GFOA PresentationGFOA Presentation April 10, 2008April 10, 2008

Presentation to thePresentation to the Government Finance Officers Association CTGovernment Finance Officers Association CT

2008 Legislative Session2008 Legislative Session

Prepared byPrepared by

Guinan Associates Guinan Associates

General 2008 Session InfoGeneral 2008 Session Info

Short sessionShort session–– Exactly 13 weeksExactly 13 weeks

»» Began on February 6, 2008Began on February 6, 2008»» Ends May 7, 2008Ends May 7, 2008

Non Non -- Budget YearBudget Year::»» Second year of biannual budget stays in Second year of biannual budget stays in

place if no new budget adopted.place if no new budget adopted.

3 New Members3 New Members

Representative Jason Perillo (R) Representative Jason Perillo (R) --SheltonSheltonReplaced Dick Belden (R)Replaced Dick Belden (R)

Senator Robert Kane (R) Senator Robert Kane (R) –– Bethlehem, Bethlehem, Thomaston, Watertown, Woodbury, Thomaston, Watertown, Woodbury, Roxbury, Bridgewater, Southbury, Oxford, Roxbury, Bridgewater, Southbury, Oxford, Seymour. Seymour. Replaced Louis Deluca (R)Replaced Louis Deluca (R)

Senator Robert Russo (R) Senator Robert Russo (R) ––Monroe, Monroe, Trumbull, Bridgeport Trumbull, Bridgeport Replace Bill Finch (D)Replace Bill Finch (D)

HOUSE 2008HOUSE 2008

151 151 Total MembersTotal Members107 Democrats !!!107 Democrats !!!

44 Republicans44 RepublicansSUPERMAJORITYSUPERMAJORITY

SENATE 2008SENATE 2008

36 Total Members36 Total Members2323 DemocratsDemocrats13 Republicans13 Republicans

Big ChangeBig ChangeNo longer a Supermajority!No longer a Supermajority!

GOVERNORGOVERNOR

RERE--ELECTED NOVEMBER 2006 ELECTED NOVEMBER 2006 with with 63% of the VOTE63% of the VOTE !!!!!!Less of a presence than 2007Less of a presence than 2007House RHouse R’’s very effective in 07s very effective in 072008 DelGobbo, 2008 DelGobbo, CaferoCafero, Healy, Healy

Pension Obligation BondsPension Obligation Bonds

Are available to the public now Are available to the public now –– April 7 April 7 –– 1414

New marketing effort by State Treasurer New marketing effort by State Treasurer –– Information and outreach to all current and Information and outreach to all current and retired teachers and PSA announcements.retired teachers and PSA announcements.

Managers Bear Stearns, JP Morgan and Managers Bear Stearns, JP Morgan and Merrill LynchMerrill Lynch

Big Issues for the SessionBig Issues for the Session

Criminal Justice Criminal Justice –– Reform and ReactionReform and ReactionTeen DriversTeen DriversMunicipal Aid Municipal Aid –– They know towns need helpThey know towns need helpHealth Care Access for AllHealth Care Access for AllGlobal Warming, EnvironmentGlobal Warming, EnvironmentOpen space, Farm land, Historic preservationOpen space, Farm land, Historic preservationCEC CEC --CitizenCitizen’’s Election Campaign s Election Campaign Ethics Ethics –– Including MunicipalIncluding Municipal

State Surplus OutlookState Surplus Outlook

Projected SurplusesProjected Surpluses

FY 07FY 07FY 08FY 08

FY 09FY 09FY 09FY 09

$489 Million ($489 Million (OFAOFA))$160.4 Million ($160.4 Million (OFAOFA))

$ 37.6 Million ($ 37.6 Million (OFAOFA))$ 3.3 Million ($ 3.3 Million (OPMOPM))

Comparison: Net IncreaseComparison: Net Increase

The Governor

$508.5 million net increase 08

$699.5 million for FY 09.

The DemocratsThe Democrats

$862.9 million net $862.9 million net increases 08increases 08

*Healthcare*Healthcare$806.2 million net $806.2 million net increases 09increases 09

EDUCATIONEDUCATION

Prope rty Tax Burde n and State Support of Education as a Pe rce ntage of Total Publ ic

School Expe nditure s

Taxes

% State Support of Education

5.05.56.06.57.07.58.0

2000 2001 2002 2003 2004 2005Year

Prop

erty

Tax

(B

illi

ons)

36.0%37.0%38.0%39.0%40.0%41.0%42.0%43.0%

% S

tate

Sup

port

of

Edu

cati

on

State Share of Education CostsState Share of Education Costs

Percent of Education Cos ts Assum ed by the State

46%

39%

42%41% 41%

40%38%

40%41% 40%

30%32%34%36%38%40%42%44%46%48%

19 9 0 19 9 5 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7

Year

Perc

ent

of T

otal

Cos

t

EDUCATIONEDUCATION

Total new dollars over 5 years will be in Total new dollars over 5 years will be in excess of $3.2 billionexcess of $3.2 billionGovernor Governor RellRell’’ss education plan increases education plan increases the Education Cost Sharing (ECS) grant by the Education Cost Sharing (ECS) grant by $1.1 billion per year$1.1 billion per year

Governor ECS ChangesGovernor ECS ChangesDetails of the ECS changes are as follows:Details of the ECS changes are as follows:

–– The ECS cap is eliminated in the first yearThe ECS cap is eliminated in the first year–– ECS Foundation will increase from $5,891 to $9,687 ECS Foundation will increase from $5,891 to $9,687 –– State Guaranteed Wealth Level (SGWL) will increase from State Guaranteed Wealth Level (SGWL) will increase from

1.55 to 1.751.55 to 1.75–– Minimum Aid Ratio will increase from 6% to 10%Minimum Aid Ratio will increase from 6% to 10%–– Resident Students will not include students from magnet Resident Students will not include students from magnet

schools schools –– Need Students Need Students –– Use updated and current dataUse updated and current data–– Increase weighting for limited English proficiency studentsIncrease weighting for limited English proficiency students–– Supplemental Formula Aid and Density Aid will be Supplemental Formula Aid and Density Aid will be

eliminatedeliminated–– All communities get at least a 3% increase All communities get at least a 3% increase

Gov: Restrictions on School Gov: Restrictions on School ConstructionConstruction

TwoTwo--pronged attempt to reduce the Statepronged attempt to reduce the State’’s overall indebtedness from local s overall indebtedness from local school construction program. school construction program.

–– Decreasing the State reimbursement percentages for local Decreasing the State reimbursement percentages for local school construction programs from 20% school construction programs from 20% -- 80% to 15% 80% to 15% -- 65%, while capping the magnet school reimbursement rate 65%, while capping the magnet school reimbursement rate at 80%at 80%

–– Placing a $300 million annual cap on the level of State grant Placing a $300 million annual cap on the level of State grant commitments for the school building priority list beginning commitments for the school building priority list beginning with the December 2007 listwith the December 2007 list

These changes will reduce the level of bonding allocations in thThese changes will reduce the level of bonding allocations in the future. They e future. They will also force additional local responsibility in the design anwill also force additional local responsibility in the design and cost of school d cost of school buildings and a more careful prioritization in the compiling of buildings and a more careful prioritization in the compiling of the school the school construction listconstruction list

Democrat Education FundingDemocrat Education Funding

ECS ECS -- $1.825 billion in FY 08. $1.825 billion in FY 08. No increase in FY 09.No increase in FY 09.

Special Ed grants Special Ed grants -- $129 million$129 millionPilot study of new funding Pilot study of new funding mechanism.mechanism.

Appropriations Committee Appropriations Committee Funding for MunicipalitiesFunding for Municipalities

CommitteeCommittee’’s budget increases state aid to s budget increases state aid to municipalities by municipalities by $293.3 M from FY 07 of which $257.4 is $293.3 M from FY 07 of which $257.4 is increase in Education fundingincrease in Education funding$93.1 M over the Governor$93.1 M over the Governor’’s recommended s recommended budgetbudget

Democrat Package Democrat Package –– Local AidLocal Aid

Overall $30.9 million increase in Property Overall $30.9 million increase in Property Tax Relief to Towns.Tax Relief to Towns.PILOT State Property IncreasesPILOT State Property IncreasesPILOT College and Hospitals IncreasedPILOT College and Hospitals IncreasedTown Aid Road fully fundedTown Aid Road fully fundedPequot/ Mohegan fund increasedPequot/ Mohegan fund increased

INCOME TAX INCREASEINCOME TAX INCREASE

GOVERNORGOVERNORincrease rate from 5% to increase rate from 5% to 5.25% for income year 5.25% for income year 2007 and to 5.5% for 2007 and to 5.5% for income year 2008income year 2008YieldsYields $617.5 million in $617.5 million in FY08 and $650.0 million FY08 and $650.0 million in FY09 and thereafter in FY09 and thereafter

DEMOCRATSDEMOCRATSProgressive Rates

0 0 -- $20,000$20,000-- 3%3%$20,000$20,000--100,000100,000––4.75%4.75%100,001100,001--150,000150,000--5%**5%**150,001150,001--200,000200,000--5.5%5.5%200,001200,001--250,000250,000--6.25%6.25%250,001 and up250,001 and up--6.95%6.95%YieldsYields $991m in FY 08, $991m in FY 08,

$947m in FY 09$947m in FY 0988% of taxpayers 88% of taxpayers -- lowerlower

GovernorGovernor’’s Revenue Proposalss Revenue Proposals

IncrsIncrs Cigarette Tax Cigarette Tax $1.51 $1.51 --2.00 p/pack2.00 p/packClarify the Film Clarify the Film Industry Tax CreditIndustry Tax Creditphasephase--out Estate Tax out Estate Tax by 2011, immediate by 2011, immediate elimination of the cliffelimination of the cliffStudy: Streamline Study: Streamline Sales Tax CompactSales Tax Compact

additional $86.4m in additional $86.4m in 08 $82.8 m in 0908 $82.8 m in 09save $21 million in save $21 million in each yeareach year$21.3m in FY 08, $31.9m in 09

Finance CommitteeFinance Committee’’s Revenue s Revenue PackagePackage

Does not include the Does not include the elimination of the motor elimination of the motor vehicle property tax.vehicle property tax.Increase in the property Increase in the property tax credit from $500 to tax credit from $500 to $1000. $1000. Makes RE Conveyance Makes RE Conveyance Tax Permanent .25%Tax Permanent .25%Increase Cig tax from Increase Cig tax from $151 $151 –– $2.00 p/pack.$2.00 p/pack.Modify Estate Tax Modify Estate Tax ––eliminate cliffs, adjust eliminate cliffs, adjust rates.rates.

Loss $280 m FY 08, Loss $280 m FY 08, $285m FY 09$285m FY 09

Local gain $40Local gain $40--45m45m

Same as GovSame as Gov

Neutral Neutral –– 31 m potential 31 m potential loss offset by change in loss offset by change in marginal rates.marginal rates.

Finance CommitteeFinance Committee’’s Revenue s Revenue Package, cont.Package, cont.

Eliminate Sales Tax Eliminate Sales Tax Exemption on clothing Exemption on clothing Eliminate funeral tax Eliminate funeral tax exemptionexemptionExempt computer and data Exempt computer and data processing services 1% processing services 1% Sales Tax Sales Tax Exempt Health & athletic Exempt Health & athletic club memberships from club memberships from sales tax m cost sales tax m cost

$135 million gain FY 08$135 million gain FY 08$138 million gain in 09$138 million gain in 09

$4.4$4.4––4.5 million each 4.5 million each yearyear

$12.9 and $13.3 m$12.9 and $13.3 m

$6.1 cost per annum$6.1 cost per annum

GOVERNORGOVERNOR’’S PROPERTY TAX LIMIT S PROPERTY TAX LIMIT PROPOSALPROPOSAL

The total amount of property taxes imposed by a The total amount of property taxes imposed by a municipality will not be able to increase by municipality will not be able to increase by more than 3 percent from one year to the nextmore than 3 percent from one year to the next..

The limit takes effect for budgets beginning July The limit takes effect for budgets beginning July 1, 2008 (Fiscal Year 2009).1, 2008 (Fiscal Year 2009).

The municipality and any taxing district within a The municipality and any taxing district within a municipality would each have its own limit.municipality would each have its own limit.

Four exceptions to the Property Tax Four exceptions to the Property Tax CapCap

–– Grand List GrowthGrand List Growth: : The limit may be adjusted upwards to reflect The limit may be adjusted upwards to reflect any grand list growth (other than motor vehicles) in excess of 1any grand list growth (other than motor vehicles) in excess of 1.5 .5 percent, provided the growth is not the result of revaluationpercent, provided the growth is not the result of revaluation

–– Debt ServiceDebt Service: : Expenses related to paying for capital projects are Expenses related to paying for capital projects are exempt from the limit, but only for the life of the bondsexempt from the limit, but only for the life of the bonds

–– OverrideOverride: : With the approval of With the approval of bothboth a twoa two--thirds vote of the thirds vote of the municipalitymunicipality’’s legislative body and a simple majority of its voterss legislative body and a simple majority of its voters

–– EmergenciesEmergencies: : With a twoWith a two--thirds vote of the municipalitythirds vote of the municipality’’s s legislative body legislative body andand approval of the Secretary of the Office of approval of the Secretary of the Office of Policy and Management, a municipality could temporarily exceed Policy and Management, a municipality could temporarily exceed the limit for such emergencies as a natural disasters, fires andthe limit for such emergencies as a natural disasters, fires and the the like.like.

Controlling ExpensesControlling Expenses……

Governor is proposing two changes to state law to Governor is proposing two changes to state law to help towns live within the property tax limit:help towns live within the property tax limit:

Arbitrators Arbitrators mustmust consider consider the ability of a municipality to the ability of a municipality to stay within the 3 percent property tax limit in calculating stay within the 3 percent property tax limit in calculating its ability to pay an award.its ability to pay an award.

Arbitrators Arbitrators could notcould not consider consider a reserve or fund balance a reserve or fund balance of up to 10 percent of a municipalityof up to 10 percent of a municipality’’s General Fund in s General Fund in

calculating its ability to pay an award.calculating its ability to pay an award.

HB 6956: CCM Strong OppositionHB 6956: CCM Strong Opposition

HB 6956 would HB 6956 would negate an overwhelming amount of negate an overwhelming amount of state aid to townsstate aid to towns that both the legislature and Governor that both the legislature and Governor are posed to allocate to municipalities are posed to allocate to municipalities –– much needed aid much needed aid that will pay for local public safety, education and that will pay for local public safety, education and transportation services. transportation services. Proponents are wrong Proponents are wrong —— the costs to municipalities would the costs to municipalities would be enormous be enormous —— HB 6956 would dredge up the HB 6956 would dredge up the over $30 over $30 million per year H&H mandatemillion per year H&H mandate, while imposing , while imposing two two entirely new, hugely costly unfunded state mandatesentirely new, hugely costly unfunded state mandates ––jobrelatedjobrelated presumptions for infectious and contagious presumptions for infectious and contagious diseases and certain types of cancer. diseases and certain types of cancer. Infectious & contagious diseaseInfectious & contagious disease claims can cost between claims can cost between $750,000 and $2.5 million per case!$750,000 and $2.5 million per case! While a single While a single cancercancer claim can claim can exceed $1 million per case!exceed $1 million per case!

Substitute House Bill No. 6956 Substitute House Bill No. 6956 WorkersWorkers’’ CompComp

AN ACT CONCERNING WORKERS' COMPENSATION COVERAGE AN ACT CONCERNING WORKERS' COMPENSATION COVERAGE FOR FIREFIGHTERS AND POLICE OFFICERS.FOR FIREFIGHTERS AND POLICE OFFICERS.

[(b) Notwithstanding the provisions of subsection (a) of this se[(b) Notwithstanding the provisions of subsection (a) of this section, those ction, those persons who began employment on or after July 1, 1996, shall notpersons who began employment on or after July 1, 1996, shall not be be eligible for any benefits pursuant to this section.]eligible for any benefits pursuant to this section.](b) For the purpose of adjudication of claims for the payment of(b) For the purpose of adjudication of claims for the payment of benefits benefits under the provisions of chapter 568 to a uniformed member of a punder the provisions of chapter 568 to a uniformed member of a paid aid municipal fire department or a regular member of a paid municipamunicipal fire department or a regular member of a paid municipal police l police department who began such employment on or after July 1, 1996, adepartment who began such employment on or after July 1, 1996, any ny condition of impairment of health caused by hypertension or hearcondition of impairment of health caused by hypertension or heart disease t disease occurring to such member while such member is on duty and actingoccurring to such member while such member is on duty and actingwithin the scope of his employment for such member's municipal within the scope of his employment for such member's municipal employer that results in death or temporary or permanent total oemployer that results in death or temporary or permanent total or partial r partial disability shall be presumed to have been suffered in the line odisability shall be presumed to have been suffered in the line of duty and f duty and within the scope of such member's employment, unless the contrarwithin the scope of such member's employment, unless the contrary is y is shown by competent evidence, provided such member completed a shown by competent evidence, provided such member completed a physical examination on entry into such employment that failed tphysical examination on entry into such employment that failed to reveal o reveal any evidence of hypertension or heart disease.any evidence of hypertension or heart disease.

Additional LegislationAdditional Legislation

SB 64 AAC Scarring Awards Under the WorkersSB 64 AAC Scarring Awards Under the Workers’’Compensation ActCompensation ActThis bill would allow for the awarding of This bill would allow for the awarding of subjective compensation awards for scarring on subjective compensation awards for scarring on any part of the body. This is a change from the any part of the body. This is a change from the current system, which has scheduled awards for current system, which has scheduled awards for different injuries.different injuries.

..

SB 255 AAC Additional Benefits for Wages SB 255 AAC Additional Benefits for Wages Lost Under the WorkersLost Under the Workers’’ Compensation ActCompensation Act

Cost for municipalitiesCost for municipalitiesAllows for the awarding of additional benefits for Allows for the awarding of additional benefits for permanent partial disabilities permanent partial disabilities These are after the claimant has completed the These are after the claimant has completed the statutory schedule for regular benefitsstatutory schedule for regular benefits

SB 486 AAC Family and Medical Leave for SB 486 AAC Family and Medical Leave for Employees of Employees of MunicipalitesMunicipalites

Current law already mandates FMLACurrent law already mandates FMLAThis would require towns to adhere to state and This would require towns to adhere to state and federal FMLA regulationsfederal FMLA regulationsPotential policy conflicts for townsPotential policy conflicts for townsCreates more stringent standards for the rehiring Creates more stringent standards for the rehiring of employeesof employees

SB 217 AA Mandating Employers Provide SB 217 AA Mandating Employers Provide Paid Sick Leave to EmployeesPaid Sick Leave to Employees

Requires employers to provide sick leave at the Requires employers to provide sick leave at the rate of one hour earned per 40 hours worked, rate of one hour earned per 40 hours worked, accruing a total of 52 hoursaccruing a total of 52 hoursDoes not distinguish between part time and Does not distinguish between part time and seasonal employeesseasonal employeesExcludes temporary workersExcludes temporary workers

SB 570 AAC Telecommuting and High Speed SB 570 AAC Telecommuting and High Speed Broadband AccessBroadband Access

Allows telecomm companies a two year property Allows telecomm companies a two year property tax exemption on property related to the tax exemption on property related to the development of high speed internet infrastructuredevelopment of high speed internet infrastructureGrand list reduction for towns and citiesGrand list reduction for towns and citiesAlready significant tax incentives for telecom Already significant tax incentives for telecom companiescompanies

SB 602 AAC The Collection of Delinquent SB 602 AAC The Collection of Delinquent Property Taxes on Motor VehiclesProperty Taxes on Motor Vehicles

Prohibits the collection of delinquent taxes on Prohibits the collection of delinquent taxes on motor vehicles that are more than 6 years beyond motor vehicles that are more than 6 years beyond the original due datethe original due datePlaces a three year maximum on the Places a three year maximum on the accuralaccural of of interest, unless the person is notified by mail or in interest, unless the person is notified by mail or in personperson

WHAT NEXT???WHAT NEXT???

Talk to your Legislators.Talk to your Legislators.You are respected in Finance Matters.You are respected in Finance Matters.Local Officials and CCM.Local Officials and CCM.Call us.Call us.

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