayed until July 1, 2019.

The amendment reduces the length of the bond covenant requirements from ten years after first bond issuance to five years. Current law allows alterations to the provisions of the caps in the event of an emergency or the existence of extraordinary circumstances for the current fiscal year. However, the amendment extends this period to include the succeeding fiscal year.

The amendment excludes from the cap on bond issuances bonds which are issued for: 1) refunding outstanding bonds or other indebtedness or 2) for temporary obligations in anticipation of revenue to be received within the next 12 months. This could result in savings in debt service payments to the extent the state is able to refinance outstanding debt at a lower cost.

The amendment requires the Office of Policy and Management, the Attorney General, the Comptroller, and the Treasurer to conduct a study concerning bond covenants. The completion of the study is not anticipated to require additional resources for any of the four agencies required to take part in the study and therefore will have no fiscal impact.

The Out Years

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

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does 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.