Lawmakers press economic development officials for more details on incentives
State lawmakers continued to press economic development officials Monday to improve reporting on job development tied to tax breaks, loans and other taxpayer-funded incentives.
Meanwhile, Department of Economic and Community Development Commissioner Catherine Smith said her agency is continuing to upgrade its reporting, but also is hamstrung by fiscal limitations and by a lack of information-sharing requirements throughout state government.
Smith also assured members of the Appropriations, Commerce and Finance, Revenue and Bonding Committees that despite concerns about reporting, companies that receive state aid either create the minimum number of jobs required, or else.
“If companies do not perform then they are required to repay the state the entire principal amount plus a penalty,” she said, adding that an independent auditor is assigned to tally the jobs created and retained at each firm that receives assistance negotiated by her department.
Smith appeared before the legislative panels at a joint hearing held in response to two reports from the state auditors of public accounts about economic development incentives.
Auditors John Geragosian and Robert Kane shocked legislators in April when they found DECD’s 2017 annual report has overstated both jobs saved and created by companies that receive incentives, and — in some cases — the cost of retaining those jobs.
And while a revised report from the department last week addressed some of the auditors’ concerns, in many instances incomplete or potentially inaccurate data still exists.
But Smith noted that in some instances, her department’s report lacks data because another agency had it and wasn’t required to release it — a problem the auditors acknowledged as well
For example, she told legislators, the incentives offered by the quasi-public Connecticut Innovations Inc., which assists fledgling tech firms, was not included in her report. The department supported a bill earlier this year to merge Connecticut Innovations data with the DECD’s annual report. The bill was not adopted.
DECD, like some other state agencies, struggles with aging software, Smith said, acknowledging that some components of her department’s report didn’t rely on the most up-to-date financial data.
“We are still in the process in determining whether there is more we need to do,” she said, adding that her agency has been seeking more funding for technology upgrades for four years.
“Within the agency we control that data and we will 100 percent get that out,” Smith added afterward. “But I said to the legislature don’t hold us accountable and expect us to report on other agencies because we simply can’t provide data we don’t have.”
State Comptroller Kevin P. Lembo, who spearheaded the push in recent years to mandate a third-party assessment of the effectiveness of the hundreds of millions of dollars Connecticut spends annually on economic incentives, urged legislators Monday not to give up.
The auditors can’t provide that third-party assessment without sufficient data from economic development agencies.
What frustrates all of us who love this state, is that Connecticut has all the raw materials to be the economic engine of New England,” Lembo said, citing its productive workforce, colleges, universities and trade schools, high quality of life and cultural and physical assets. “With all of this raw material, Connecticut owes it to itself to get these investments right. That cannot happen if we don’t fully analyze our economic development strategy.”
Geragosian and Kane have another report due to legislators early next year on DECD and legislative leaders were divided as to whether they need to introduce more bills next year to get a better assessment of the state’s economic strategy.
“It is still troubling, some of the ommissions that were made, even in the revised report,” said Rep. Caroline Simmons D-Hartford, House chair of the Commerce Committee, who added it might be better to direct DECD to focus on evaluating a few key programs — thoroughly — than trying to assess all incentives. “These are critical programs creating jobs in our state, hundreds of millions of dollars being spent, so we’ve got to be sure we get this right.”
Rep. Melissa Ziobron of East Haddam, ranking House GOP member on the Appropriations Committee, said more legislation shouldn’t be necessary, provided the Executive Branch is serious about cooperating.
“The problem we have is the lack of communication between these agencies and the ability to drill down,” she said. “The idea that they can’t submit information because they can’t access information, fixing that doesn’t require new legislation. … It’s ridiculous.”
Rep. Jason Rojas, D-East Hartford, House chair of the finance committee, agreed that the best fix is for the next governor “to ensure that the agencies are communicating better. … We shouldn’t need legislation to tell them to do that.”
But Rep. Chris Davis of Ellington, ranking House Republican on finance, said he wants to see the department’s report expanded to include details on incentive proposals that had to be abandoned. “That’s not included in this report, perhaps because it’s not mandated,” he said.
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