Gov. Dannel P. Malloy’s administration outlined a package of job-growth proposals Thursday that includes $516 million in bonding for business and infrastructure investments, a new tax break aimed at small businesses, and a plan to streamline state regulations.
The proposal outlined by two key administration officials before the legislature’s Commerce and Labor & Public Employees committees drew bipartisan praise, not surprising given it is the product of bipartisan negotiation. But some legislators expressed concern over the price tag.
State government “can be difficult to work with,” Catherine Smith, Malloy’s commissioner of economic and community development, told lawmakers. “And we are not generating the same level of activity as some other states.
The single-largest investment in the plan involves adding $340 million to the Manufacturers’ Assistance Account, which provides various low-interest loans and grants to businesses.
The administration also is seeking to double enrollment in the Manufacturing Reinvestment Account, a program that allows manufacturers to invest pre-tax profits for a number of years — after which they must be reinvested into the company. The program currently accepts up to 50 businesses, and that would climb to 100.
Another key component of the plan has been dubbed the “Small Business Express Package,” and involves up to $50 million for loans and matching grants to help small companies create jobs.
To help companies take risks in adding positions in new areas, the administration also is seeking $10 million for the “Step Up” program, which would subsidize training and other costs associated with these new jobs for up to six months, after which a company would assume all costs.
Other key investments in the plan involve adding another $50 million to the state’s “Fix-it-First” road improvement program and $20 million for brownfield remediation. Funds also would be used to develop new incubator space for start-up companies launched in cooperation with Connecticut’s colleges and universities.
Malloy’s budget director, Office of Policy and Management Secretary Benjamin Barnes, said the $516 million needed to fund these loans, grants and infrastructure projects would be bonded.
And given reduced demand for municipal school construction projects as the economy remains sluggish, the administration believes this bonding can be taken in portions from anticipating allocations over the next few years without exceeding the planned annual limit of about $1.4 billion.
“Here’s something you don’t see very often,” Smith joked as she outlined the administration’s plan to effectively cut the $250 business entity tax in half. The charge, a flat registration fee businesses pay annually, would not change, but it would only be due every other year, rather than annually.
Barnes said fiscal analysts for the Executive and Legislative branches still were calculating the cost of the tax break, but it would not affect the current state budget.
“Though it pains me as a budget director to see a diminishment of revenue, we don’t think it will be that significant,” Barnes added.
Job-creation tax credits for businesses would be increased from $200 per job to $500, but the overall funding for the program would remain capped at $20 million.
“I think it’s a great start, and long overdue,” Rep. Ed Jutila, D-East Lyme, said in reference to the business entity tax reduction. Jutila had previously proposed eliminating the tax entirely.
Sen. L. Scott Frantz, R-Greenwich, praised administration officials for targeting job growth proposals that should enjoy strong support from both parties. But while the package is not expected to add costs to the current, $20.14 billion state budget, Frantz did note that the initiatives would add nearly $500 million in principal alone to Connecticut’s debt burden.
Perhaps the largest area of bipartisan consensus since Malloy first announced plans in June for an October session on job growth was a need to improve what is perceived by businesses as Connecticut’s oppressive regulatory environment.
The new legislative package calls for state government to hire a consultant to streamline regulations, particularly with a focus on four large permitting departments: Administrative Services, Energy and Environmental Protection, Transportation, and Economic and Community Development.
“I think this is something people can gain confidence from,” said Rep. Bruce “Zeke” Zalaski, D-Southington, co-chairman of the Labor and Public Employees Committee. “Though we still have a long ways to go.”