The Senate gave final passage Thursday to a deal allowing United Technologies Corp. to use $400 million in unused tax credits to expand facilities and cut their tax liability.
The goal of the legislation is to keep the state’s largest aerospace company in Connecticut as well as the jobs that come with it. It commits Pratt & Whitney to stay in Connecticut for at least 15 years and keeps Sikorsky’s corporate headquarters in Stratford for at least five.
The bill cleared the Senate in a bipartisan, 34-2, vote. Opening the debate on the Senate floor, Energy and Technology Co-Chairman Sen. John Fonfara said the bill gives Connecticut and UTC employees hope.
“When you have a good thing, you do not assume that that good thing will always be here. It’s about recognizing Connecticut, this small state, lacking in many of the valued natural resources of other states, has an abundance of one thing — brain power,” he said.
The House approved the deal in an overwhelming vote last week. Gov. Dannel P. Malloy, who announced the agreement in February with UTC Chairman and CEO Louis Chenevert, released a statement praising the vote. Malloy said he plans to sell the bill.
“This agreement will bolster the state’s aerospace sector, encourage business growth and investment and, most importantly, foster the retention and creation of thousands of good-paying jobs with good benefits for Connecticut residents,” Malloy said.
Although the proposal had bipartisan support in the Senate, some Republicans questioned the policy.
Sen. Rob Kane, R-Watertown, said he was conflicted on the bill because the state was willing to throw resources at “the big guy,” while ignoring the complaints and requests of “the little guy.” Kane ultimately voted for it.
Sen. Joe Markley, a Southington Republican who voted against it, agreed. He likened extending special benefits to keep UTC in Connecticut to the state crafting deals to keep wealthy residents in the state as taxpayers rather than just changing state tax policy generally.
“If I came before you and said ‘I want to put a bill in to keep Donald Trump in Connecticut because Trump’s thinking of leaving Connecticut and I think we ought to give him a tax break to keep him here’ … I would be the object of derision because it’s a ridiculous idea on the face of it,” Markley said. “But somehow we feel entitled to do this with corporations.”
Senate President Donald Williams said the agreement would also impact the hundreds of smaller businesses that serve as suppliers to UTC’s companies.
“This is about those companies and those workers as well,” he said.
UTC is expected to invest up to $500 million in capital improvements over the next five years and the tax offsets from the state of Connecticut will be extended over 14 years. The total income tax credits for the various entities cannot exceed $400 million.
The deal also includes the creation of a customer training center at UTC Aerospace Systems in Windsor Locks and new labs at the United Technologies Research Center.
The centerpiece of the new agreement will be a 425,000-square-foot global headquarters and world-class engineering building for Pratt & Whitney in East Hartford. UTC also will build a new 12,000-square-foot global customer training center at its Aerospace Systems business in Windsor Locks. The deal also includes capital improvements at Sikorsky. Construction on the projects would begin this year and continue through 2018.
In order to receive the full compliment of tax credits, Pratt & Whitney, UTC Aerospace Systems, and United Technologies Research Center would need to, at the very least, retain the workforce they currently have in order to access 90 percent of the tax credits.
Pratt & Whitney, UTC Aerospace Systems and the United Technologies Research Center currently employ 14,100 workers and 4,900 engineers. In order to qualify for the full credit, it needs to employ 5,000 engineers and 14,400 workers.