Malloy: ‘First Five’ No Jive
by Christine Stuart | Aug 10, 2011 3:45pm
(17) Comments | Commenting has expired
Posted to: Business, Labor
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.”
Tags: first five, corporations, airport, Malloy, Cafero
(17) Comments
posted by: gerardw | August 10, 2011 4:38pm
There goes companies six and later out the door. We need a competitive environment for all businesses, not politicians picking winners and losers.
posted by: Matt W. | August 10, 2011 4:39pm
“...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.” Beautiful! Now that sounds like an environment in which business is going to flourish and expand. When they’re trapped like rats they’ll have no choice but to expand their business here. HAHAHA! Aweseome!
posted by: meridenite | August 10, 2011 6:17pm
Ticket Network just relocated to South Windor from Vernon they weren’t going anywhere and espn annouced the move from nyc to Bristol in March.
posted by: Major-Shmuck | August 10, 2011 6:37pm
Major Shmuck says, Malloy has to defend this ridiculous POS lottery because it is a HUGE waste of money….... Hey citizens of CT, companies who are relocating within the state will get MILLIONS….and you will not get your services Hey Malloy….Great job…again….
posted by: GoatBoyPHD | August 10, 2011 7:16pm
In the world of sports, and now streamng sports overses in the burgeoning markets of Asia, ESPN is still the ESPN brand. Will that convert into new partnerships in the US? Maybe.
posted by: Disgruntled | August 10, 2011 9:25pm
FIRST FIVE JIVE!
What a bunch of gibberish from our ex-mayor. All the incentives given to UBS sure worked,eh Dan?
When companies get taken over or decide to move,they don’t care about costs.And,I LOVE paying a company that failed to extort the town of Vernon but struck it rich with The Nutmeg King!
posted by: streever | August 11, 2011 7:54am
Malloy is wrong.
Businesses hire because they have a business need, not because they have spare money. Spare money goes to the investors and the board.
We need to give tax givebacks to people who spend money if we want to stimulate our economy and create jobs.
posted by: Disgruntled | August 11, 2011 9:10am
And speaking of the Nutmeg King…while he is handing out the fat for corporations he got himself nominated to the NGA overseeing energy,environment,agriculture and natural resources…all areas that he is an obvious expert in.I suppose he can tap Ben Barnes vast knowledge base for anything he is missing.
ACTUALLY—the whole NGA is a boondoggle. $42million is assets (CT taxpayers help fund it,no?) with most officers making close to or in excess of $200K.
DAN will get some travel time in with this crowd as he runs for his next office.Maybe even get his wife a job there.
The NGA. They are exempt from taxes…another draw to a deadbeat politician!!
posted by: Icarus | August 11, 2011 9:20am
Many businesses are moving employees to places such as Texas where wages are cheaper and employees are just as skilled. Businesses such as ESPN that do not have any specific need to be in any specific location are especially vulnerable to leaving the state. As far as the reason businesses hire, it is not as simple as spare change versus business need. Behind the scenes, many businesses eliminate vacant positions that would otherwise have been filled if they do not meet their budgets. On the other hand, some businesses will hire thinly despite the monetary climate. As someone who works in finance, I applaud the efforts to keep high skilled labor in our state. Unfortunately, only time will tell if this attempt is successful.
posted by: redman | August 11, 2011 9:49am
Welfare is taking money earned by someone and giving it to someone else. A tax incentive is taking less money from someone. “Corporate Welfare” is misinformation propagated by ignorant left nuts.
posted by: sharewhut | August 11, 2011 1:28pm
Icarus,
ESPN does need to maintain a presence in the Northeast. The big money from advertizing is generated in this market. Keeping a high profile in the New York-Boston market is essential. Are you going to drive a big potential advertiser up a few hours (at most)from NYC or Boston to show off what you’re offering them, or are you going to fly them out to Dustbowl, TX?
They’re currently comfortably situated dead smack in the middle of the largest media/advertizing market in the world.
Perhaps there was a time very early on when they could have tried developing in upstate NY or elsewhere, but pulling up stakes would have been very risky early on in their history. Their CT roots allowed for a controlled growth early on that allowed them to become what they did. Could they ‘afford’ to go elsewhere now? Doubtful. Even with their’s and Disney’s vastness of wealth, to recreate what they’ve built here wouldn’t be possible. Not to mention hoping to recupe some of what they’ve put into CT so far. Don’t think there’s a huge real estate market for multi-billion dollar TV complexes.
That said, with repayment of loan (if not forgivable’) and potential income taxes from new workers (who won’t be at bottom of scale) ESPN’s looks to be most reasonable of first 3.
posted by: sharewhut | August 11, 2011 1:34pm
redman,
but if you take less from someone, don’t you need more from someone else? How many smaller companies could have been helped by this money that’s not there any more because it was given as a break to giants?
And ‘forgivable’ loans and grants- straight up corporate welfare- that is ‘giving’.
posted by: NOW What? | August 11, 2011 3:59pm
“Icarus” is absolutely correct.
“Streever” - I agree with you that businesses hire because they have a business need not because they have spare money, and that spare money tends to goes to the investors and the board… but that doesn’t make Malloy’s ideas wrong - far from it. Keeping pre-existing businesses in CT, getting out-of-state ones to relocate to CT. and encouraging new ones to start up in CT are all very different, VERY complicated, and require a large *variety* of “tools” and strategies in order to succeed… targeted tax credits are only one such tool.
“Redman” - this is NOT “corporate welfare” at all… it’s not like CT is giving any companies cash or blank checks to do with whatever; we’re talking about interest-free LOANS, JOB TRAINING grants (it’s FAR cheaper - and far more effective - to help a business train its own workforce that it would be to throw money at the DOL or Dept. of Ed. to do it!), and TARGETED corporate tax credits - none of which is “welfare” by ANY stretch of the imagination.
“Disgruntled” - you couldn’t POSSIBLY be more WRONG. UBS is *still* trying to figure out how to most its employees around and to where, it ABSOLUTELY is examening the associated costs, and currently CT’s municipalities are able to do very little on their own to help encourage a company to relocate or start up in their city or town… their finances are usually too small and budgets too tight - other states have COUNTIES that have more financial resources to do these kinds of things than do CT’s municipalities, thus leaving the bulk of such efforts in CT up to the State.
I’m not saying that Malloy’s efforts to date will be a panacea, but they’re a pretty good start. And I see that even McKinney’s starting to come up with some ideas - mostly half-baked, but at least he’s starting to think “out-of-the-box.” But this is all PEANUTS compared to what REALLY must be done to crank up a better economic engine for Connecticut.
posted by: sharewhut | August 11, 2011 8:54pm
Steve.
I’ll type slowly.
If they do the minimum the CIGNA deal calls for (100,00,000 capital investment, add 200 jobs (whether physically in CT or not).
- $15,000,000. Forgivable Loan.
-$2,000,000 grant for relocation,training or recruiting.
-$3,000,000/year off corporate taxes for 4 years.
-followed by $6,000,000/year for next 3 years.
Potential for $30,000,000.
(yes, tax break is ‘capped’ at 70% of their obligation.).
$47,000,000.
Not a bad gift.
Makes me feel ashamed to get a $200 longevity payment.
posted by: Icarus | August 12, 2011 12:37am
I do have to admit it is interesting to lay off thousands and then pay millions to secure private jobs. Not sure what is going on with that?!?!
posted by: Disgruntled | August 12, 2011 8:44am
I wish I am wrong,but I am not.
FIRST FIVE JIVE is a losers game. He gave up trying to lure companies from out of state and was not (he is a politician!) tough enough to admit a mistake and is now tossing taxpayer money in-state at companies and trying to spin it as a positive.
IF he gets lucky and snags a company from out of the area,he will jet home from his travels and lead the brass band down Main Street.