The state Senate pared down a request Wednesday to increase the funds state economic development officials would be able to dole out to Connecticut businesses without legislative approval.
The bill debated by the state Senate raised questions about how much power the executive branch should have in offering taxpayer dollars as incentives to businesses.
Sen. Gary LeBeau, D-East Hartford, explained that instead of the $40 million state officials wanted to give out without legislative approval, the request was reduced to $26 million for biotechnology projects and $15 million for other types of businesses. Urban industrial tax credits were capped at $26.75 million. The administration had initially sought to increase the credits to $40 million before legislative approval.
“We reduced those requests. We thought they were a little bit exorbitant,” LeBeau said of the administration’s plan.
LeBeau said they took a historical look at the tax credits and tried to keep them in line with the rate of inflation when setting the caps.
Sen. Scott Frantz, R-Greenwich, felt the bill struck the right balance and congratulated LeBeau in keeping the programs in line with the rate of inflation.
But not everyone in his party agreed.
Sen. Minority Leader John McKinney, R-Fairfield, said there are some deals that are so expensive that the legislature needs to have approval.
“Why do we need to have approval? We need to have approval because this isn’t our money,” McKinney said. “This money belongs to the taxpayers.”
He said the legislation, which passed 24-12 with two Republicans joining the 22 Democrats to vote in favor of the measure, gives too much power to Commissioner Catherine Smith of the Department of Economic and Community Development.
“Here we are saying that we are going to increase how much taxpayer money one individual can give away without the elected representatives of the people of the state of Connecticut saying ‘yes’ or ‘no,’” McKinney said.
He said that sadly the legislature already gave Gov. Dannel P. Malloy’s administration the power to say there are no caps when it comes to the “First 15” program.
That program allows the state to give an enormous amount of money to 15 companies that each agree to create more than 200 jobs over a specified period of time.
McKinney complained about the Malloy administration’s decision to give more than $100 million to one of the world’s largest hedge funds to move from Westport to Stamford. He said Westport — one of the towns he represents — will lose its third largest property taxpayer when Bridgewater moves about 12 miles down the road to Stamford.
“And by the way, the gentleman who’s getting $100-plus million from the state of Connecticut, is worth $12.5 billion,” McKinney said.
He said that when a Republican held the governor’s office the Democrat-controlled legislature sought more oversight over these projects and tax credit programs. But now that it’s a Democratic governor, caution seems to be thrown to the wind.
“That is just rank hypocrisy,” McKinney said.
But it’s only partly partisan.
“This is about the legislature having oversight of spending the people’s money,” McKinney said. “We are the co-equal branch of government charged with spending the money — not the governor, with all due respect.”
None of the Democrats voted against the bill with McKinney, but some who fall on the more liberal side of the political spectrum agree with him.
The two people who testified against the bill during the public hearing were Lindsay Farrell of the Working Families Party and Matt O’Connor, a political director for one of the largest unions in the state.
Farrell called the financial assistance for businesses “corporate welfare” and O’Connor said “state economic development funds should be administered through a transparent, state-led process that holds recipients to a high, but fair, standard.”
The bill passed 24-12 and now heads to the House for approval.