House Bill 5472 (sHB5472 File No. 462) amends the general statutes concerning municipal finance and audits, with changes effective July 1, 2024. The bill allows the Municipal Finance Advisory Commission to designate municipalities as tier I based on their financial condition and practices, requiring them to prepare a five-year financial plan. It also specifies that a municipality retains its tier I designation until the Commission unanimously votes to terminate it, even if there are positive changes in the factors leading to its designation. The criteria for a municipality to be released from its tier designation include no audited operating deficits for two consecutive fiscal years, an investment-grade bond rating, an approved financial plan projecting a positive fund balance, and no evidence of unsound financial practices. The secretary has the discretion to terminate the tier designation or redesignate the municipality to a lower tier, with a 60-day notice period to the municipality, and if no notice is given within this period, the tier designation is deemed terminated.

Additionally, the bill allows tier II, III, or IV municipalities to be eligible for funding from the Municipal Restructuring Fund, requiring a restructuring plan for approval, which may include a proposed reduction in the minimum budget requirement for education. The Secretary of the Office of Policy and Management, in consultation with the Municipal Accountability Review Board, will make decisions on fund distribution. The bill also updates the criteria for designating a tier III municipality as a tier IV municipality, adds a new criterion related to evidence of unsound or irregular financial practices, and modifies the process for public notice and comment on such a designation, requiring the Governor's approval. It changes the requirements for filing audit reports, specifying where and within what timeframe the reports must be filed, and allows for a possible extension by the Secretary of the Office of Policy and Management. The bill increases the civil penalty for failing to file an audit report on time from a maximum of $10,000 to $50,000 and changes the preservation period for an auditor's working papers from three to five years after filing the audit.

Statutes affected:
Raised Bill: 7-576a, 7-576f, 7-576i, 7-393
PD Joint Favorable Substitute: 7-576a, 7-576f, 7-576i, 7-393
File No. 462: 7-576a, 7-576f, 7-576i, 7-393