Gov. Ned Lamont
Gov. Ned Lamont’s first first proposals for the upcoming legislative sessions both involve economic development.
Gov. Ned Lamont’s first first proposals for the upcoming legislative sessions both involve economic development.

Gov. Ned Lamont unveiled his first legislative proposals Wednesday for 2020: a new incentive program for businesses to expand or relocate jobs to Connecticut and a revised small business assistance initiative.

“Some of the best investments we can make as a state are in companies that are already here and that want to be here,”  Lamont said during a mid-morning announcement at GalaxE.Solutions, a tech firm in the Upward Hartford collaborative for business incubators. “This sends a message to the region and the world that Connecticut supports its corporate partners.”

The proposals, which Lamont will submit to the General Assembly when the 2020 session opens Wednesday, include an “earn-as-you-grow” incentive plan, according to the governor’s office.

Businesses creating 25 or more full-time jobs will retain 25% of their withholding taxes related to the new employment for up to seven years.

Employers who meet this threshold in one of the state-designated opportunity zones, or within an economically distressed municipality, may retain up to 50% for seven years.

To earn either benefit, businesses must pay salaries equal to or greater than 85% of the median household income for the municipality in which they are located.

Though Connecticut’s economy has picked up steam in recent years, income growth here in 2019 was 3.5%, a little below the national mark of 4.4%, said state Economic Development Commissioner David Lehman.

“Really that comes down to [growing] good, high-paying jobs,” Lehman said.

For that reason, businesses looking to take advantage of the incentive program would have to create jobs in the following high-paying fields: aerospace/defense; clean energy/renewables; corporate headquarters; distribution and logistics; entertainment and digital media; financial services; information technology; life sciences; manufacturing; or research and development.

Both Lehman and Lamont said the goal is to retain more of Connecticut’s high school and college graduates, particularly those in science, technology, engineering and math [STEM] fields.

Lt. Gov. Susan Bysiewicz and Economic Development Commissioner David Lehman discuss the administration’s job incentive proposals.
Lt. Gov. Susan Bysiewicz and Economic Development Commissioner David Lehman discuss the administration’s job incentive proposals.

Lamont’s first budget, signed last June, canceled a previously approved state income tax cut for STEM graduates who stay and work here. That tax break would have been worth nearly $8 million in total to these graduates next fiscal year, and almost $20 million by 2024.

But administration officials said canceling that tax break was not a mistake. That’s because another goal is for state government to pay less in exchange for the jobs it helps to generate.

A frequent criticism of Lamont’s predecessor, Gov. Dannel P. Malloy, was that his administration was too generous with its incentives, particularly given the salary levels tied to the jobs that they did create.

Lehman estimates that during the last three years of Malloy’s tenure, Connecticut paid about $16,000 in incentives for each job it helped to create. The new administration is sticking closer to a range of $5,000 to $10,000.

“We need to be mindful that Connecticut taxpayers are on the other side of these incentives,” Lehman said.

Lt. Gov. Susan Bysiewicz also noted that the administration’s second new proposal is aimed at boosting small businesses and others that might not have access to the same start-up or expansion capital available to larger companies.

Small Business Express 2.0, named and partly patterned after a program Malloy launched in 2011, will focus more on partnering with banks, helping to guarantee their loans and spur more private investment in small businesses.

But there also will be some direct lending on the state’s part. Bysiewicz said the focus here would be on the disadvantaged, such as small businesses in Connecticut’s poor urban centers, minority-owned companies and businesses started by women, the disabled and veterans.

“Over the last decade, the Small Business Express program has helped many entrepreneurs, including women and minorities, build their businesses and create jobs right here in Connecticut,”  Bysiewicz said. “These new legislative proposals will build on those successes and grow our state’s economy in order to increase our economic competitiveness, while also reducing costs to our taxpayers.”

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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7 Comments

  1. Utter insanity. Doing the same thing over and over and over,expecting a different outcome. Very very sad and frustrating.

  2. Unfortunately these programs are not as good as many other states we compete with (NY, VT, NH, NC, FL). Also DECD seems to be ignoring similar SMB programs that failed and are unrealistic for young growth businesses and startups. It is concerning that they did not do their homework on some of this – especially in the SMB space – they are getting killed in CT. It would be far smarter to reduce taxes on businesses of a certain size and give tax breaks to the middle class.

    Very happy to see the changes for larger businesses but the Amazon example being used by many Democrats Leaders as an example of not requiring incentives for massive private investments is completely wrong. Amazon’s recent expansion in NY was planned long before HQ2 and adding 1.5K new positions and less than $20 million investment in MANHATTAN should not be compared to 25K new jobs and $2.5 Billion investment in QUEENS.

    Any politician using the Amazon example is either uninformed or being purposely dishonest.

  3. Yesterday, UPS announced a rather large deal. The “support” from the state was minor compared to what the previous CT. governor passed out to anyone who came knocking. Unfortunately most who came knocking,left when the state money was collected!

    HARRISBURG, Pa. (AP) — Package deliver company United Parcel Service has committed to spending $1.4 billion to expand its operations in Pennsylvania and hire more than 1,700 new, full-time employees, Gov. Tom Wolf’s administration said Wednesday.
    Wolf’s administration said it offered UPS $2.7 million in tax credits and more than $6 million in taxpayer-funded grants as part of the projects.

  4. Why set a goal of 25 employees. It would seem having stages for different size companies would be better. Giving a tax break on 1 added employee in a 4 person company so it can grow would make more sense. It would also allow small business an easier path to getting over initial growth hurdles.

    The basic concept is good incentivize hiring by offering tax cuts, but it’s not fully flushed out.

  5. Why set a goal of 25 employees. It would seem having stages for different size companies would be better. Giving a tax break on 1 added employee in a 4 person company so it can grow would make more sense. It would also allow small business an easier path to getting over initial growth hurdles.

    The basic concept is good incentivize hiring by offering tax cuts, but it’s not fully flushed out.

  6. The David Lehman referenced in this article….
    Is this the same David Lehman that said: “Incentives don’t drive the economy. That’s not the key to a successful economy,” just a few days ago? (CT Mirror; 1/28/2020)

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