The Lamont administration wants to change how the state attracts private companies to create jobs and invest in Connecticut.
As part of his budget proposal, Gov. Ned Lamont unveiled a program giving state tax rebates to companies in specific industries that add at least 25 full-time employees for a minimum of two years.
New employees hired under the JobsCT Tax Rebate Program must earn at least $37,500 annually, or 85% of the median household income in the municipality where the jobs are located.
Employers who meet these criteria will qualify for a refundable rebate equal to 25% of the withholding taxes from the new full-time employee over the next five to seven years that they can reinvest in their business.
Companies that locate or expand in distressed municipalities or opportunity zones can qualify for a 50% rebate, Lamont said.
CBIA president and CEO Chris DiPentima said the jobs incentive proposal aligns with the organization's Rebuilding Connecticut pledge.
“It’s critical that we create policies that nurture our businesses as we rebuild Connecticut stronger than before," he said. “The governor's proposed job creation tax rebate program does just that.
“There are many well paying career opportunities among our great Connecticut businesses and this program encourages the growth of those careers with extra focus on individuals from disadvantaged backgrounds and businesses in opportunity zones.”
Rebates range from $1,000 to $5,000 per year, except for 2021 when the minimum rebate will be $2,000 per employee.
The state will cap the program at $40 million per year, and any rehiring for jobs lost due to the COVID-19 pandemic will not count toward the 25 employees.
Lamont said his proposed program is better for taxpayers than previous incentive programs, which cost roughly $16,000 per new employee.
“We anticipate the cost per new job in the focus areas to be between $5,000 and $10,000, depending on the wage,” Lamont said in a statement.
State auditors in a 2020 report criticized economic development incentivize programs under the previous administration.
“For too long, Connecticut has promoted economic development primarily by providing ad-hoc incentives for large businesses to locate here,” Lamont said.
“That approach invited companies to play states off one another, produce limited durable investment in the state, did little to support medium-sized businesses that cannot attract the same level of attention, and did nothing to help home-grown businesses and entrepreneurs.”
“We’ve heard from many in the business community that recruitment and job creation programs should ensure job growth before any state monies are paid out so this earn-as-you-grow incentive is the right direction for ensuring maximum return on state invested dollars,” he said.
Lamont’s proposed program targets industry sectors already aligned with the state’s overall economic development strategy.
These include aerospace and defense, clean energy and renewables, entertainment and digital media, financial services, information technology, life sciences, manufacturing, and research and development.
Lamont also said the state borrowed around $200 million a year to fund the old incentive program. The new proposed program requires no annual bonding.