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Jobs Bill Comes With $516M Price Tag

by Christine Stuart | Oct 20, 2011 4:34pm
(11) Comments | Commenting has expired
Posted to: Business, Labor, Special Session

Christine Stuart photo

Gov. Dannel Malloy’s Chief of Staff Tim Bannon and DECD Commissioner Catherine Smith

When all the proposals lawmakers and Gov. Dannel P. Malloy’s administration could agree upon were added up the final price tag was $516 million.

The item with the biggest price tag is a $340 million investment in the Manufacturing Reinvestment Account. It’s a program that allows manufacturers to invest pre-tax profits for a certain number of years in an investment account. That money is then reinvested in a company.

Department of Economic and Community Development Commissioner Catherine Smith said the $340 million investment will generate a $2.25 billion return on investment to the state over the next 10 years.

But aside from the large investment in manufacturing, the package also includes smaller investments for all types of companies.

Small businesses will be able to take advantage of up to $50 million in loans and matching grants for job creation. There will also be another $10 million available to subsidize training for employees for up to six months. The companies participating in the training program will then be able to hire the skilled workers full-time.

The package also increases the job-creation tax credit from $200 per job to $500 per job, but the program will remained capped at $20 million.

The package eliminates one year of the $250 Business Entity Tax that all companies pay annually to the state and many view as nuisance tax. The package doesn’t eliminate it this year, but it eliminates it in the second year of the biennium and turns it into a biannual tax.

In her presentation to the legislature’s Commerce and Labor and Public Employees Committees Smith joked about the reduction in the tax saying it’s something that rarely happens.

Office of Policy and Management Secretary Ben Barnes said he didn’t believe the reduction in revenue will hurt that much.

The package includes another $50 million for the state’s “Fix-it-First” road and bridge improvement program, and $20 million for brownfield remediation. On the smaller side, there’s $5 million for farmland preservation and $5 million to replace the boilers and furnaces for nonprofit community providers and Housing Authorities.

The boiler and furnace replacement money was one of the items holding up negotiations on the package, which didn’t come together until earlier today.

Republican lawmakers said Democratic lawmakers and Malloy initially wanted to spend $15 million to help low-income individuals purchase new boilers and furnaces, but Republicans objected saying it wouldn’t help many people since many of those receiving the heating assistance don’t own their own homes.

Asked about how that item creates jobs, Malloy said someone has to come and install the boiler or furnace.

Republicans said the problem with that is that it doesn’t sustain jobs.

Malloy argued the state will benefit if the new equipment can lower the price of electricity at the state’s Housing Authorities and community providers, which the state also helps fund.

“We’re actually potentially allowing more money to be directed at other areas, either the direct provision of services—generally requiring more employees,” Malloy said. But he admitted “it is a trial program.”

House Minority Leader Lawrence Cafero said they weren’t willing to support a $15 million boiler and furnace replacement program for individuals, but they will support the $5 million for the community providers.

The fact that Republicans and Democrats were able to come together and agree on a $516 million package seems to usher in a brave new world of bipartisanship.

“I think it says we understand that the failure to address job growth, job retention on a bipartisan basis has hurt the state of Connecticut,“ Malloy said. “So at every step in this process, literally from the say I announced this special session, I did everything in my power to assure this would be done on a bipartisan basis.”

Joe Brennan, vice president of the Connecticut Business and Industry Association, said it’s hard the analyze the package as a whole since it wasn’t released until Thursday morning, but the areas identified for funding were the same areas his organization focused on when it submitted recommendations to elected officials. He said they also suggested putting a heavy emphasis on reducing the time it takes to permit something a company needs to do business.

Reductions in regulations and permitting will be looked at as part of the legislation. According to the presentation Smith gave, an application with the State Traffic Commission that is older than 60 days old will be deemed to be approved if the commission hasn’t taken action on it.

“The unpredictability of the permitting process has been immensely frustrating and very costly,” UConn Economist Fred Carstensen testified Thursday. He said that one of his colleagues says the business growth problem in Connecticut has not been cost, it’s been climate.

He said he’s aware of a company in eastern Connecticut that filed for a water permit in 2002 and they’re still waiting for it.

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(11) Comments

posted by: Victoria1555 | October 20, 2011  5:04pm

Getting out of the way shouldn’t COST anything. But so many of us our moving out of state, let’s see how it works out for next year and the year after that with less taxpayers and probably more welfare? It’s a crying shame!

posted by: DirtyJobsGUy | October 20, 2011  5:05pm

These things are always a mish-mosh of unrelated items.  Some are supposed to sound good ($200 tax credit for hiring?  Please. at minimum wage this is only a few days of pay).  The rest is the usual payoffs to towns and cities (and unions).

How about picking one thing and going after it seriously?

posted by: ... | October 20, 2011  5:37pm

...

It is good to see action being taken on the business entity tax, as well as the brownfields, which were a significant part of Malloy’s discussions in 2010.

Thus far, it seems as though concessions were made enough on both sides to obtain a bi-partisan quorum of support/passage.

posted by: Careful | October 21, 2011  10:56am

Money is no object to our free spending Gov. Dannel Malloy and his Democratic General Assemmly.  We are already the leader in per-capita spending indebtedness—so our big spenders our making sure that we do not lose that dubious and taxpayer costly ranking.

Blame our state voters—as they don’t care who they vote into office.  “We continue to shoot ourselves in the foot—by our poor voting judgement.”

posted by: meridenite | October 21, 2011  11:10am

I would really like to see the analysis of the $2.25 Billion return on the $340 Million over ten years on the manufacturing reinvestment.

posted by: Disgruntled | October 21, 2011  11:24am

Sounds like a done deal but one must wonder about long term benefits. FIRST FIVE JIVE has been a disaster in my opinion. Paying HUGE upfront money ,increasing long-term debt,and bringing in pre-exisiting jobs,not creating new jobs. While this does wonders for the tax man it does little for society as a whole. Spun in the press it makes citizens feel good,until they have to continue looking for work and continue paying their food,oil,house and increased tax bills. I hope for the best but fully expect another UBS or Clairol.The corporations are gaming us all.


STAMFORD (AP)—A government official says NBC Sports has agreed to relocate from New York to Stamford to take advantage of tax breaks in Connecticut.

The official told The Associated Press on Friday that the deal would be part of Gov. Dannel P. Malloy’s signature development program. The official spoke on condition of anonymity because Malloy and Democratic leaders of the legislature hope to announce a deal next week.

Chris McCloskey, a spokesman for NBC Sports, declined to comment.

The official said NBC Sports and the legislature still have to finalize details on the tax credits.

Malloy’s so-called “First Five” initiative is intended to consolidate various tax credits to draw five businesses that invest $25 million in Connecticut and create a total of 1,000 jobs over five years.

posted by: RAN | October 21, 2011  3:36pm

Wow!!  A seven fold return by “investing” in the Manufacturing Reinvestment Account!  I have a suggestion.  Why don’t we all put all of our money in this account and just sit back and enjoy the returns.  The whole state could just move to the Bahamas.  What a joke. This is not a jobs bill.  This sounds exactly like the Obama jobs bill.  Grow government and spend more taxpayer dollars.  Growing government doesn’t create jobs.  It drains private sector jobs. 

I shouldn’t be surprised that our lame Republican caucus is going along with this.  Where are the real job creating proposals, Republicans?  How about reducing the size of the state work force?  55 thousand employees for one of the smallest states in the union?!!  If our state employees were a corporation, it would be one of the largest corporations in the world.  How about reducing corporate and personal income taxes?  How about reducing the number of state mandated healthcare benefits?  One size does not fit all? (but try telling that to the eggheads in Hartford)  How about reducing business regulations and red tape.  Oh, I forgot.  That will be studied at a later date. 

What about stopping all the taxpayer money being diverted into “green jobs” and “green” technology and other such initiatives?  There is no such thing as a green job.  Ask the employees of Solyndra, if you can find any.  The whole green idea is based on a false premise - manmade global warming.  And this idea is destroying our capacity to be energy self sufficient and is driving up energy costs.  Energy costs affect all products.  Every product and service we all use (raw or retail) - paper, plastic, cars, construction, etc. - is affected by energy costs.  If energy prices come down, the price of products and services comes down.  When will the Bozos in Hartford and Washington learn about economics?  Never, I’m afraid.

posted by: eastrivertype | October 21, 2011  5:07pm

Thumbs up on the MRA.  That is the kind of program that makes a difference.  Manufacturing in CT is technology driven.  That helps.
But the loans, grants and increase in the tax credits for job creation are a waste. What struggling company is going to add employees to get a $500 tax credit?  Like “First Five” this will only benefit those companies that were already planning on hiring.  Those that need the help the most get zip.
And re the Business Entity Tax, how many jobs will making it biennial create?  The answer is zero.  Once every two years you are giving employers $250.  I’ll bet they line up in droves to hire new people with all that cash.
Finally, re the Carstenson comment that it is not cost but climate that impedes job creation, how man people does he employ?  Cost is the #1 factor.  Climate is also important, but it is much more intangible.

posted by: Victoria1555 | October 22, 2011  11:12am

So many states voted their criminals. CT voters will be awake come next time to vote. The bottom line is to vote them ALL out. Vote in your neighbor, your relative..who cares as long as we start completely over like other states did with the last election. Wake up CT smile

posted by: Careful | October 22, 2011  11:26am

This should sound like the failed Obama jobs bill—as Gov. Malloy is a “rubber-stamp for the failed economic policies of Pres. Obama!”

Like Obama as President, Malloy will be a one-term Governor. Even the state unions won’t vote for him.

posted by: Disgruntled | October 24, 2011  6:00pm

Looks like a done deal and I can’t help but feel good about filling up empty space. That said,I doubt very much if NEW jobs will be created and wonder if,in ten-fifteen years,the site will be vacant again when the money runs out.
Headlines are good for Dan.Incomes taxes are good for the state. Some of the folks there will buy goods/services from local companies…but where are the jobs? Dan gets bragging rights but I still maintain that it is all FIRST FIVE JIVE. A zero sum game with the taxpayers getting caught holding the bag down the line.

http://www.stamfordadvocate.com/news/article/NBC-Sports-coming-to-Stamford-2233829.php