But will Connecticut’s new ‘jobs bill’ actually put people back to work?
In August, during a visit to New Haven as part of his jobs tour, Gov. Dannel P. Malloy reminded a room full of business leaders of a promise he’d recently made. He planned, he recalled, to bring the state legislature back into session this fall to tackle the issues of job creation and economic growth.
“There’s too great an outflow of dollars by Connecticut investors to other states, often ignoring the opportunities in their own back yard,” Malloy told the assembled CEOs.
“Some of our cities,” he added, “are not perceived as either A. affordable or B. livable, and clearly we have to work with local governments to address those issues.”
Last month Malloy made good on his pledge to call a legislative special session. By the end of it, he had what he wanted: a sweeping jobs bill overwhelmingly approved by both houses. That happened on October 26. A day later (October 27), Malloy signed the legislation — H.B. 6801, “An Act Promoting Economic Growth and Job Creation in the State” — into law. “I’m proud of what we were able to accomplish today on behalf of the residents and businesses in this state,” said Malloy in a post-vote release.
The same release quoted Senate Minority Leader John McKinney (R-28) of Fairfield saying that the bill was “a good first step toward putting Connecticut on more sound economic footing and it proves that state government functions best when the majority party works with the minority and focuses on solutions.”
Added House Minority Leader Lawrence F. Cafero (R-142) of Norwalk, “Small businesses, the engine of job creation in Connecticut, will benefit greatly from this legislation.”
The votes in favor of passage of the 163-page bill were 34-1 in the senate and 147-1 in the house.
“I think everyone thinks we need to take action regarding job growth,” says New Haven State Sen. Martin Looney (D-11), part of a bipartisan group of lawmakers who introduced the bill. “The thing is to reverse the stagnant [job] trend,” he says. “We had broad-based cooperation.”
Among key elements of the legislation is a subsidy to help small businesses pay salaries and training costs for new employees for six months.
“It’s for businesses with fewer than 50 employees,” explains Looney, the senate majority leader. “One hundred percent of the salary is paid the first month [of employment], 75 percent the second and third months, 50 percent the fourth and fifth months and 25 percent the sixth month.”
There are a few stipulations. For example, the new employee must have been unemployed immediately before being hired, and the company must be located in a low-income urban area.
However, there are no such parameters for another subsidy contained in the bill that targets small-business manufacturers, notes Looney.
The legislation also extends the First Five program, which is targeted towards larger businesses. Rebranded as the First Five Plus program, this aspect of the bill provides Department of Economic & Community Development (DECD)-derived financial incentives to up to 15 companies by the end of the 2012-13 fiscal year. Selected businesses must embark on projects that that create 200 or more new jobs over two years, or invest at least $25 million and create at least 200 new jobs over five years.
Other elements of the bill include:
• A Small Business Express Program under the auspices of DECD, providing low-interest loans, matching grants and other financial assistance to eligible state businesses within 30 days of submitting completed paperwork;
• Accountability for programs such as Small Business Express and First Five Plus through mandated periodic reports to the governor and General Assembly standing committees;
• A reduction to $25,000 of the investment amount for which angel investors may receive tax credits (the eligibility threshold previously was $100,000);
• Review of the state Department of Labor’s current training programs and establishment of educational, informational, training and evaluation initiatives that result in a workforce with technical skills matching current and future business/industry needs;
• Expansion or formation of manufacturing technology programs in selected community technical colleges, with an emphasis on precision manufacturing;
• Reducing the length of time required to obtain needed permits and elimination of some cumbersome regulations;
• Establishing an e-business portal for improved access to services and programs;
• Creation of a Main Street Investment Fund Account to provide grants to municipalities with populations of 30,000 or less to use for sidewalk construction, street lighting, building renovations, landscaping, bicycle paths and other public improvements;
• Collection of information on the impact of airport development zones and establishment of additional zones;
• Support (upon approval by the governor) for up to five public-private partnership projects (an agreement between a state agency and a private entity) — e.g., transit-oriented development or health, child care or housing facilities — that create jobs and foster economic growth; and
• Bond issuance to pay for the programs and incentives described in the legislation.
Jobs and the economy have been central issues of the emergent Malloy administration. The governor’s jobs-focused tour took him to more than 50 companies throughout the state. Often accompanied by Department of Economic & Community Development Commissioner Catherine Smith (ON THE RECORD, August BNH), Malloy listened to concerns and solicited ideas about business and economic needs. During other public appearances he reiterated his commitment to spurring job growth.
In addition, there are a number of available jobs in the state that need to be filled, notes Smith. The bill helps address that reality, she says.
“We’re hearing that the talent in Connecticut is extremely good,” Smith says, “but in certain areas there’s a shortage of qualified workers.” The bill offers a number of short-term solutions for immediate needs and also addresses longer-term issues such as reorganizing the system so that it better manages the development, training and education of the state’s current and future talent pool, she says.
However that, as well as other aspects of the jobs legislation, weren’t enough to sway Norwich State Rep. Christopher D. Coutu (R-47), one of the two lawmakers who voted against the bill. (The other was Canton State Sen. Kevin D. Witkos, R-8.)
While the price tag for the bill is a reported $626 million, Coutu contends the final cost will be well over $1 billion when borrowing costs, as well as monies needed to continue programs and projects, are factored into the equation.
“In my view the jobs bill is more of a spending bill,” says Coutu. “I’m looking at the bottom-line cost and how much taxpayers will owe at the end of the process.”
Coutu recommends a reversal of the current fiscal trajectory, and says “more balance” in the Democrat-controlled legislature might be a way to achieve it.
“We need to change the culture in Hartford. We have to really look within and change our culture throughout the state,” Coutu says. “In a perfect world I think we should stop doing everything we’ve been doing. Stop raising taxes, stop spending money we don’t have, stop borrowing money we can’t afford to pay back.”
Looney takes issue with Coutu’s “spending bill” label for the legislation.
“I think that is a very short-sighted view,” says Looney, insisting that monies spent will stimulate greater returns for the state.
But State Sen. L. Scott Frantz (R-36) of Greenwich echoes Coutu’s fiscal concern — even though Frantz voted in favor of the legislation.
“The one big negative was the price tag,” says Frantz. “We’re putting far too many resources into one package.” Frantz adds that had the cost for H.B. 6801 been closer to $200 million than the reported $636 million, he would have had few or no reservations about supporting it.
“Having said that,” says Frantz, he voted for the bill because “Connecticut has to do something for people to get back to work. But our best economic policy is to keep tax rates as low as possible. That would help put people back to work.”
Looney and other staunch supporters of the law believe it is a catalyst for job creation and economic growth. Many of the specifics in the legislation, he notes, are the result of feedback received from CEOs over a period of months.
For example, lowering the investment amount required to receive an angel investment tax credit means an investor “can cast a much wider net,” asserts Looney. And other incentives, such as tax credits for relocated television production companies that move to and create jobs in Connecticut, ensure that economic growth is sustained over time.
“With the film credit, we want to make sure those are targeted to build an industry in Connecticut,” says Looney. “So we want to try to develop an industry here. We want companies that film on a year-round basis hiring Connecticut people who will be part of the business.”
DECD Commissioner Smith says the jobs legislation directly addresses concerns of Connecticut business leaders by incorporating elements such as financial incentives for small businesses, enhancing skills of the state’s workforce and streamlining the regulatory environment.
“I think the messages we got on the road are pretty clear,” says Smith. “The jobs bill, I think, actually hit those issues on the head and helps the state.”