The Register Citizen (Torrington, CT)
Business ‘NO BLACK BOX’
Lamont floats post-pandemic hiring perk for Connecticut
|
The day after Disney announced it was closing Greenwich-based Blue Sky Studios — a company that cashed in tens of millions of dollars in state tax credits — Gov. Ned Lamont again proposed a new tax incentive plan designed to deliver smaller aid packages to a larger pool of companies.
Floated last year to the General Assembly only to be tabled at the outset of the COVID-19 pandemic, Lamont’s proposed JobsCT Tax Rebate Program would give rebates to companies in targeted industries that added at least 25 employees, based on the amount of state income taxes those employees paid.
Companies that added jobs in dozens of federally designated “Opportunity Zones” — carved out of three-dozen cities statewide, including portions of Stamford, Bridgeport, Danbury, Norwalk, and New Haven — would be eligible for double the rebates.
Incentives would be capped at $5,000 for any one employee — in contrast to programs under previous governors that offered, in some cases, $20,000 or more per employee — but would be more widely available than the negotiated mega-deals of the past.
Companies would not be eligible for jobs they recover after furloughs during the pandemic.
On Wednesday, the Connecticut Department of Labor reported more than 169,000 residents were receiving unemployment benefits at the end of January, a higher total than entering the new year. The Blue Sky closure is coming at the cost of nearly 470 jobs, the company disclosed in a
DOL filing.
Industry insiders predicted many of those workers will be snapped up by other animation and digital media companies.
Lamont touted the JobsCT program on Wednesday as an “earn-as-you-grow” perk that would be available to any growth-mode business. He suggested it marks a departure from swing-for-the-fences incentives that employers like Blue Sky Studios and Alexion Pharmaceuticals have cashed in over the years in exchange for adding hundreds of jobs in Connecticut.
“Small businesses are so much more than places of employment — they are the bedrock on which our towns, cities, and neighborhoods are built,” Lamont said Wednesday in prepared remarks. “We used our state resources to do everything we could to keep our small businesses afloat during
the pandemic until the federal Paycheck Protection Program could kick in — not once but twice, with the hope that this time the vaccine will make the recovery more permanent.”
Disney announced on Tuesday the shuttering of Blue Sky, which moved to Lamont’s hometown of Greenwich in 2009 and received $25 million in incentives from the administration of former Gov. Jodi Rell toward a $65 million tab in setting up its animation studio.
Like the First Five program created by Rell’s successor Dannel Malloy that helped steer $320 million in assistance to 16 companies, the JobsCT rebate would focus on industries where Connecticut has existing strengths, including aerospace and other precision manufacturing; digital media; finance and insurance; and life sciences.
But Lamont anticipates many of those rebates going to more companies adding jobs in the dozens, rather than a few handfuls doing so by the hundreds, and with better representation statewide. The First Five program weighed heavily toward lower Fairfield County, with only five recipients situated east of Westport.
The Connecticut Department of Economic and Community Development would have leeway to award rebates selectively based on the growth potential of a business, its long-term viability and the bang for the buck it offers in helping bolster a community.
In a presentation last year to a General Assembly committee, DECD cited the example of a company adding 25 jobs with average annual pay of $100,000 each, which at the maximum 50 percent rebate level would allow that employer to recoup nearly $350,000 of more than $950,000 in state income taxes withheld over seven years.
“It’s very important to me that whatever the incentive, it’s not a black box,” said David Lehman, explaining the new approach last year to members of the Commerce Committee of the General Assembly. “The incentives are earned over time as new jobs are created or as capital investment is being made in the state of Connecticut. The alternative is providing up-front grants or forgivable loans . ... We were subject to the business risk of those companies.”