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July 8, 2024 Politics & Policy

Here’s how the special legislative session will impact businesses

HBJ FILE PHOTO The state Capitol with downtown Hartford in the background.

Most of the attention on the General Assembly’s late June special session focused on lawmakers granting the South Central Connecticut Regional Water Authority the ability to purchase Bridgeport-based Aquarion Water Co.

But there were several other components of a more than 100-page bill, which was passed by both chambers, that will impact businesses.

The special session’s initial goal was to address fixes to the car tax that lawmakers say were needed to prevent a potential tax increase in October. The changes continue to classify commercial vehicles as motor vehicles and clarify that municipalities are allowed to establish motor vehicle mill rates that are lower than mill rates on real and personal property, other than cars or trucks.

Another part of Senate Bill 501 gives the South Central Connecticut Regional Water Authority the ability to bid on and potentially acquire Aquarion, which was put up for sale by Eversource Energy earlier this year. That measure drew criticism from Senate Republicans, who argued the proposal should have had a public hearing before being included in the special session.

Lawmakers also banned school construction project managers from self-performing subcontracting work, and changed the formula for calculating an annual assessment paid by domestic insurers and HMOs. That assessment helps fund the budgets of state regulatory agencies, including the Insurance Department, Office of the Healthcare Advocate and Office of Health Strategy.

Here’s a look at several other parts of the special session bill that will impact Connecticut businesses.

State Historic Preservation Office reforms

Last year, the legislature created a working group to assess the State Historic Preservation Office’s role in approving tax credits and grants for the redevelopment of historic properties. The working group was created due to complaints by some developers and municipal officials who say the decision-making process by SHPO is sometimes too burdensome and unpredictable, and can significantly delay or even block economic development projects.

Senate Bill 501 lays out new rules and timelines for SHPO’s evaluation of state-funded redevelopments. Under the changes, SHPO will have just 30 days to make an initial determination of a project’s impact on “historic structures and landmarks” and, if possible, propose a “feasible alternative” the developer could pursue to avoid the impact.

If there’s no alternative, SHPO would have to propose a mitigation plan within the next 15 days.

All of SHPO’s determinations will need to be provided to the developer in writing, and it will have to make public all its determinations on an annual basis. Developers will also have the option, within 15 days, to request the Department of Economic and Community Development commissioner’s review of any SHPO determination — and the commissioner would have 30 days to do so.

New bank charters

Another part of the special session bill aims to attract new types of banks to Connecticut, but mainly includes a name change for a certain charter. Under the change, uninsured banks are now called “innovation banks.”

Such banks tend to be financial technology companies, and they are allowed to accept and hold non-retail deposits. The bill, for the first time, also gives innovation banks the ability to accept non-retail deposits that are eligible for Federal Deposit Insurance Corp. insurance. That previously wasn’t allowed.

Over the past year, several fintechs have applied for the bank charter, and Banking Commissioner Jorge Perez said he views innovation banks as an economic growth opportunity for the state.

Interest payment relief

The bill also exempts businesses and nonprofits from paying interest on underpayments of corporation business, pass-through entity and personal income taxes if the underpayment was due to an amended return filing required by Internal Revenue Service guidance on the federal employee retention credit.

It requires the state Department of Revenue Services to treat any interest already paid on these underpayments as an overpayment and refund it to taxpayers without interest.

The federal employee retention credit is a refundable credit against employment taxes that was created for eligible businesses that continued paying employees during the COVID-19 pandemic.

A CT Mirror report was used in this story.

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