CT SB00528

Allows the Secretary of the Office of Policy and Management and State Treasurer to enter contracts with tier III or tier IV municipalities to provide contract assistance for debt refunding, with joint approval required from General Assembly committees on appropriations and finance.

Contract assistance is limited to annual debt service on refunding bonds plus costs of issuance and expenses directly resulting from the refunding, and can be paid directly to the municipality, trustee, paying agent, or bondholder.

Municipalities receiving contract assistance for more than five fiscal years must have a reduction in appropriated municipal aid (excluding equalization aid grants) in the sixth fiscal year equal to the state debt service paid, unless the General Assembly approves alternate aid.

Municipalities with cumulative negative unassigned fund balances of two percent or more of general fund revenues must have municipal aid reduced by an amount equal to debt service paid by the state, unless the General Assembly approves alternate aid or the deficit results from accounting changes or state aid reductions.

Tier III municipalities automatically become tier IV municipalities if they have annual operating deficits of two percent or more of general fund revenues in one year, or one percent or more in two consecutive years.