Hartford Business Journal

17 HARTFORDBUSINESS.COM | JULY 12, 2021 HE ALTH CARE WORKS BETTER WHEN IT ALL FITS TOGETHER Anthem Blue Cross and Blue Shield is the trade name of Anthem Health Plans, Inc. Independent licensee of the Blue Cross and Blue Shield Association. ®ANTHEM is a registered trademark of Anthem Insurance Companies, Inc. 127180CTEENABS 09/20 HEALTH CARE REIMAGINED. Stronger. Better. Connected. At Anthem, we're taking integration to a whole new level. Where everything's connected — products, technology, tools, information and people, too! Everything works together for better care, lower costs and peace of mind. Learn more about how Anthem is moving the health care delivery system forward VISIT ANTHEM.COM OR CONTACT YOUR BROKER! DENTAL HEALTH & WELLNESS MEDICAL BEHAVIORAL RX VISION DISABILITY LIFE BENEFITS EDUCATION DIGITAL ENGAGEMENT PLATFORM WELLNESS PLATFORM FINANCIAL MANAGEMENT proposal. Simmons, whose committee oversees DECD's incentives programs, said she prefers the earn- as-you-go model. "I think it's a much more sustainable and strategic way to be giving out incentives," Simmons said. "Because for many years, our model was the First Five program, where we would give out big deals and they wouldn't always create the jobs that were promised and they wouldn't always stay [long term in Connecticut]." Changing market States that provide less lucrative incentives may lose out on a corporate relocation deal if a competing state is willing to be more generous. Critics have called it a race to the bottom, and one that mostly benefits corporations, but even politicians who concur with that sentiment are unlikely to want to tie their hands on potential relocation and expansion deals that might arise down the road. Simmons said she has discussed that fear of losing out with colleagues in the legislature. "There is definitely a little bit of fear around giving up that incentive tool," she said. However, she's convinced Connecticut's government already has the capacity to respond if a situation arises that merits opening up the wallet, such as Malloy's legislature- approved deal with Pratt & Whitney that allowed the jet-engine maker to exchange $400 million in stranded tax credits if it committed to building a new headquarters in East Hartford and staying there for at least 15 more years. "We would still be able to have that flexibility in certain situations," Simmons said. If companies are responding tepidly to Connecticut seeking to lower its incentives spending, it wasn't apparent in June, when Lamont announced that three out-of- state companies were establishing operations here. Investment fintech iCapital, manufacturer ITT, and digital real estate fintech Tomo plan to bring 357 jobs to Connecticut. In exchange, DECD has promised them "grants in arrears" worth at least several million dollars once they achieve their targets. "No company has rejected our incentives," Lehman said. "I think maybe the market has changed too. We are putting forth a competitive model consistent with other states." Besides those three newcomers, a fourth, tobacco giant Philip Morris International, announced it would move its headquarters and 200 jobs to Fairfield County. However, Philip Morris wasn't offered incentives reportedly due to the optics of giving taxpayer dollars to a cigarette company, albeit one that's in the midst of transitioning its business to non- smoke alternatives like vaping. Helping minority businesses A key goal of the Lamont administration's business incentives strategy, according to Lehman, is to attract or create the greatest number of jobs for the least amount of taxpayer money. Providing EXP loan guarantees to private lenders allows the state to leverage perhaps 20 times the value of its money in loans, rather than issuing general obligation bonds in order to lend out the money directly, Lehman said. He estimates that EXP 2.0 — the program will likely be rebranded when it launches later this year — will cost the state $27 million during its first four years. That's at least several million dollars less than the average amount the state spent every year on the original program since it launched in 2012. Compared to the former First Five Program, JobsCT — capped at $40 million per year — would virtually eliminate state borrowing entirely, since the government would simply be rebating some of its net income tax gains to employers, rather than providing loans and up-front grants. The cost per job would be an estimated $5,000 to $10,000, compared to an average of nearly $19,000 per job in First Five, according to Lehman. EXP had already been winding down over the past few years, with total assistance slowing to a relative trickle of just $12 million during Lamont's first two years in office, well below what it was over much of the last decade, including its 2013 peak of more than $60 million in loans and grants. Also important, the legislature increased the maximum loan size allowed per borrower within EXP's carve-out for minority-owned businesses, hiking it five-fold, from $100,000 to $500,000. The legislation also allows more minority business lenders, such as community development financial institutions, into the program by removing a previous cap of two such entities. Caroline Simmons

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