Hartford Business Journal

www.HartfordBusiness.com • December 17, 2018 • Hartford Business Journal 15 ous about competing for business." The administration's economic-devel- opment strategy was multifaceted and included growing key industry clusters that drive the state's economy, such as health care, bioscience, financial ser- vices and advanced manufacturing, and investing in workforce development. Malloy also focused on investing in cities, particularly Hartford and Stamford, and transportation, unveil- ing a 30-year, $100 billion plan in 2015 to overhaul the state's infrastructure, though he wasn't able to fund it long term. The Hartford Line railway and CTfastrak busway also debuted under Malloy's watch. Key incentive programs launched by his administration in 2011 included the now well-known — and some- times controversial — First Five Plus program, which has pledged more than $500 million in loans, grants and tax credits to nearly 20 companies — in- cluding Cigna, Charter and Bridgewa- ter Associates — that together have promised to retain and create approxi- mately 30,000 jobs in Connecticut. Meanwhile, the Small Business Express program aimed to provide capital to smaller firms at a time when bank lending was still tight. It has shelled out approximately $295 million in low-interest, potentially forgivable loans, according to DECD's database. Early in Malloy's tenure, tens of millions of more dollars went to com- munity colleges to establish advanced manufacturing training centers and to manufacturers, through the Smith- forged Manufacturing Innovation Fund, for training workers, taking on appren- tices and prototyping new products. Bioscience and aerospace Later in his first year, Malloy an- nounced the nearly $1 billion Bioscience Connecticut initiative, which helped fund buildout of Jackson Laboratory's genom- ics facility (which now employs 385 sci- entists and others) and construction of a new patient tower at state-owned John Dempsey Hospital — both located on the UConn Health campus in Farmington. Despite that investment, the state's bioscience industry has suffered from setbacks during the Malloy years, including the closing of Bristol-Myers Squibb's Wallingford campus and Alexion's decision to move its head- quarters to Boston, while still main- taining a large New Haven workforce. Overall, the state's bioscience invest- ments will take more time to develop, Smith said, as research and develop- ment on new drugs takes decades. "That Jackson Labs deal we did specifically to try to put that stamp of approval on our ecosystem," she said. UConn, a major economic driver, has also continued its growth during the Malloy years. His "Next Genera- tion Connecticut" initiative included a long-term, billion-dollar investment to boost science, technology, engineering and math education and facilities. The state's flagship university also debuted a new tech park and opened a satellite campus in downtown Hartford. In his second term, Malloy forged several deals with the state's largest aerospace manufacturers, offering Farmington's United Technologies Corp., Stratford's Sikorsky Aircraft and Electric Boat in Groton nearly $700 million, mainly through tax credits and exemptions, to keep their respec- tive headquarters in the state for the foreseeable future, and grow their workforces, capital investment and spending with local suppliers. "When I became governor, everyone thought Sikorsky was leaving, UTC was leaving and Electric Boat was leaving," Malloy said. "Now we have agreements for 20- to 30-plus years. I think that's a good thing." Incentive controversy While Malloy had plenty of political support, even from Republicans, for his major defense industry incentive deals, his economic programs haven't always escaped criticism. For example, labor unions derided Malloy for awarding $57 million in First Five Plus incentives to two major hedge funds in 2016. Even some businesses were wary of First Five, said Joe Brennan, CEO of the Connecticut Business & Industry Association (CBIA). "It was controversial," Brennan said. "I'd get calls from our members asking about Connecticut helping to fund their competitor." However, Brennan said he under- stands Malloy's instinct to be aggres- sive, given the reality of fierce compe- Fortifying CT's economic- development blueprint By Gregory Seay and Matt Pilon gseay@hartfordbusiness.com, mpilon@hartfordbusiness.com S everal Connecticut economists, a lawmaker and the current Department of Economic and Community Development commis- sioner offered up suggestions to the incoming governor for leveraging state assets and resources to attract and retain jobs. Here's a look at some of their ideas: Fiscal constraints, best practices Economist Donald Klepper-Smith, of DataCore Partners in New Haven, said the state must get its fiscal house in order, which includes requiring state wages and benefits to be determined by the legislative process only, not backdoor poli- tics, and adopt- ing a hard and fast spending cap tied to the Consumer Price Index for All Urban Consumers. He also said the state must do a full-scale review of practices and policies in competing states, assess- ing what constitutes "best practices" in economic development. He also said the Lamont administration should: • Monitor the business climate to see what's working and what is not; • Establish a Governor's Council of Economic Advisors like Gov. M. Jodi Rell (he formerly chaired that panel) to help flesh out ideas and issues to help promote good fiscal and economic-development policies. Unleash unused tax credits Fred Carstensen, UConn finance professor and director of the Con- necticut Center for Economic Analysis, said state lawmakers should enact legislation allowing eligible Connecticut companies, those sitting collectively on tens of millions of dollars worth of unused, or so-called "stranded'' business tax credits, to "sell'' those credits to employers that commit to capi- tal investments in Connecticut. The state used a similar strategy to free up millions in tax credits that Pratt & Whit- ney and par- ent United Technologies Corp. used to erect its new engineering office building on its East Hartford campus. Assessing the business climate Senate Republican Leader Len Fa- sano said DECD should be required to disclose additional information about their economic incentives. Specifically, when a company an- nounces it is leaving Connecticut (like General Electric or Bristol Myers Squibb) lawmakers and the public should know what deal the state put on the table in an attempt to keep them. "So we know we're going down the right track, or not going down the right track," he said. If a company rejects a good offer, like GE did when it went to Boston, then it becomes a ques- tion of: "How do we change the climate in Con- necticut such that an offer you give is going to stick?" He also wants to see the legisla- ture seed the zeroed-out Small Busi- ness Express program once more, but have area banks administer the state loans instead. In addition, he said more inner-city small business- es deserve the loans. Cultivate talent Current DECD Commissioner Catherine Smith agrees the state must get its fiscal house in order but it also must remain laser-focused on workforce development. "I'm a believer right now that the momentum of job-creation is on our side," she said. "But now we've got to make sure we've got the talent com- ing out of our universities. That's why I'm concerned about having more people come in, stay in the state from our university systems." Donald Klepper- Smith, Economist, DataCore Partners Fred Carstensen, Finance Professor, UConn and Director, Connecticut Center for Economic Analysis Len Fasano, Senate Republican Leader 2011 2012 2013 2014 2015 2016 2017 2018 $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 Manufacturing Assistance Act* Small Business Express DECD's direct financial assistance to companies *Includes both MAA-only and MAA-First Five deals Source: Dept. of Economic and Community Development Continued on next page >>

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