Malloy Vetoes Lembo’s Bill Calling for Legislative Evaluation of Business Incentive Programs
Posted to: Business, Consumer Protection, CT Watchdog, Economic Development, State Budget, Taxes, Transparency
Gov. Dannel P. Malloy vetoed two more bills Thursday, including one that was passed on the last night of session and another that would give a legislative committee the ability to evaluate the state’s tax incentive program for recruiting and retaining businesses.
Currently, the tax incentives are analyzed every three years by the Department of Economic and Community Development, which draws up the incentive deals for the businesses, and the Department of Revenue Services.
One of the bill’s main proponents was state Comptroller Kevin Lembo, who recently voted as a member of the Bond Commission against the state giving loans and grants to Bridgewater Associates, the world’s largest hedge fund.
In a statement, Lembo called the veto “deeply troubling” and a “terrible loss of transparency.”
He said every year the state provides hundreds of millions of dollars in tax credits to Connecticut businesses.
“The state owes it to businesses and all taxpayers to fully analyze the return on investment that these sizeable and important programs actually deliver in order to assess whether such resources are fulfilling their intended purpose or, if not, whether state funds would be better deployed to other economic development or infrastructure investment,” Lembo said.
He said, “If objectivity really matters, we always want an independent third party to evaluate our work.”
But Malloy has been consistent about maintaining the power of the executive branch in most of his eight vetoes this year.
In his veto message, Malloy called the change in the monitoring of the tax incentive program “unnecessary and unwarranted.”
He said the last report on the incentives in 2014 was 169 pages and used modified and updated methodology in its recommendations on how to achieve the maximum benefit from incentives offered.
He said the DECD and DRS have the “subject matter expertise to provide independent actionable analysis.”
The next report is due to the legislature in 2017. Malloy encouraged proponents to work with the two agencies in preparing it.
A Pew Charitable Trusts report released in April concluded that if states collect data about their economic development incentives, then they are more likely to help businesses and workers.
The bill Lembo supported, and which Malloy vetoed, would have also given small manufacturing companies that don’t pay corporation taxes the ability to qualify for manufacturing apprenticeship tax credits.
“Allowing business tax credits to be claimed against the personal income tax would open the door for other similar proposals and increase the likelihood that the credits will result in a revenue loss to the state,” Malloy said in the veto message.
Malloy also vetoed a bill Thursday that would have allowed municipalities to exempt nonprofit and for-profit arts and culture organizations from 100 percent of their property taxes. The bill was supported by two Republican lawmakers, Sen. Rob Kane and Rep. Eric Berthel of Watertown, and opposed by the Connecticut Council of Small Towns. It passed unanimously in the House on a consent calendar and 35-1 in the Senate. Only Sen. Eric Coleman, D-Bloomfield, voted against it.
Malloy has signed 220 bills — 216 from the regular session which ended on May 4 and four from the special session held May 12 and May 13.