A commission approved a $22 million loan and grant package on Friday to help the world's largest hedge fund upgrade and expand its offices despite questions about whether the deal makes financial sense for a state facing continued budget problems.
Democratic Gov. Dannel P. Malloy said he wished Connecticut didn't have to compete with other states like Massachusetts, New York, New Jersey and Rhode Island by offering money to keep or attract companies, but that was today's reality. He said this agreement with Bridgewater Associates will ultimately be a good investment for the state.
“I think the idea that we’re going to be able to maintain levels of expenditure without growing the economy is false and unfortunately, to grow the economy, you have to realize you’re in a competition to do that,” Malloy said.
Last year Malloy was unsuccessful in trying to persuade General Electric to keep its longtime corporate headquarters in Fairfield. The corporate giant is moving to Boston, where it will receive more than $150 million in grants and other incentives from the state and city.
"Let me assure you, people would be critical if Bridgewater was adding 750 jobs to Westchester County and not Fairfield County,” Malloy said.
Under Connecticut's agreement with Bridgewater, which manages approximately $150 billion in investments for institutional clients, the hedge fund will receive $5 million in training and energy assistance grants and a $17 million low-interest loan that will be forgiven if it keeps its promises for new and retained jobs in Connecticut. Bridgewater pledged to create 750 jobs by the end of 2021 while keeping an existing 1,402 in the state.
Bridgewater is planning to spend $527 million to expand its facilities in Westport, Wilton and Norwalk. Malloy said Connecticut's investment in the expansion project is relatively small, noting that the state was competing with its neighbors for those new jobs.
The State Bond Commission, which Malloy's oversees, approved the deal on a 7-2 vote.
State Comptroller Kevin Lembo, a Democrat, voted no.
“I’m not saying we should stop handing out economic development money but if this was $22 million manufacturing grants today, I would vote in favor of it.”
The state has been dogged by declining state revenues and a series of stubborn state budget deficits, with more projected in future years. The General Assembly recently passed a revised $19.7 billion budget for the fiscal year beginning July 1 that attempts to cover a projected $960 million deficit by making deep cuts across state government, including social service programs. Nearly 1,000 state employees have received layoff notices in recent months.
In voting no, Lembo sided with fellow State Bond Commission member Chris Davis, a Republican state representative from Ellington. They argued that Connecticut should work with companies on ways to improve the state's overall business climate and make investments that help all state businesses rather than narrowly targeting state resources to one company.
“From what I heard today there was not threat that Bridgewater is threatening to leave the State of Connecticut," Lembo said.
Malloy, however, stood by the deal.
"I think leadership requires a willingness to do things that aren't necessarily popular," he said.
Based in Westport, Bridgewater was founded by Ray Dalio in 1975. It serves clients that include central banks and foreign governments. Dalio, a billionaire, lives in Greenwich.
Malloy also referenced the importance of keeping him in the state, noting the effect on New Jersey when billionaire hedge fund manager David Tepper moved from there to Florida. That resulted in a decrease in tax revenue for New Jersey, which, like Connecticut, is the biggest share of cash in its coffers.
"We see what happens in places like New Jersey when some of the wealthiest people move out of states," Malloy said.
Max Reiss contributed to this report.