New Governors' Agendas 2011: Dan Malloy, Connecticut
In January, new governors were inaugurated in 26 states. As the nation continues to deal with a slowly improving economy, these governors have their work cut out for them. Area Development's editor recently asked the new governors what businesses in their states could expect regarding resources, regulatory changes, and tax and financial incentives.
Malloy: This administration is focused on job creation, and to demonstrate the state's commitment to businesses, I am proposing several bold initiatives:
My First Five program will provide added incentives to encourage large business development projects by augmenting and combining existing incentive and tax credit programs for the first five companies that create 200 new jobs within two years, or invest $25 million and create 200 new jobs within five years.
Along with that, I plan to raise the cap on the total credits that can be granted under the Urban and Industrial Sites Reinvestment Tax Credit Program from $500 million to $750 million and raise the annual cap on the Job Creation Tax Credit Program from $11 million to $20 million, a move that could create 20,000 new jobs if these credits are fully realized. I also plan to authorize $80 million in additional bonding for the Economic Development and Manufacturing Assistance program, which is the state's largest economic development lending fund.
By consolidating tourism and economic development, we will create a unified approach that leverages cultural and tourism assets in an effort to attract, retain, and grow jobs. With this, I will commit $15 million per year for two years in marketing to jumpstart a critical component of economic development.
Which particular industry sectors would be well served by your state's resources?
Malloy: Connecticut, always on the cutting edge of technology and innovation, will continue its focus on aerospace and defense, insurance and financial services, bioscience, medical devices, alternative energy, digital media, and precision manufacturing.
Aerospace and defense is a well established and growing sector. Industry, government, and academia are working together to promote the more than 1,000 companies in the industry supply chain that support companies like Electric Boat, General Electric, and United Technologies Corporation, which include Pratt & Whitney, Sikorsky, and Hamilton Sundstrand. This high-tech manufacturing requires a highly skilled and educated work force that only Connecticut can provide.
With companies like RBS, UBS, and many others, Connecticut's financial services industry is well positioned to rebound from the downturn. Still the insurance capital, Hartford is home to Aetna's headquarters and is a center of operations for Amsterdam-based ING Group. And Fairfield County is the epicenter of the hedge fund industry.
The state's bioscience sector has tremendous opportunity for expansion. International company Boehringer Ingelheim continues to grow, while Pfizer, U.S. Surgical, and Bristol-Meyers Squibb all maintain a significant presence in the state. This sector ties into some of the world's finest universities that call our state home, such as Yale and the University of Connecticut. Through technology transfer, the research and innovation derived from these institutions works as the catalyst behind consistently emerging small, startup companies, providing a pipeline of innovation for larger companies.
Alternative energy - and fuel cells in particular - is an emerging sector of our economy that we will put concerted effort into expanding. The state is home to almost 20 percent of the world's work force in fuel cell technology. Fuel cells designed and manufactured in Connecticut were on the first Apollo mission and today still power NASA's rockets and satellites, in addition to other commercial buildings and vehicles. Connecticut will be a national model for energy technology and conservation, and use of biofuels and renewable forms of energy to reduce business costs.
How will the state continue to serve its existing industry?
Malloy: The state's business community must know that Connecticut is open for business, and to demonstrate how committed my administration is to this maxim, we will pursue policies that encourage research and development, job creation, and business expansions. Moreover, we must know what businesses need.
I will ensure the state's business development team - comprised of a public/private partnership of state, quasi-public agencies, private sector, and the utilities - continues working with the business community to address short- and long-term business needs, particularly on matters that relate to competitiveness in the global marketplace. Part of this effort is an aggressive outreach program aimed at developing relationships with businesses and increasing awareness of business assistance programs. Connecticut will be known for its public/private partnerships, business-friendly stance, and innovations. Businesses will know that the state is there to help, from inception to project completion.
We have many tools such as incentive-driven loans, tax incentives, and technical advice. There are credits for research and development, angel investments, job creation, and film production and digital media, to name just a few. The recently updated Insurance Reinvestment Tax Credit Program put Connecticut on the map in terms of providing equity and capital for investment in technology-based growth companies, which, in turn, helps to leverage private investment. Revolving loan funds are also available at the local and regional level throughout the state.
Connecticut companies in all industries, with the state's continued support, will continue to be on the leading edge of developing new technologies and products.
In today's economic environment, what is your administration's policy on financial incentives to business?
Malloy: Certainly, incentives that give Connecticut companies the competitive advantage they need in the global marketplace are a part of my overall economic development strategy. We want the state's small businesses and the startups to have the tools they need to grow and develop. The state's targeted performance-based incentives are flexible enough that we can assist many different businesses across the wide spectrum of industries in Connecticut. For example, we have tax credit programs that encourage job creation, worker training, and the rehiring of displaced workers. One of our most powerful tools, the Urban and Industrial Sites Reinvestment Tax Credit Program, fosters development in urban centers and the reuse of brownfields. But whatever the program, we will continually evaluate all incentive programs and strengthen them when necessary to ensure they are meeting the demands of business, keeping Connecticut competitive in business recruitment and expansion, and giving residents the best possible return on investment.
Do you plan to undertake any specific educational initiatives to encourage businesses to locate and remain in your state?
Malloy: Human capital will be one important determinant of Connecticut's position in the increasingly competitive global economy. States with skilled and educated work forces will be successful. Our state's education system, from the bottom up, must produce highly skilled, technologically savvy workers. And for Connecticut's economy to thrive and expand, the state's education system must be strategically linked with economic development. Connecticut's labor force must be work-ready, with the requisite technological, communications, and analytic skills needed for high-skill, high-tech jobs.
Just announced last month, I have formalized a proposal that would make the state's higher education system more efficient and effective. The plan is to consolidate the state's community colleges, the Connecticut State University system and Charter Oak State College to flatten administration and direct more money to students and classroom instruction.
Are there any changes to your state's tax and/or regulatory code that you are proposing in order to encourage business development?
Malloy: My first priority is getting Connecticut's fiscal house in order, which will have a positive impact on the state's long-term competitiveness. My tax package reflects the imperative of balancing the state's fiscal operations without gimmicks or use of one-time resources, and certainly without increasing our indebtedness just to fund ongoing operations.
In order to encourage job creation in Connecticut, I am raising the cap on the total credits that can be granted under the Urban and Industrial Sites Reinvestment Tax Credit and Job Creation Tax Credit programs. If fully realized, this could result in 20,000 new jobs in the state.
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