Gov. Dannel P. Malloy stood outside the gleaming Alexion Pharmaceutical building Tuesday in downtown New Haven to tout his administration’s analysis of the First Five, a state economic development program that gives large sums of money to corporations to stay and create jobs in Connecticut.
The analysis includes job creation numbers reported to the agency by the companies and it says that over its first five years the program has helped create 3,759 net new jobs at 13 companies. That number is expected to increase to 5,863 over the next two years if the companies create all the jobs they’ve promised. Based on current projections the number is expected to be closer to 4,025 net new jobs.
Based on modeling done by the Department of Economic and Community Development, if the companies create the minimum number of jobs required — 200 employees per company — then they will generate $266.4 million in additional state income tax revenue over the next 10 years, or $26 million annually. However, those figures are based on a range of salaries given to the state by the companies. They are not based on actual income tax returns.
DECD Commissioner Catherine Smith said the “net present value” of the investment based on projections is $62.9 million so far.
Smith, who went to the Yale University School of Management, said she was taught that anything over zero is good investment and this is well above that. She said it’s not just the state throwing money at companies. She said the state is going to see an investment with a positive return.
Thus far, the modeling in the analysis assumes the state has allocated $256.6 million in direct assistance to these companies and another $125 million in tax credits.
Senate Minority Leader Len Fasano, R-North Haven, said what isn’t clear from the analysis is what types of jobs they are adding at these companies.
“Is it landscaping jobs? We don’t know,” Fasano said Tuesday.
Fasano said they’ve asked Smith for information on the program numerous times and have always been told the information is proprietary and not available for analysis.
House Minority Leader Themis Klarides, R-Derby, said that she generally applauds any program touted by the governor and Democratic majority in the legislature that doesn’t “decimate the state’s economy,” however, spending $381 million as of May 31 to merely retain 14,000 jobs and create only about 3,800 new jobs “is a sad commentary on how low our standards have fallen.”
“Connecticut deserves better than this,” Klarides added.
Republicans, many of whom voted to create the program back in 2011, have argued that if Connecticut was simply more business friendly then it wouldn’t have to essentially bribe companies to stay or locate here.
But Senate President Martin Looney, D-New Haven, said it’s how business is done.
“This is part of the price of doing business in the currently competitive economy where every state is looking to attract businesses away from every other state, and that is part of the problem,” Looney said Tuesday. “If you are going to be competitive in that market, to hold down the high-paying jobs, you often sometimes have to get into these deals that have a lot of upfront costs in order to get a benefit you’re hoping for down the road.”
Cigna, which was the first company to participate in the First Five program, has met its job creation goals, Smith said. According to the report, as of May 31 Cigna had created 525 net new jobs and has 4,408 full-time employees at its Bloomfield campus. Cigna’s package included $50 million in tax credits, $21 million in direct state assistance, a $15 million forgivable loan and a $6 million training grant.
Alexion Pharmaceuticals, which played host to Malloy and Smith for their press conference outside its College Street building, has created 510 jobs. That’s on top of the 368 jobs it had when it moved back to the Elm City.
Alexion’s deal with Connecticut includes $25 million in tax credits, $26 million in direct state assistance, a $20 million forgivable loan, and a $6 million grant.
Does the DECD try to account for the number of jobs that would have been created if the state had never offered an incentive package?
“Would the bulk of them have come into existence? The answer is ‘no’,” Malloy said. “Would some of them come into existence? I suppose so.”
Malloy said that in many cases they were in direct competition with other states to keep these companies in Connecticut.
“In many of those situations, not only was this a job add, it was a protection of the jobs currently here,” Malloy said.
According to the DECD analysis, the state has retained 13,349 jobs through the deals with the 13 companies.
The job creation numbers for seven of the 13 companies have been audited by the state at various times over the past three years. The most recent job audit was NBC Sports, which shows it hired 10 more employees between May and August. Audits for Alexion, Sustainable Building Systems, Deloitte, Bridgewater Associates, EDAC, and Synchrony Bank have not been completed yet, according to the DECD.
The 13 companies that have received assistance from the state include Cigna, NBC Sports, Alexion, ESPN; CareCentrix, Sustainable Building Systems, Deloitte, Bridgewater Associates, Charter Communications, Navigators, Pitney Bowes, EDAC, and Synchrony Bank, which is a spinoff of General Electric.