Support builds for UTC deal, but questions linger

OPM Secretary Ben Barnes, Economic Development Commissioner Catherine Smith, and UTC executives Peter Gutermann and Harry Im testify before state legislative panels on Monday

Mark Pazniokas / CT Mirror

OPM Secretary Ben Barnes, Economic Development Commissioner Catherine Smith, and UTC executives Peter Gutermann and Harry Im (left to right) testify before state legislative panels on Monday

Leaders of two crucial state legislative panels offered strong endorsements Monday for Gov. Dannel P. Malloy’s proposal to provide up to $400 million in tax relief for United Technologies in exchange for its major investment in its Connecticut aerospace industries.

But while some minority Republicans lawmakers questioned some aspects of the deal, they stopped short of directly opposing the plan.

“I think all of the pieces are coming together in a proposal like this,” said Rep. Patricia Widlitz, D-Guilford, co-chairwoman of the Finance, Revenue and Bonding Committee. “It is very exciting.”

The finance panel and the Commerce Committee conducted a joint hearing on the tentative deal, which would require UTC to invest $500 million in total in several capital projects, including a new headquarters and engineering facility at Pratt & Whitney in East Hartford and an upgrade to its engineering lab at Sikorsky Aircraft in Stratford.

The company would promise to maintain its Pratt headquarters in East Hartford for 15 years and its Sikorsky headquarters in Stratford for another five.

But perhaps the most controversial aspect of the deal allows UTC to significantly reduce employment in East Hartford and still receive huge tax relief.

For example, it currently employs about 4,900 engineers and 14,100 individuals in total in East Hartford, with a gross payroll topping $1.53 billion.

The value of credits would fall steadily – and be eliminated entirely – if engineering employment falls below 4,350, total employment falls below 12,450, or gross payroll falls below $1.37 billion.

But Malloy said the deal would preserve an engineering knowledge base essential not only to the aerospace industry, but to Connecticut’s economy in general.

“We’re getting out in front and stabilizing that workforce,” said Rep. Chris Perone, D-Norwalk, co-chairman of the Commerce Committee.

“It’s not fun to play defense,” added Sen. L. Scott Frantz of Greenwich, the ranking GOP senator on both the finance and commerce panels. “But that’s the reality of it. I can’t think of better outfit to play defense with” than UTC.

Still, despite the praise from committee leaders, the plan continued to draw questions from rank-and-file Republican lawmakers.

Rep. Gail Lavielle, R-Wilton, argued that the bill drafted to implement the assistance Malloy is seeking appears to give the executive branch broad discretion in determining whether UTC has fulfilled its obligations, and also to award state aid in the future.

Lavielle added she remains undecided about the bill but wants to ensure that any corporate assistance is subject to legislative approval, and open to future legislative review and scrutiny,

“We really do need careful oversight over these types of deals,” she said. “This is a huge amount of taxpayer money.”

Rep. Pam Sawyer, R-Bolton, said her uncertainty is centered largely on one question: Is it OK to provide hundreds of millions of dollars in tax relief to a company that not only won’t commit to grow jobs, but could qualify for major assistance even after eliminating positions?

“My initial reaction is that it’s a very positive thing to do for one of our largest corporations in Connecticut,” Sawyer said. “But my second and third thoughts are on why there is no increase in jobs tied to this. It is actually structured in the reverse. That’s a big concern.”

But UTC Vice President and General Counsel Peter A. Gutermann told the committees that this public-private investment in aerospace, coupled with a new state initiative to dramatically expand engineering programs at the University of Connecticut, would be a key to future economic growth.

“The simple truth is that companies – and states – that invest in innovation and attract the highest skilled employees, from scientists and engineers to technicians and skilled production workers, will be winners in the global economy,” he said. “That is what the Connecticut Aerospace Reinvestment Act represents, an investment that positions UTC and Connecticut for future success.”