State Officials Drafting Malloy’s ‘First Five’ Economic Development Plan

HARTFORD (AP) — Connecticut’s new economic development chief said Monday she and other state officials are working up the details of Governor Dannel P. Malloy’s signature economic development program even while the legislature considers its merits before voting on the proposal.

The plan, now before the legislature, would combine several state tax credits to encourage five businesses to create a total of at least 1,000 jobs within two years.

Commissioner Catherine Smith said in an interview with The Associated Press April 18 that she and others in the administration are developing standards for companies seeking to participate in Malloy’s “First Five” program. She said the state has received numerous inquiries from companies and state officials are drawing up standards to select the five.

“We’re working on the criteria that we would apply to those companies, as well, so that we have a fair and equitable system for determining who the first five actually are,” she said.

Her confidence in the legislation’s eventual success may not be misplaced. Senator Gary LeBeau, the Senate chairman of the Commerce Committee, said the bill could win legislative approval as early as next week. It was approved 43-9 this month by the Finance, Revenue and Bonding Committee, which Sen LeBeau, an East Hartford Democrat, said is a strong signal of the measure’s broad support. He called it a “significant departure” from previous economic development plans.

“It gives the governor a tremendous amount of flexibility to lasso some corporations that could be major job providers for the state,” Sen LeBeau said.

The measure calls for the economic development commissioner to draft eligibility standards. A business development project would be eligible for financial assistance if it creates at least 200 jobs in two years from the time the application is approved or invest at least $25 million and create a minimum of 200 jobs in five years from the date its application is approved. Tax credits may not exceed $750 million.

In January, the Department of Economic and Community Development issued a report that said several state tax credits and property tax abatements have a negative or limited impact and should be abolished. It cited a business tax credit in enterprise zones that the state agency said has had no effect on economic development and another credit for taxes paid by manufacturers in enterprise zones criticized for creating too few jobs.

Commissioner Smith, who has been commissioner since April 1, said she has not read the report, but needs to look at all the tax credits “and make sure we understand which of these programs are most effective.”

“I want to go back and look at each and every one of our programs and say what were the expectations around job creation and revenue creation for the state and then how did we actually do,” she said. “Are we hitting the sweet spots of what’s really needed inside of Connecticut?”

She said the impact of the recession and weak recovery make it difficult to measure economic benefits of state tax credits.

Commissioner Smith, who was a chief executive of ING’s retirement services business, said some of the “sweet spots” are the financial services and insurance sector.

“Obviously, I come out of that arena so I have a bit of an idea of what makes it tick for them,” she said.