Malloy: ‘First Five’ No Jive
Prompted by a question from a reporter, Gov. Dannel P. Malloy used a ceremonial bill signing for the Connecticut Airport Authority—a bipartisan bill—to defend his “First Five” proposal, which gives companies tax incentives for adding jobs in the state.
The tax incentives, which vary depending on the number of jobs created, have been offered to three companies that are already located in the state. ESPN, CIGNA, and TicketNetwork were the first three companies to participate in the program.
The program has received mixed reviews.
Malloy has received criticism from some who say those companies already existed and would have invested in their infrastructure without the tax incentives. Critics view the tax incentives as corporate welfare, but Malloy begs to differ.
He said Connecticut was in competition with several other states for CIGNA’s Corp. headquarters.
“If they had decided to move their corporate headquarters from Philadelphia to a state such as Texas where they have a substantially larger number of employees what would have been at risk is the entire employment base in a state like Connecticut,” Malloy said.
“If they had opted for Delaware being substantially closer to Philadelphia, it would have been substantially easier to transfer jobs without even interfering with people’s commutation,” Malloy said. “We thought that that’s a wise investment. It is a wise investment and I think it’s going to play itself out rather rapidly with an immediate investment in capital.”
As for TicketNetwork, the ticket exchange and software company which moved into the old Gerber Scientific building in South Windsor, Malloy said he didn’t want to lose a “serial entrepreneur.”
He said Connecticut was in competition with a number of states to keep that business. If it wasn’t for the ‘First Five’ “we would have struggled to find an appropriate way to keep them,” Malloy said.
“The leader of that organization his mind is constantly at work,” Malloy said referring to TicketNetwork CEO Don Vaccaro. “He is in some senses a serial entrepreneur.”
If the state lost Ticketnetwork it may also lose the potential for whatever else comes from that business, Malloy said.
With respect to ESPN, Malloy said the organization has facilities in California and the ownership of the company is based in California. It has built facilities there and in Texas.
“I’ll tell you, I want them to grow as fast as they possibly can, so that if there’s ever somebody that takes over the company in California and says, ‘gee, I’d like to bring them to California’ we make it too hard for them to possibly do it,” Malloy said.
He said he wants to make it so expensive for ESPN to replace the infrastructure and the human capital that it decides to stay in Connecticut indefinitely.
“All in all, let’s put it a different way, how about if we lost all of those?” Malloy asked. “How about if Ticket Network had gone to Rhode Island or Massachusetts or New York? The headquarters from CIGNA had decided to go to one of the states that was courting them? Or ESPN doesn’t make massive additional investments in Connecticut?”
The state plans on giving upwards of $71 million to CIGNA, $25 million to ESPN, and $8 million to TicketNetwork. The packages are a mix of no-interest loans, tax breaks, and job training grants.
Malloy said as he continues the process of courting and evaluating companies for the tax incentives he’s finding the “toolkit” the state has to lure companies to the state “inadequate” compared to other states.
He said some of the recommendations he will make to the legislature during the September special session will revolve around the development of a different set of tools to help the Department of Economic and Community Development go after jobs.
“One of the shortcomings ultimately is the recognition that the best jobs for Connecticut to have are the jobs we currently have,” Malloy said. “And we need to take a really good look at our retention tools.”
The process of doling out these tax incentives is far from transparent. The negotiations are done behind closed doors because of the proprietary information exchanged between the state and these companies.
Asked if he thought the state was being played by these companies, Malloy said, “hopefully, we don’t get played.“
“I’m going to announce today that the Patriots are not coming to Connecticut,” Malloy said. “On the other hand I’m a hockey fan…”
Former Gov. John G. Rowland had sought to move the Patriots to a stadium in downtown Hartford, but the football team pulled out of the deal concerned about the space limitations of the original Rentschler Field site.
Malloy defended the premise of his ‘First Five’ program with House Minority Leader Lawrence Cafero and several other Republicans in the room.
While the two sides exchanged words Tuesday over the state employees concession deal they were able to stand united behind the creation of the Connecticut Airport Authority.
“I think credit is due to our governor,” Cafero said in some brief remarks.
“This is one where he actually agreed with me,“ Malloy said. “I have to bring him out once in a while.”
Cafero and Sen. Minority Leader John McKinney were not invited to a press conference announcing the tax package being given to CIGNA, which was the first company to receive it. “I wouldn’t hold my breath that its going to happen a lot, but here we are. We’re together.”