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Will GE’s Move Impact The 2016 Elections?

by | Jan 14, 2016 4:05pm
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Posted to: Business, The Economy, Election 2016, Jobs, Labor, State Budget, Taxes

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(Updated 4:40 p.m.) General Electric’s decision to move its headquarters from Fairfield to Boston gives Connecticut Republicans “good talking points for the upcoming legislative races,” a University of Connecticut political science professor said Thursday.

uconn.edu “There’s no getting around it. Even Governor Malloy said this is a blow,” Ronald Schurin, an associate political science professor at UConn, said.

However, it remains to be seen how big of a role it will play and how many legislative races it could impact. Schurin said it would play a much bigger role if 2016 was a gubernatorial election year.

Scott McLean, a political science professor from Quinnipiac University, said at the very least it will give Republicans the opportunity to wag their finger and say “I told you so.”

He said he’s uncertain how far that will go in getting Republicans elected, but he thinks they can get some traction from this for the upcoming legislative session. He said Republicans will have a much stronger negotiating position when it comes to calling for a seat at the table. On the other hand, McLean said the Democrats, who hold the majority in the General Assembly, could just laugh it off and continue to ignore them.

“Connecticut works better when there are two reasonable strong parties,” McLean said.

No matter what happens, it’s certain GE’s departure will be part of the rhetoric on the campaign trail.

Republican lawmakers wasted little time in criticizing their Democratic colleagues for not responding quicker to GE’s concerns this past summer about a tax hike.

Sen. Len Fasano, R-North Haven, said Wednesday he hoped GE’s relocation would be a “wake up call,” but he feels like the Democratic Party is trying to rationalize the move.

“Now we can say there are ramifications for not having predictability and stability in our budgets,” Fasano said.

Democrats aren’t buying the narrative and they don’t believe GE’s departure is a referendum on Connecticut’s economy.

“I don’t doubt that GE was sincerely concerned about corporate taxes when they made their comments about the budget this summer,” Senate President Martin Looney, D-New Haven, said Thursday. “However, by moving to a state with essentially the same tax structure that Connecticut has — and, not coincidentally, the same extremely high level of quality of life — it’s clear that taxes were not the reason for the relocation of their headquarters.”

Massachusetts has a corporate tax rate of 8 percent. Connecticut’s is 9 percent. The top personal income tax rate in Connecticut is 6.99 percent and in Massachusetts it’s 5.1 percent.

“The bombast and hyperbole coming from Republican legislative leaders truly represents the dark side of party politics,” Looney added. “It’s honestly harmful to the state of Connecticut.”

Fasano countered that if Democrats keep ignoring that GE left at least partly because of Connecticut’s tax structure and the lack of predictability in its budget process, then they’re doomed to repeat their failures.

“People deserve the truth, because you cannot fix a problem until you’re honest about its existence,” Fasano said. “Even the governor seems to get it now, as he said yesterday, ‘. . . businesses care about how states budget, and now is the time to continue our bipartisan efforts to reform our budget, find new ways to pay our pensions, and create a more sustainable and predictable state budget.’”

Looney said Republicans are twisting GE’s reason for moving.

“By twisting the reasons for GE’s move and attacking our state and economy purely for political gain, the message the Republicans are sending to the 16 Fortune 500 companies who continue to be headquartered here and all businesses large and small in the State of Connecticut is unfortunate,” Looney said.

He said Republicans are being hypocritical because they voted against Connecticut’s efforts to create the ecosystem GE found so attractive in Boston.

In a press release Wednesday, GE’s CEO Jeffrey Immelt said they chose Boston because they “want to be at the center of an ecosystem that shares our aspirations.” He cited the 55 colleges and universities in the Greater Boston area and the investment the state makes in research and development.

Looney said the Republicans in Connecticut lamenting GE’s move to Boston are the same ones “who voted against and blasted Connecticut’s successful efforts to grow our economy by investing in Connecticut’s bioscience corridor from Jackson Labs in Farmington to Alexion in New Haven.”

But Fasano said GE’s focus was more about the state’s fiscal health.

Fasano said he met with GE’s chief financial officer last year and the CFO told him “when you have tax hike after tax hike, followed by deficit after deficit, the system is not working.”

Fasano continued: “With Connecticut facing a deficit of over $350 million next year and over $3 billion in the out years, it’s common sense for businesses to be worried that they could end up the next target in tough times. They don’t feel like the state of Connecticut is on their side, and that has to change.”

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