Hartford Business Journal

6 Hartford Business Journal • May 4, 2015 www.HartfordBusiness.com TOP STORY Businesses fret Dem's tax hike proposals Business lobbyists condemned a budget proposal passed last week by the Finance, Revenue & Bonding Committee that would increase taxes and elimi- nate or limit certain exemptions for businesses and wealthy residents. The legislative package would raise nearly $2 billion in new tax revenues over the next two fiscal years, according to the Office of Fiscal Analysis. That amount would be offset by a lowering of the state's sales tax, as well as other measures. One of the largest revenue generators involves eliminating sales tax exemptions for CPAs, engineers, architects, and other service-based busi- nesses. That would add $485.5 million in state revenue in fiscal 2016 and $617.3 million in fiscal 2017, according to OFA. A 2 percent supplemental tax on capital gains for high earners would generate $345.6 million over two years. The committee concurred with Gov. Dannel P. Malloy's proposal to limit companies' use of loss carryforwards to 50 percent of net income, which would raise $246.4 million over the next two years. The finance committee also proposed raising the top marginal income tax rate to 6.99 percent, up from 6.7 percent, to generate $102.4 million and $94.7 million in revenue, respectively, in fiscals 2016 and 2017. The finance committee would also reduce the biennial business entity fee by half, resulting in a total loss of $20 million, and reduce the 6.35 percent sales tax in two phases over the next two years, ending at 5.35 percent. The sales tax proposal would cost the state more than $955 million over the next two years. The Connecticut Business & Industry Association blasted the proposal, saying it would negatively impact job growth and investment in the state. GOVERNMENT & POLITICS Jepsen reaches $100M settlement in Rowland layoffs case The state's top lawyer reached a $100 million settlement in a lawsuit filed by employee unions 12 years ago after then Gov. John Rowland laid off 2,800 workers. The settlement with the State Employees Bargaining Agent Commission (SE- BAC), which must be approved by a judge and lawmakers, would save the state money because the risk incurred by not settling would be too great, Attorney General George Jepsen said last week. "If this case were not settled, the worst-case scenario involving an award of damages at the trial court would result in exposure to the state of as high as $300 million or more," Jepsen said. "Through this settlement, we believe we have re- duced the state's exposure by more than 40 percent and have structured payment of economic damages — by far the largest portion of the state's exposure — over a minimum of two budget cycles." Many of the laid-off workers — who argued that Rowland's layoffs were politically motivated — returned to their jobs. They will accept their settlement payments in vacation pay or personal leave, Jepsen said. After losing a U.S. Court of Appeals ruling in May 2013, Jepsen asked the U.S. Supreme Court to take the case, but eventually withdrew that request to enter into settlement discussions with SEBAC. ECONOMIC DEVELOPMENT N. Hartford area gets 'promise zone' status Federal officials have designated a section of North Hartford as an economic promise zone, which city government hopes will lead to the redevelopment of the Swift Factory, officials announced last week. A five-person team of AmeriCorps Vista members will work to get federal assistance for the 3.1-square-mile area, which will receive preferential con- sideration for funds. The relatively new designation includes the Clay Arsenal, Northeast and Upper Albany neighborhoods. Down the road, it could also mean tax incentives, if Congress approves a proposal from President Obama. Hartford officials hope to convert the vacant Swift Factory into a hub for busi- nesses and healthcare services. The U.S. Department of Housing and Urban Development expects to name 20 such zones around the country this year. Hartford was competing with nearly 100 other urban areas in the second round of applications. To qualify, areas must have a poverty rate of more than 33 percent. North Hartford's promise zone, which has 23,930 residents, is well above that, at more than 49 percent. REAL ESTATE Wheeler Clinic buys Gothic Park The Wheeler Clinic has stepped forward as the recent buyer of Gothic Park, one of Hartford's oldest midtown office complexes in the shadow of St. Francis Hospital and Medical Center. As previously reported, the winning online-auction bid for the twin-building complex on six acres at 43 & 49 Woodland St. was submitted a few weeks ago. As a tenant, Wheeler says it currently operates a broad range of programs at 43 Woodland St., serving nearly 2,000 children and families through outpatient and community-based services. According to building details listed at Auction.com, the smaller, three-story 43 Woodland St. was built in 1867. The newer, five-story 49 Woodland opened in 1986. Together, they contain 54,476 square feet divided among 21 office suites. The buildings are about two-thirds leased, the broker said. The building also houses other health care practices and a law firm, who are expected to stay, Wheeler said. INSURANCE CT insurance lobby on board with 'Cadillac tax' repeal An association representing more than 400 independent Connecticut insur- ance agencies says it supports a proposal by U.S. Rep. Joe Courtney and several fellow Democrats to repeal a 40 percent tax on higher-cost health plans. Obamacare's so-called "Cadillac tax" is set to take effect in 2018. Courtney and others argue that it will have disproportionate effect on areas with more expensive health premiums, such as Connecticut. The tax could also hit many union employee health plans. The tax would be imposed on plans with annual benefits above $10,200 for individuals and $27,500 for family plans. "The excise or 'Cadillac' tax will potentially cause an increase in health insur- ance costs for both employers and employees while also causing many em- ployees to see a significant decrease in the quality of their health insurance coverage as employers are forced to reduce benefits to avoid this tax increase," IIAC President Warren C. Ruppar said in a statement. BANKING & FINANCE CHEFA's Weldon to succeed Asher The Connecticut Health and Educational Facilities Authority (CHEFA) said it has named Jeanette W. Weldon as its next executive director. Weldon succeeds Jeffrey A. Asher, who will retire in July after 26 years with CHEFA — the past six as executive director. Weldon has been with the quasi-public agency for the past six years. She has prior experience as a financial advisor, investment banker and rating agency analyst. CHEFA provides access to grants and financing to nonprofits and has more than $8 billion in outstanding bonds. MANUFACTURING Medical device firm to open Enfield facility Massachusetts manufacturer Cirtec Medical Systems said it plans to open an En- field facility where it will double its capacity for making implantable medical devices. The 35,000-square-foot Print Shop Road location is three miles from the company's East Longmeadow headquarters. It will have a 5,000-square-foot clean room and 6,000 square feet of assembly space, as well as a machine shop and engineering and metallurgical labs. Cirtec said it helps medical device OEMs develop and launch products efficiently. The company said it will start moving into the new facility in the next few months and expects to hire more workers as production volume grows. BY THE NUMBERS $470M The spending increase proposed last week by the legislature's Appropriation Committee on top of Gov. Dannel P. Malloy's own budget. 39.6 million The record-high number of passenger trips on the New Haven commuter line last year, which was up 1.6 percent from 2013. 3,000% The increase in the cost to the state of compound medications from three years ago, according to the Hartford Courant. $1.1B The amount of money the state would raise in fiscals 2016 and 2017 under a Democratic proposal to eliminate sales tax exemptions for CPAs, engineers, architects, and other service- based businesses. TOP 5 MOST READ on HartfordBusiness.com ■ N. Hartford gets 'promise zone' status ■ CT to debut mattress recycling ■ Hartford riverfront is CT's cash, visitor cow ■ CNG fined $50K over gas leaks ■ Uber's $8M CT economy STAY CONNECTED For breaking and daily Greater Hartford business news go to www.HartfordBusiness.com. 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