Connecticut is open for business. That’s the message from the Department of Economic and Community Development and its new proposal to grow jobs in the state without putting taxpayers on the hook.
The days of giving millions of dollars in state-based tax incentives to companies to move to Connecticut might be over.
“We want something that’s competitive, that reduces risk and I think is in the context of what companies want and I think this does that,” Department of Economic and Community Development Commission David Lehman says.
During a presentation to the legislature’s Commerce Committee Lehman laid out his vision for how to entice companies to expand in the state.
“Connecticut has a history of sometimes providing significant tax incentives that were not as transparent. That were not earn as you go or performance based,” Department of Lehman says.
Lehman says all that would change if the legislature approves this legislation.
Under the proposal, no longer would the state lead with upfront grants or loans to businesses who want to come to Connecticut or expand in the state. The new “earn as you grow” program will require companies to create the jobs first and then receive a percentage of the income tax generated by that job.
Under the program companies that locate or expand in distressed municipalities or opportunity zones can qualify for a 50% rebate based on the employees' income, while companies located in municipalities that do not have these designations can qualify for a 25% rebate.
The business community and municipalities like the proposal.
“This program is clear and transparent and focuses on mid-sized companies, which have historically been ignored and left out of the conversation,” Ashley Zane says.
Zane, a government affairs specialist with the Connecticut Business and Industry Association, says their members support this approach and its focus on aerospace, manufacturing and bioscience.
“And focusing on home grown businesses which are going to be critical as the economy recovers from the COVID-19 pandemic,” Zane says.
The Connecticut Conference of Municipalities supports the legislation because it doesn’t impact the property tax base.
“As we’re hopefully coming out of the COVID-19 pandemic there’s significant concern among our members about the long term impact this is going to have on our local economic base,” Randy Collins, a lobbyist for CCM, says.
No one testified against the proposal.