To encourage job growth, Democratic and business leaders suggested the state support start-up, small and medium sized businesses while selling Connecticut to prospective businesses outside the state at a Friday round table discussion.
The legislative majority leaders’ round table served as a sounding board for ideas as the General Assembly prepares for a special legislative session focused on job growth.
While the “First Five” program, a product of the last session, has focused on offering incentives to large companies promising to create at least 200 jobs, the idea that the state needs to do more to shore up its smaller companies kept coming up at the meeting.
David Pepin, founder of Next Generation Ventures LLC., said the state should find ways to encourage venture capital firms to contribute to all levels of start-up businesses.
Pepin said there have been instances, referencing one small start-up in New Haven, where firms outside the state have offered to invest in these businesses with the condition they move. A California-based venture capital firm offered the company a total of $8 million to move to that state.
He said similar start-up businesses need more funding from state’s venture capital firms in order to stay in state, but many of the firms are not looking to make small investments. Rather, prominent firms seem to prefer making large investments to international businesses, he said.
Elliot Ginsberg, director of the Connecticut Center for Advanced Technology, said the state should look to help medium sized businesses as well.
He said too much of the focus has been on larger businesses, especially through the “First Five” legislation, but there needs to be support and resources for the smaller businesses already here so they can become more productive.
“Part of the focus may just be how we address the needs of the 25-50 person firm over X amount of time,” said Ginsberg. “They stand to grow, the numbers won’t be significant in terms of absolute but it will percentage wise.”
He noted despite recent declines, the manufacturing industry in the state, encompassing many 25-50 employee businesses, could help in economic recovery in the future if they receive resources and other support.
The group agreed the state must make efforts to help the businesses within the state grow, but they suggested there is also a need to bring in outside businesses.
While other states aggressively seek to bring out-of-state business into their states, Bill Cibes, former Office of Policy and Management secretary, said that Connecticut should not aggressively attempt to “poach” business.
Gov. Dannel P. Malloy said Tuesday that his administration is in talks with some out-of-state manufacturers, whom he hopes to draw to Connecticut with through the “First Five” initiative. But moving a business into the state is a process that takes more time, he said.
Cibes said the state should opt instead for better marketing. He said it should focus on positive aspects, including the low tax burden businesses face, when attempting to attract outside business.
Lyle Wray, executive director of the Capitol Region Council of Governments, said competing states have proven they’re willing to do much more to bring in outside business.
While the discussion focused on key issues in promoting business and job growth, several factors that hinder job growth including high energy, transportation and healthcare costs were ignored.
A recent report by the Council on State Taxation found that Connecticut had the lowest business tax burden in the country last year.
Summarizing the report, Wade Gibson, a senior fellow at the nonprofit CT Voices for Children, said the high cost of energy, healthcare and transportation factor more heavily into the operating cost of the average business than taxes. He called on the governor and the legislature to take steps to address those issues during the special session.
None of those issues were discussed at Friday’s meeting.
Afterwards House Majority Leader Brendan Sharkey, D-Hamden, said those issues will play a role in the special session at “one level or another.”
“Clearly, those are issues that go into the question of how we grow our state and grow jobs in our state,” said Sharkey. “It’s really a question of seeing what roles those issues play in the overall issue of creating a more hospitable environment for growing jobs.”
