First Five Plus paying off for state

Program credited with creating 3,700 jobs, $1.3B in investments

A Department of Economic and Community Development analysis of the state’s First Five Plus program released Tuesday found that it is “clearly meeting — if not exceeding — expectations,” with more than 3,700 jobs created so far in Connecticut.

The report, titled “First Five Plus Program: Return on Investment Analysis,” noted that the nearly $1.3 billion in investments made by First Five companies during the first five years of the program are more than quintuple the amount the state has given out in loans and grants to 13 large firms to spur business growth in Connecticut.

“By providing investment-oriented incentives to large companies to grow in Connecticut, we have not only seen substantial growth in good paying jobs, but the state expects to more than fully recoup its initial investments,” the report said.

Gov. Dannel P. Malloy, who pushed through the First Five program during his first term when the state went through a prolonged financial slump, called the initiative a big success.

“When I took office, we didn’t have existing toolkits to help large cor-

porations expand, nor did we help small businesses thrive,” he said in a statement. “This report shows that we are moving in the right direction ...”

But Peter Gioia, chief economist for the Connecticut Business and Industry Association, said the state has only recently been on the right track fiscally — and that is the true test of whether businesses will want to stay in the state. He pointed out that the First Five program couldn’t keep General Electric from deciding to move its headquarters out of state last year.

Don Klepper-Smith, a statewide economist with Data Core Partners in New Haven, added that it’s easy to cherry-pick data to make it seem like the Connecticut economy is picking up, but the truth is that business confidence is way down right now.

And personal income that in previous recoveries has increased at a 4 percent to 6 percent annual rate is now rising in the 1 percent range, Klepper-Smith said. Also, he said, home prices are on the decline throughout the state.

Klepper-Smith noted that 521 people a week are leaving Connecticut for other states, an indication that the economy is moving sideways at best. “I’d look at the Last 521 instead of the First Five,” he said. “This is an economic recovery that is lacking in many respects.”

Still, Gioia acknowledged that a program like First Five is necessary to combat other states’ attempts to poach businesses from Connecticut.

“The state has to play the game,” he said, “because other states are playing the economic development game.”

The First Five program, later renamed First Five Plus, allows the state to offer loans, tax credits and other help to large businesses that either promise to add 200 jobs within two years or invest at least $25 million and create 200 new positions within five years.

The 3,759 jobs added so far by large companies in Connecticut thanks to First Five amount to less than three-quarters of the 5,264 jobs that were the maximum expected. But they are above the minimum of 2,608 that had been required, the report showed.

In addition, the report indicated that First Five had helped retain 13,349 jobs in the state that could have moved elsewhere.

The report said that new jobs created through First Five are expected to increase state income tax revenue by nearly $285 million over the next decade. About three-quarters of First Five companies have chosen to locate in Connecticut’s cities, according to the report, which noted that Stamford attracted many of these “due to its abundance of young workers, newly developing high-amenity housing and easy access to New York City.”

None of the First Five companies are in southeastern Connecticut. Financial services and insurance companies make up the largest component of First Five firms, with digital media, manufacturing, pharma/healthcare and green technology taking smaller shares of the pie.

Some of the companies mentioned in the report are ESPN, Alexion Pharmaceuticals, NBC Sports, CIGNA and Pitney Bowes. Others are CareCentrix, Sustainable Building Systems, Deloitte, Bridgewater Associates, Charter Communications, Navigators, EDAC and Synchrony Bank.

Peter Gioia, chief economist for the Connecticut Business and Industry Association, said the state has only recently been on the right track fiscally — and that is the true test of whether businesses will want to stay in the state.