The Commerce Committee this week heard from the state's economic development chief about two new business recruitment and development programs.
Department of Economic and Community Development commissioner David Lehman shared the parameters of an earn-as-you-grow incentive program for businesses that expand in or move to Connecticut.
The state previously provided funds to companies that promised to create or maintain a certain number of jobs.
These jobs must be created in designated sectors—aerospace, clean energy, digital media, and financial services, among others.
Businesses that create at least 25 jobs over a two-year period, with salaries at least 85% of the median household income for the municipality where the job is located, will receive a 25% tax credit.
Businesses that also choose to locate in a distressed municipality or federal-designated Opportunity Zone will receive a 50% tax credit.
"This program represents a new direction for the state's economic development strategy–without picking winners and losers and maintaining transparency with a focus on key in-demand industries and communities most in need of economic resurgence," CBIA's Shannon King told the Commerce Committee Feb. 27.
"We understand the need to reduce the bonded indebtedness of the state, but we have to be careful to not restrict our ability to grow our economy.
"The lack of sufficient growth in Connecticut has been one of the main contributors to our budget problems over the last decade."
Small Business Express
Lehman and deputy commissioner Glendowlyn Thames also shared proposed changes to the state's Small Business Express program, created in 2011 to alleviate post-recession credit availability issues.
The administration now believes it's time to partner with—not compete against—banks to provide loans and capital to small businesses, startups, and entrepreneurs.
HB 5007 allows DECD to partner with Community Economic Financial Institutions, along with local and regional banks, to provide revolving loan fund programs to small businesses to purchase new machinery, expand their facility, or add working capital for hiring or product and service improvements and investments.
The bill also prioritizes loans for women, minority, veteran, and disabled-owned businesses, who can be disadvantaged in the traditional lending market.
Private Sector Partnership
"The Small Business Express Program has helped many small businesses establish and grow their footprint in Connecticut," King said.
"In this new economic era, partnering with the private sector and community banks increases lending capacity and ensures capital for higher risk businesses."
Manufacturers are concerned the new structure may not adequately serve the needs of smaller companies who relied on the Manufacturing Assistance Act, Small Business Express 1.0, and the Manufacturing Innovation Fund.
Committee members also voiced concerns over the competitiveness and effectiveness of these new programs.
King encouraged legislators and the DECD to "do their due diligence in ensuring that new and expanded economic development programs are competitive among those in other states and are monitored closely for efficiency and effectiveness."