Conn. Gen. Stat. § 7-497: Income from notes and bonds tax-exempt; exception.

It is hereby determined that the powers conferred upon municipalities by this chapter are in all respects for the benefit of the people of the state and for the improvement of their health, safety, welfare, comfort and security, and that the purposes of this chapter are public purposes and that municipalities will be performing an essential governmental function in the exercise of the powers conferred upon them by this chapter. The state covenants with the purchasers and all subsequent holders and transferees of notes and bonds issued by a municipality, in consideration of the acceptance of and payment for the notes and bonds, that the notes and bonds of the municipality issued pursuant to this chapter and the income therefrom shall at all times be free from taxation, except for estate and gift taxes and taxes on transfers. Municipalities are authorized to include this covenant of the state in any agreement with the holder of such notes or bonds.