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Executive Order Creates Economic Assistance Database

by Hugh McQuaid | Dec 3, 2013 5:27pm
(4) Comments | Commenting has expired
Posted to: Jobs

Hugh McQuaid Photo

Gov. Dannel Malloy and Comptroller Kevin Lembo

Gov. Dannel P. Malloy took executive action Tuesday to enact a proposal by Comptroller Kevin Lembo to develop a searchable database of the state’s economic assistance programs.

This year, Lembo pushed lawmakers to pass legislation that would have required the state to allow the public to easily access data on the hundreds of millions of dollars the state spends each year on tax credits and forgivable loan programs for companies promising to create jobs in Connecticut.

Since 2011, the state has given more than $475 million in economic assistance to 1,114 companies, according to numbers provided by the administration Tuesday. That does not include tax credit assistance.

Although the House unanimously passed a version of the bill, the Senate did not take action on the proposal before the end of the legislative session. Lembo said he would continue to push the Malloy administration to use its authority to require disclosure of economic assistance data.

Malloy signed the executive order calling for the database at Salamander Designs, a Bloomfield furniture manufacturer that has received state assistance to hire six additional workers. The order requires the Economic and Community Development Department and Revenue Services Department to establish the site by March 31.

“Taxpayers have a right to know what their state is doing to promote economic development and job creation,” he said. “And they should have easy access to that information.”

Lembo called the executive order a “significant step toward open government.” He said making more information available also gives academics the opportunity to asses the economic impact of the state’s assistance programs. The comptroller said he hoped to build on the order to make more government data available to Connecticut residents.

“For government, transparency is a value in and of itself. Transparency that leads to accountability, leads to positive change, which ultimately leads to increased constituent confidence in their government,” he said.

Malloy said he had supported the legislation approved by the House and thought it was important to accomplish its goals through executive order.

“I felt that we needed to get this done and Kevin [Lembo] agreed. I’m happy that this day has arrived,” he said.

However, during the legislative session the proposal did get some pushback from Malloy’s administration. Both his budget chief, Benjamin Barnes, and his Economic and Community Development Department Commissioner Catherine Smith testified against the bill when it had a public hearing before the Finance, Revenue and Bonding Committee in March.

“I’ve never been against sharing appropriate information with the public. What we needed to do was build that capability and we have now built it,” he said.

Smith, who demonstrated a map containing economic assistance data, said Lembo worked with her office to ensure that the information he requested could be released under state and federal law.

“In spirit, I think we met all the needs [of Lembo’s proposal], we just fine-tuned it to make sure we had the ability statutorily to provide the information,” she said.

Hugh McQuaid Photo Like the version of the proposal that passed the House, Malloy’s executive order eliminated some of the specific information Lembo had originally called for to be disclosed in the database. The tax information made available will be general in an effort to protect the privacy of companies participating in the public assistance programs.

“The commissioner of [Revenue Services] will be required to provide the commissioner of DECD with as much detail as the law allows about how certain tax credits are claimed,” Malloy said.

Rep. Sean Williams, R-Watertown, said he was glad Malloy signed the executive order, but said it should have been done a long time ago. He said many of the recipients of economic assistance packages have attracted negative publicity.

Williams used Back9Network as an example. Last month, the golf-themed television station that had received assistance from the state apologized for publishing videos containing lewd humor on its website.

“It’s a good thing. It’s a long time coming. But there’s a reason they’re doing it,” Williams said. “. . . Right now you’re seeing sagas like the Back9Network and all of the sudden people are saying ‘How did this company get public money?’”

On Tuesday, Malloy’s office also released a report on the state’s economic assistance programs. The report concluded the programs have helped to create 11,817 jobs and to retain 30,887 jobs.

Sal Carrabba, chief executive officer of Salamander Design, said the assistance helped him create jobs and expand at a time when banks were not lending money and the company was struggling to get by.

“It really wasn’t much of a time for making investment. It really was about survival for awhile,” he said. “When we learned about the program the state was offering, it put some wind in our sails.”

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(4) Comments

posted by: perturbed | December 3, 2013  9:39pm

perturbed

Kevin Lembo has earned our praise and gratitude for his heroic efforts to shed some light on the murky, shadowy business of “economic development” (aka “corporate welfare”).

However, I think there’s a reason why he’s not smiling at the signing of the executive order, at least if Catherine Smith’s map is any indication of what’s to come.

What’s wrong with the map? First, there are no dollar amounts shown. (!)

Second, the notion that it’s even remotely possible to tally up “jobs created” and “jobs retained” as a direct result of “dollars dispensed” is a complete farce.

According to an investigative article by Louise Story in the NYT about a year ago (As Companies Seek Tax Deals, Governments Pay High Price), not only are the true costs paid by governments across the country difficult to identify, so too are the actual payoffs in terms of jobs.

A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.

That bears repeating: “Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.”

Yet there they are, published on Smith’s nonsensical map in black and white, without the slightest hint that they were made up out of thin air: the numbers of “jobs created” and “jobs retained,” reported to the nearest whole number! The ridiculous map looks more like a campaign ad than a database.

And third, any reporting of corporate welfare in Connecticut that doesn’t capture the $115,000,000 give-away to the world’s largest hedge fund last year (see here: Connecticut Offers Millions to Aid Bridgewater Expansion) is fundamentally flawed. Not only is Bridgewater Associates the largest hedge fund in the world, it’s also (not surprisingly) one of the most profitable, raking in $6.6 Billion in profits in 2011 alone. (And those hedge fund managers’ compensation is taxed at capital gains tax rates, not income tax rates.)

So let me get this straight: we have the largest hedge fund in the world with over $6 Billion in profits, and if those hundreds of promised jobs are actually created—as will be clearly shown, after 10 long years of watching and waiting—it will be the direct result of the $115 Million the state taxpayers coughed up in 2011?

R—-i—-g—-h—-t.

—perturbed

posted by: CitizenCT | December 3, 2013  10:07pm

Have to admit I didn’t vote for Lembo.  Thought he was a public policy and healthcare policy specialist, not a seasoned Finance professional that the comptroller job requires.  I was wrong as he’s proven to be a capable independent minded manager demonstrating great leadership skills.  Would like to see him run for Governor.

posted by: dano860 | December 4, 2013  9:45am

Accountability, accountability, accountability!
If they don’t follow up on the progress or lack thereof they are only fooling themselves.
It is fairly well known that some business’s that have been awarded funds are on the verge of collapse. We are just prolonging the inevitable at the expense of the taxpayer.
These companies are applying for these funds on their own, the EDC offices in their towns aren’t even aware that they are getting money from the State.

posted by: Noteworthy | December 4, 2013  11:51am

The Two Faces of Eve Notes:

1. This is Malloy’s “transparency” face - signing an order to disclose minimal information on his investment of nearly a half billion dollars in taxpayers money.

2. Malloy’s other face is crafting legislation on government suppression of information behind closed doors; using private emails to conduct public business; gutting freedom of information and stacking the task force with hatchet men while consolidating the government watchdogs into a pool that he controls.

3. This is mostly about preening not performance. Like GAAP, the budget, “shared pain” in $1.6 billion in renewable annual tax increases on top of billions in new debt, it is a lite version of the truth and an even lighter version of what ought to be done.

4. The results of this politically driven move will be just as predictable as all of the above.