Bonding, Tax Adjustments Approved

In the final hours of this year’s legislative session, the Senate passed a sweeping omnibus bond and tax adjustment package that includes hundreds of millions of dollars in new bond authorizations.

HB 5524, which cleared the House earlier, included and a number of concepts from various Finance, Revenue, and Bondng Committee bills discussed this session.

The new bond authorizations include an extension of the UConn 2000 infrastructure program by four years with an additional $625 million in new bonding.

The authorization also requires UConn or the UConn Foundation to raise $100 million of “UConn 2000 philanthropic commitments and gifts” by June 30, 2031 to match new bond authorizations.

The bill also allows the state to issue special tax obligation bonds for the Department of Transportation’s commercial rail freight line competitive grant program for improvements and repairs to, and modernization of, existing rail, rail beds, and related facilities.

Other Bond Authorizations

Other new bond authorizations of note include:

• Earmark of up to $20 million in previously authorized Manufacturer Assistance Act bonds for funding opportunity zone investments through an impact investment firm
• Low interest loan program for municipalities and private entities for climate resiliency projects funded through a new Climate Resiliency Revolving Loan Fund
• $100 million in additional Urban Action bonds for economic development grants
• Additional $4 million for advanced manufacturing and emerging technology programs in the CSCU system
• $15 million in additional funding for microgrid and resilience grants and loan pilot program
• $100 million in additional authorizations for the fix-it-first bridge repair program

In addition to the adjustments to the bond package, the bill made a number of tax changes impacting corporate and municipal taxes.

NOL Carryforward

Importantly, the bill extends from 20 to 30 income years the period when corporations may carry forward a net operating loss deduction for corporation business tax purposes for NOLs incurred in income years starting on or after Jan. 1, 2025.

The bill also allows certain combined groups meeting specified qualifications to deduct, over a 30 year period, the amount necessary to offset the increase in the valuation allowance against net operating losses and tax credits in Connecticut that resulted from the state’s shift to combined reporting.

These two sections were advocated for by CBIA and our many industry colleagues, and will help attract and maintain business investment in our state.

The bill extends from 20 to 30 income years the period when corporations may carry forward a net operating loss deduction.

The bill also creates a working group to study state tax expenditures. The working group is tasked with examining the state’s statutory tax expenditures to simplify the state tax code and identify those that are redundant, obsolete, duplicative, or inconsistent.

The working group is to report back to the legislature by Jan. 1, 2025.

The bill authorizes the Department of Revenue Services commissioner to reaudit insurance premiums tax returns and impose more than one deficiency assessment.

That provision is subject to the same requirements that apply to audits and assessments under existing law, while section 68 extends from 45 days after being initially licensed to do business in Connecticut to 90 days after this date the due date for newly licensed nonresident- and foreign-licensed insurance companies to remit their initial five-year return to DRS.

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For more information, contact CBIA’s Chris Davis (860.244.1931).