Connecticut SB 511: AN ACT ESTABLISHING MUNICIPAL GROWTH DIVIDEND PAYMENTS.

Bill Text

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General Assembly  
Substitute Bill No. 511  
February Session, 2026 
 
 
 
 
AN ACT ESTABLISHING MUNICIPAL GROWTH DIVIDEND 
PAYMENTS.  
Be  it  enacted  by  the  Senate  and  House  of  Representatives  in  General 
Assembly convened: 
 
Section 1. (NEW) (Effective October 1, 2026) (a) As used in this section: 1 
(1)  "Municipally  attributable  revenue"  or  "MAR"  means  the  sum  of 2 
the portion  of  revenue,  as  determined  by  the  Department  of  Revenue 3 
Services, from (A) the tax imposed by chapter 219 of the general statutes 4 
that  is  attributable  to  sales  occurring  at  a  specific  physical  business 5 
location  within  a  municipality,  (B)  the  withholding  portion  of  the  tax 6 
imposed  by  chapter  229  of  the  general  statutes  that  is  attributable  to 7 
wages  earned  at  a  physical  place  of  employment  located  within  a 8 
municipality,  and  (C)  the  tax  imposed  by  chapter  208  of  the  general 9 
statutes  that  is  attributable  to  business  activity  occurring  within  a 10 
physical nexus in a municipality; 11 
(2) "MAR baseline" means the amount of the municipally attributable 12 
revenue of a municipality for the fiscal year ending June 30, 2026; and 13 
(3) "Municipality" means any town, city, consolidated town and city 14 
or consolidated town and borough. 15 
(b) (1) There is established an account to be known as the "state-wide 16 
municipal  growth  account",  which  shall  be  a  separate,  nonlapsing 17 
account.  The  account  shall  contain  any  moneys  required  by  law  to  be 18 

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deposited in the account. Moneys in the account shall be expended by 19 
the Secretary of the Office of Policy and Management for the purpose of 20 
distributing    municipal    growth    dividends    to    municipalities    in 21 
accordance with subsection (d) of this section. 22 
(2) For the fiscal year ending June 30, 2030, and annually thereafter, 23 
the   aggregate   amount   of   the   municipal   growth   dividend   for   all 24 
municipalities  as  determined  under  subsection  (c)  of  this  section  shall 25 
be  transferred  by  the  Treasurer  to  the  account.  Investment  earnings 26 
credited to the account shall become part of the assets of the account. 27 
(c)  The  Department  of  Revenue  Services  shall  determine,  not  later 28 
than  November  1,  2028,  the  MAR  baseline  for  each  municipality. 29 
Commencing  with  the  fiscal  year  ending  June  30,  2030,  and  annually 30 
thereafter, the department shall determine the municipally attributable 31 
revenue for each municipality for the applicable fiscal year and provide 32 
all  determinations  made  pursuant  to  this  subsection  to  the  Office  of 33 
Policy and Management. 34 
(d)  (1)  Commencing  with  the  fiscal  year  ending  June  30,  2031,  and 35 
annually   thereafter,   the   Secretary   of   the   Office   of   Policy   and 36 
Management    shall    distribute    municipal    growth    dividends    to 37 
municipalities   in   the   amount   of   one-half   of   one   per   cent  of   the 38 
municipality's MAR for the preceding fiscal year, except that: 39 
(A)  If  a  municipality's  MAR  for  a  fiscal  year  is  below  its  MAR 40 
baseline, such municipality shall receive no municipal growth dividend 41 
distribution for such fiscal year; and 42 
(B)  For  any  municipal  development  project that  is  intended  to 43 
support  municipal  economic  growth  and for  which  the  state  has 44 
provided instrumental capital, the municipality shall receive, in lieu of 45 
the  distribution  under  this  subsection,  fifty  per  cent  of  the  municipal 46 
growth dividend attributable to such project and the state shall receive 47 
fifty per cent of such growth dividend until the full amount of the state 48 
capital expenditure has been recouped. 49 

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(2)  Any  distributions  received  by  a  municipality  pursuant  to  this 50 
section shall be used by the municipality to provide municipal services 51 
in accordance with the provisions of subsection (e) of this section or to 52 
reduce the municipality's mill rate, or both. 53 
(e)    Each    municipality    shall    establish    a    municipal    revenue 54 
stabilization  fund  and  all  distributions  received  by  a  municipality 55 
pursuant to this section shall be deposited in such fund. For the purpose 56 
of providing municipal services, a municipality may use the moneys in 57 
such fund as  a  one-time  expenditure  or  as  an  ongoing  expenditure, 58 
provided the legislative body of the municipality certifies that such fund 59 
is  sufficiently  capitalized  to  sustain  such  ongoing  expenditure  for  not 60 
less than three fiscal years. 61 
(f)  Not  later  than  November  1,  2030,  and  annually  thereafter,  the 62 
Secretary  of  the  Office  of  Policy  and  Management  shall