State may have seen last of ‘First 5’
Lamont’s jobs pitch doesn’t include corporate tax breaks
Gov. Ned Lamont is trying to persuade many businesses to relocate or stay in the state. But the pitch does not include a threeword name frequently uttered by his predecessor.
First Five Plus represented thenGov. Dannel P. Malloy’s flagship program for recruiting and retaining large companies, but no additional firms will join during Lamont’s tenure. In his first six months in office, Lamont has given no indications that he wants the state to finance more deals for corporate subsidies — signaling instead that he wants to ramp up outreach to the business community, but focus investments on infrastructure and workforce development to tackle the state’s languid economic recovery.
“He’s off to a good start by identifying workforce development and transportation as critical elements,” said Joe McGee, vice president of public policy for
The Business Council of Fairfield County. “Corporate incentives are important, but they’re secondary. You don’t want to throw away the ‘toolbox,’ but you want to primarily look at the broader issues that drive economic growth.”
Less focus on First Five Plus
Nineteen companies are participating in First Five Plus, including the likes of Amazon, AQR Capital, Bridgewater Associates, Charter Communications, Cigna, Deloitte, Electric Boat, Henkel, NBC Sports Group and Synchrony.
No other firms will join, with June 30 having marked the deadline for filling the remaining slot.
Since First Five Plus’ 2011 launch, Connecticut has allocated loans worth about $248 million, grants totaling $129 million and another $126 million in tax credits to the participating companies, according to the state Department of Economic and Community Development.
The program’s companies have cumulatively committed to investing about $2.9 billion of their own money in Connecticut operations.
First Five Plus firms have created about 4,100 jobs and retained about 30,000 positions, according to DECD. Between 2012 and 2021, those same businesses are expected to generate together about $383 million in income tax, sales and use tax revenues, according to state projections.
But a number of state legislators are skeptical about the program’s impact and favor a different approach for supporting large companies.
“I’m not a huge fan of tax expenditures to recruit or retain companies,” said state Rep. Fred Camillo, RGreenwich, a member of the Commerce Committee. “I’d rather see us lower the tax rates across the board.”
Lamont has said little publicly of First Five Plus since his January inauguration.
He did not mention the program in a speech last week to The Business Council of Fairfield County. Instead, his remarks focused on other initiatives that he said would boost economic growth — including his proposed highwaytolling system and workforcedevelopment initiatives.
Other state initiatives reward companies for growing in Connecticut. Most notably, the Urban and Industrial Site Reinvestment Tax Credit program allows companies to earn credits during a 10year period for creating jobs and making capital investments.
Faith in Amazon
While he has not touted First Five, Lamont has praised some of its participants — particularly Amazon.
Through the program, the ecommerce giant has qualified for up to $20 million in tax credits for its new distribution center in North Haven. It operates similar facilities in Wallingford and Windsor.
Last month, Lamont toured the North Haven facility, an approximately 1 millionsquarefoot complex that could create up to 1,800 jobs. The longvacant site once housed a plant for aerospace manufacturer Pratt & Whitney.
“It reminds you of a state in transformation, and we need a transformation,” Lamont said of the center, in his speech to the Business Council.
Under Malloy, Connecticut offered an undisclosed amount of subsidies to Amazon when it filed in October 2017 what would turn out to be an unsuccessful bid to host Amazon’s HQ2 campus, proposing sites in Stamford and the Hartford area.
Sixteen months later, the contention surrounding Amazon’s abandoned plan to open an HQ2 in the Long Island City section of Queens, N.Y. — and Amazon’s accompanying decision to not search for a replacement site — did not deter Lamont from making his own pitch to the Seattlebased company.
“If Amazon is still interested in a comparable facility in the NYC area, HQ2 or similar, Stamford is the place,” Lamont said on Twitter at the time.
He did not disclose in those statements whether the state had offered any additional aid to Amazon.
Neither Lamont’s office nor Stamford Mayor David Martin’s office have subsequently announced any Amazon offices or company projects that would be based in the city.
Optimistic outlook
Despite Amazon’s expansion, Connecticut is still grappling with a protracted recovery. It has regained all of the privatesector jobs shed in the state’s 20082010 recession, but it has recouped only 81 percent of all the positions lost in the downtown. The state dropped 1,500 jobs in May.
Early last month, United Technologies Corp. announced that it would move its headquarters to the Boston area. A couple of weeks later, Hubbell Lighting disclosed that it would close its electroniccomponents factory in Newtown, its largest plant in the state.
The blow of GE’s 2016 headquarters relocation from Fairfield to Boston also lingers, Lamont acknowledged to the Business Council.
“GE was very clear with us, they were pretty blunt, they said, ‘One, Connecticut, get your fiscal house in order, and No 2., fix your damn transportation system,’ ” Lamont said. “It was still a wakeup call for the state of Connecticut.”
But the governor remains bullish about the state’s ability to persuade companies to relocate or expand in the state.
In his first six months, he has met with dozens of CEOs. Among other initiatives, his administration is pitching the state to womenled businesses in response to recent legislation that largely banned abortions in Georgia and Missouri.
“Whatever it takes to get them to come take a look at Connecticut, that’s what we’ve got to do,” Lamont said.
To bolster the state’s recruitment efforts, former cable TV entrepreneur Lamont has reshuffled the state’s economicdevelopment leadership.
Former Goldman Sachs managing director David Lehman has taken over as the economic development commissioner.
Lehman is “in the process of evaluating all of DECD’s financial assistance programs, but it is too early to discuss specific changes at this time,” said DECD spokesman Jim Watson.
Meanwhile, former PepsiCo CEO Indra Nooyi and former Webster Bank CEO Jim Smith have assumed cochairperson posts on the board of the Connecticut Economic Resource Center.
The nonprofit CERC is being revamped. Working with Lamont and DECD, the group intends to focus on retaining and recruiting firms and marketing the state’s business climate.
“One of the things that’s been lacking in Connecticut is we don’t accentuate the positives enough,” Smith said in an interview. “We’re going to ‘do business’ differently with business. Connecticut is famous for its silo mentality, but people are now talking to one another, in a more collaborative way, more than they have done in a long time. That dialogue alone will contribute to economic growth.”
“We’re going to ‘do business’ differently with business.” Jim Smith, cochairman, Connecticut Economic Resource Center