New Haven Register (Sunday) (New Haven, CT)
Gov. moving job-creation incentives to tax credits
It was one last check — at $6 million, a big one — that Connecticut taxpayers signed last year for Cigna, rounding out the balance of a $30 million tax credit the insurance carrier received a decade ago as part of a larger package of incentives, including an additional $21 million in cash grants and loans.
What did the taxpayers buy? An extra 200 Cigna jobs in addition to the nearly 3,900 workers the company already had in Bloomfield — with Cigna designating the town next to Hartford as its headquarters in a relocation from Philadelphia, spending $134 million of its own money to do so.
That was a deal from a different era under a different governor, Dannel P. Malloy.
Gov. Ned Lamont has already shrunk the size and number of incentive deals for companies. Now he’s moving toward relying nearly exclusively on tax credits as Connecticut’s reward for business expansions, rather than loans and grants.
Instead of getting money up front, businesses would qualify for credits over time under a new JobsCT program that offers a standard formula — not tailormade deals like those Malloy offered — for businesses to qualify for incentives.
The Connecticut Department of Economic and Community Development has been awarding grants under the JobsCT label since last July, supported by money already authorized under existing incentives. Lamont is now asking for a permanent JobsCT program — but shifting it to credits against future tax revenue, rather than grants underwritten by bonds the state must repay with interest.
There was little dissent in a March hearing of the General Assembly’s Commerce Committee. Still, DECD Commissioner David Lehman took pains to explain the goals while noting incentives in other states businesses can tap.
It is the third year running Lehman has attempted to sell the legislature on the program, which was shunted to the sideline in 2020 and 2021 by the demands of the COVID-19 pandemic.
“I know there’s been some discussion in the legislature on
should there be any incentives for businesses that are growing,” Lehman told Commerce Committee members last month. “We've reduced the amount of incentives that the state is providing, significantly. We don't think you should lead by incentives — we realize incentives are provided by Connecticut taxpayers. There's a really, really important balance.”
Up to $5K per job
Employers adding at least 25 jobs can earn tax rebates of 25 percent of the income tax withheld for that worker, capped at $5,000 for those in the higher tax brackets.
The bill would extend the rebate to 50 percent for businesses hiring in urban districts where the state is looking to promote growth.
Between 2012 and 2021, DECD awarded $1.34 billion in cash grants and loans to employers according to DECD's newest annual report, not including another $125 million in COVID-19 pandemic assistance distributed to businesses and nonprofits.
“Pre-pandemic, the bonding numbers for business incentives was close to $200 million a year for the three preceding years,” Lehman said, in an interview with Hearst Connecticut, referring to the last Malloy years. “We were down to about $50 million before the pandemic.”
DECD assistance is only one
avenue for helping businesses looking to expand in Connecticut. Others include help with training workers through the Department of Labor and or equity investments from the Connecticut Innovations venture fund.
Lehman said the state would remain open to one-time incentive deals with the approval of the legislature, for companies that would maintain large numbers of jobs — as the case with Cigna in Bloomfield or Lockheed Martin's Sikorsky subsidiary in Stratford.
Under a $200 million incentive package in 2016, Lockheed Martin committed to keeping Sikorsky's headquarters plant in Stratford through 2032 as it builds a new helicopter fleet for the U.S. Marine Corps. At nearly $42 million,
DECD estimates that the state has generated more than twice as much tax revenue as the value of the incentives awarded Sikorsky during that period as it ramps up to build the helicopters.
Under a new deal earlier this year, Lockheed Martin can earn $50 million in tax credits and other incentives if it wins a big Pentagon contract to replace the storied Black Hawk helicopter — but with the incentives tied directly to Sikorsky's success in winning that bid.
With ample resources and prestige, Cigna and Lockheed Martin have been able to fill available jobs in Connecticut. But many companies have struggled to find people to do the work at the pay they are willing to pony up. Connecticut
remains well short of its 2019 employment totals, with some workers remaining on extended hiatus thanks to the earnings of a spouse, savings or other means.
“Since February of 2020, 71,400 people have left Connecticut's labor force,” said Chris DiPentima, CEO of the Connecticut Business & Industry Association, speaking Thursday at at CBIA economic conference in Trumbull. “That represents 50 percent of New England's labor-force shrinkage — but even more staggering, it represents 41 percent of the national labor-force shrinkage. Little old Connecticut, with 1 percent of the national population.”