Catherine H. Smith, the commissioner of economic development, joins Gov. Dannel P. Malloy in kicking off a jobs tour today at Blue Sky Studios, a company whose stream of tax-credit revenue nearly was dried up by an oversight in state budget revisions.
Smith played a role in making sure the tax credits were saved in a provision inserted into a budget implementation bill near the end of the session–and learned a lesson about the importance of being in the loop at the state Capitol.
“It would have been nice to be at the table when those first decisions were made,” said Smith, a top ING executive recruited by Malloy to her first public-sector job: helping the governor sell Connecticut to business.
Since April 1, home has been a corner office on the third floor of 505 Hudson Street in Hartford, a building that also houses social services agencies. Her office has a view of the Capitol and downtown to the north. A flat screen TV hangs on the wall opposite her desk, tuned to CNBC.
Catherine H. Smith
During an interview, she periodically snuck a peak over the reporter’s head to glance at the market crawl on the screen. “It’s the old financial services person in me,” she said, smiling.
After nearly three months in the job, she was asked to describe the state’s economic-development footing in a nutshell.
“We’re behind. You can see it in the numbers. Our job creation over the last 10 years is pretty dismal. So the numbers verify that,” Smith said. “What’s been the most concerning and disturbing to me is the other states are so much more proactive in every way, shape and form than we have been.”
As anyone who encountered Malloy during his campaign for governor last year undoubtedly heard that Connecticut has had 22 years without net job growth, a record worse than every state but Michigan. It was a Malloy mantra, repeated when he announced Smith’s appointment March 3.
“I’m thrilled that Catherine has agreed to take on the immense task–and I do mean it’s immense,” Malloy said. “We’ve got to reverse a 22-year history of failing to grow jobs, and do it as quickly as we can.”
Smith, 58, then the chief executive of ING U.S. Retirement Services and a former high-ranking executive at Aetna Financial Services, was a recruiting coup for Malloy, bringing a dash of corporate star power to the administration’s economic development efforts.
It will be up to Smith, with Malloy as her most important ambassador and salesman, to reverse that trend at a time when Connecticut is struggling to emerge from a brutal recession, and her boss is preparing to order his own downsizing.
Malloy had hoped to kick off his jobs tour–part listening tour, part P.R. campaign–with the budget crisis behind him. Instead, he and Smith are hitting the road after the rejection of a labor cost-savings deal that leaves his budget unbalanced.
Without the labor savings, Malloy has indicated he will order at least 7,500 layoffs, a number that, if added to the May unemployment figures, would have bumped the unemployment rate from 9.1 percent to 9.4 percent.
“I don’t think I would have taken this job if I didn’t feel that there’s really an opportunity to make change here,” Smith said in an interview at her office. Optimism, of course, is a job requirement.
Smith takes on that opportunity at the helm of the Department of Economic and Community Development, an agency with a checkered track record that dates back to the latter years of the Great Depression. It’s had plenty of change, but struggled for focus.
Since its creation in 1937 as the Publicity Commission, an agency with the straightforward mission of publicizing Connecticut as a place to locate business, it has been reorganized in nearly every decade.
Even before the launch of today’s jobs tour, Smith already has been out talking to companies, as has the governor.
Blue Sky, a subsidiary of 20th Century Fox, has gotten its share of attention. Malloy attended a kickoff event for Blue Sky’s latest full-length feature, but his administration had to scramble to untangle the tax-credit issue.
Blue Sky was attracted to Connecticut by a generous tax-credit program, but the Malloy Administration inadvertently devalued them when it lowered the cap on the amount of premium tax liability that insurers can offset with credits from 70 percent to 30 percent.
It was a change that Connecticut’s home-state insurers sought as preferable to a proposed increase in the insurance premiums tax, but an unintended consequence was that it hurt Blue Sky.
The credits promised to Blue Sky are worth far more than the company’s own tax liability. But they are transferable, so the real value is what they can fetch on the open market from other companies looking to decrease their taxes.
With a cap of 30 percent on insurers, that market shrank. Benjamin Barnes, the governor’s budget chief, said Smith played a role in finding a solution, raising that cap above 50 percent.
Today, after Malloy speaks over lunch to the Business Council of Fairfield County, Smith and the governor will tour Blue Sky, which Smith says is growing so fast that conference rooms now house workers.
Smith said the Malloy Administration’s economic development focus is building on its strengths, including bio-science and precision manufacturing. Costs are high in Connecticut, but its workforce is educated and highly productive, she said.
One of the places in Connecticut that is getting it right is New Haven, the city governed by Malloy’s one-time rival for the Democratic gubernatorial nomination, Mayor John DeStefano. “They’ve done a really nice job on public-private partnerships,” she said.
New Haven is leveraging bio-science research at Yale. The Malloy Administration is trying to add to Connecticut’s capacity for bio-science with an $864 million expansion at the UConn Health Center.
Smith said she has heard little from the business community about the tax increases Malloy is implementing to reduce the deficit, but she has heard plenty about the passage of a mandate on many businesses to provide paid sick days. The objections often came from companies that already provide them.
“It was more the general idea of it,” Smith said. “What I’ve been trying to do is point out the positive things.”
She said the legislature passed several economic development measures, including from Malloy’s “First Five Program,” which provides incentives to the first five businesses that each bring at least 200 new full-time jobs to the state in the next 24 months.
“We are our own worst enemies sometimes. People stand up and say, ‘Well, we re not that friendly to business sometimes.’ We have a lot of great tings going on here for business,” Smith said. “So let’s make sure our citizens know that, as well.”