Gov. Ned Lamont and economic development commissioner David Lehman announce business incentive proposals in late January in Hartford. ctmirror.org

Between grants, low-interest loans and tax breaks, Connecticut provides hundreds of millions of dollars annually in incentives to help businesses survive — and sometimes to expand — in a high-cost state.

And while these incentives remain a perpetual source of debate, a national think-tank says Connecticut at least does better than most other states at ensuring it gets a good return on its investments.

The Pew Charitable Trusts recently analyzed all states and the District of Columbia on their ability to evaluate their incentives, ranking them as “trailing,” “making progress” or “leading.”

Connecticut was one of 16 states in the top group, due largely to new legislation adopted just two years ago.

“Connecticut is leading other states because it has a well-designed plan to regularly evaluate tax incentives, experience producing quality evaluations that rigorously measure economic impact, and a process for informing policy choices,” Pew analysts wrote.


In recent years, legislatures here have bonded more than $100 million annually for economic development initiatives in municipalities, brownfield remediation and small business assistance.

The state also provides credits, exemptions and other breaks through its taxes on corporations, insurance companies and public service utilities that total more than $500 million per year.

Connecticut was one of the first states to begin producing regular evaluations of its incentives. Lawmakers first enacted a measure in 2010 requiring Department of Economic and Community Development reports every three years showing whether jobs were created as promised, or whether other positive economic impacts resulted. 

But as late as May 2017, though, Pew analysts found “the studies have had little effect on incentive policy” adding that Connecticut “lacks a strong connection” between the evaluations and policymakers.

In other words, legislators either weren’t reading the reports, or the analyses lacked information the lawmakers wanted.

Legislators passed a bill in 2016 to require the two branches of government to work more closely, but then-Gov. Dannel P. Malloy vetoed it, saying a statute wasn’t needed for cooperation.

Comptroller Kevin P. Lembo Mark Pazniokas / ctmirror.org

Supporters in the legislature and other advocates, including Comptroller Kevin P. Lembo, renewed their push and were successful one year later.

The new system requires legislators to hold public hearings on the analyses, which now must be produced each year. It also drew the state auditors into the process, requiring them to review the reports and submit findings to key legislative panels.

“Connecticut should be making its policy decisions and investment decisions on the back of good information and data,” Lembo said. “That is the absolute essential goal of the economic evaluation law that I advocated for – ensuring that state government is transparently and thoughtfully reviewing whether the hundreds of millions of dollars invested in economic development and job growth each year are fulfilling their intended purpose.”

The spokesman for Gov. Ned Lamont’s budget office, Chris McClure, said “It is an honor to be recognized by Pew as a national leader on this issue. It is a reflection of the hard work and safeguards our state has put in place to evaluate our tax incentive programs. We are continuing to build on this progress through Governor Lamont’s new JobsCT legislation, which creates a transparent, earn-as-you-grow tax rebate to assist employers who are expanding and fueling the next generation of economic growth in Connecticut. This approach minimizes risk and is good for businesses and taxpayers alike.”

Lamont, who took office in January 2019, also has stressed Connecticut must be more selective in the incentives if offers — and more focused on ensuring it gets the results it wants.

“We need to be mindful that Connecticut taxpayers are on the other side of these incentives,” David Lehman, Lamont’s economic development commissioner, said in late January when the governor unveiled two economic incentive efforts.

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.

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Keith M. PhaneufState Budget Reporter

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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6 Comments

  1. Hold on a minute! The “Pew Chartible Trust” must use baseline data from a validated source to come to conclusions related to the State of Connecticut Programs. The only source of the required data would have to be a State of Connecticut Agency. Or more specifically, the former CT DECD (CT Department of Economic and Community Development). Which was cited for erroneous and incomplete reporting of economic tax benefits and credits related to it programs. The former Comm. Catherine Smith admitted to these errors and false results, in Sept of 2018 ( Related article: CT News Junkie – Economic Development Official Apologizes for Reporting Errors – Sept 28, 2018). So, I believe, “Garbage in, Garbage out!”.

    1. Well said and pretty well sums it up! There is less transparency and the end results are apparent every single day we are driven further and further into bankruptcy. Seems the frenzied, consistent and continuous attempts to spend and tax more are having the expected results.

  2. This is good news, we gave far too much to companies that over promised and under-delivered under the Malloy Administration. Now we need more transparency in other programs where tax dollars seem to be sucked in with very little return in investment.

  3. Stop this insanity. It isn’t the government’s role to invest in businesses. Abide by the 14th Amendment and make the playing field level for all businesses.

    Reduce taxes and regulations and, once again, make Connecticut a place where people will freely chose to do business!

  4. The previous administration passed out pork with no accountability and fought to prevent any oversight.
    What happened to the million dollars that was given to the indoor tomato farm?
    Hybrid Insurance?
    Back9 networks?
    Mystic Burrito or Fields of Fire?
    The list is very long indeed and represents a whole lot of state debt.

  5. Requiring legislators to hold annual public hearings on the analyses and having state auditors review the reports and submit findings to key legislative panels is all well and good, but until proven wrong, I remain skeptical politicians will seriously review the data beyond their usual partisan optics.

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