Home Banking & Finance Two governors, two strategies for growth

Two governors, two strategies for growth

New York will soon proclaim to the world that the Empire State is “open for business,” with a new economic development program to show for it. Having spent the first half of 2011 hollering the same proclamation, Connecticut Gov. Dannel P. Malloy will attempt to deliver his own program this fall to a skeptical small-business community.

In New York, Gov. Andrew Cuomo unveiled last month an economic development program that will funnel $1 billion from different state agencies to 10 regional groups, which will be able to use a consolidated funding application to secure backing for various projects. Cuomo hopes that will mass funding that otherwise might be dribbled out from the silos of state agencies, potentially resulting in better outcomes.

As is the case with Malloy, Cuomo spent his first legislative session wangling to eliminate massive budget deficits and is now shifting his attention to jobs. In addition to the new development councils, Cuomo is promising what his office calls “historic” changes to the way businesses apply for development funds and a worldwide marketing program using the tagline “New York is open for business.”

Malloy spent his first six months in office promising the same thing for Connecticut, getting a frigid response from some companies that are now absorbing a raft of tax increases.

At a July forum in Litchfield County, Malloy suggested he would make small businesses the main focus of a promised legislative session this fall on jobs, without elaborating what he is planning.

The question becomes whether there is anything new under the sun that can make Connecticut the choice of businesses considering a Northeast expansion, even amid a regimen of tax increases.

For all the bellyaching of stagnant growth in Connecticut, the state has fared far better than many U.S. states since the boom years preceding the economic collapse. In an analysis of five-year job trends in the 50 states computed by American City Business Journals, Connecticut ranked 29th nationally with a 3.8 percent decline as of June. New York had a slight gain over the same 5-year period to rank 10th nationally, the best performance of Northeast states on the ACBJ study; New Jersey ranked 36th with a 5.1 percent decline.

As of deadline, two larger companies had signed up for Malloy’s “First Five” program under which five companies can take an enhanced package of incentives in exchange for creating at least 200 jobs in Connecticut. Following Cigna’s $50 million deal to designate Bloomfield as its corporate headquarters at the expense of Philadelphia, Vernon-based TicketNetwork Inc. also was approved for nearly $8 million in incentives, in exchange for pumping up its workforce from its current level of just under 300 people.

At the same time, multiple companies have announced contractions, including DRS Technologies Inc., which is laying off 160 workers in Bridgeport as it wraps up a big military contract. Unilever, one of Fairfield County’s largest employers, is letting go 185 workers in Middlesex County who make Vaseline and other products.

If Malloy is greasing the skids for larger companies like Cigna to overlook his tax increases here, Connecticut faces an uphill slog with its small businesses still reeling from the new levies, according to Peter Gioia, vice president and economist for the Connecticut Business and Industry Association (CBIA) in Hartford.

Malloy acknowledged as much.

“Although we had done some interesting things on job creation, including the establishment of First Five … we need to do more,” Malloy said, speaking at a Litchfield County gathering in mid-July. “What we really need to do more is to figure out ways to help smaller businesses in the state grow. Part of that’s around the issue of capital and putting pressure on banks to make sure they are making loans.”

Still, Connecticut businesses continue to complain of reduced loan availability as of the second quarter, in a survey published by CBIA. Despite a June analysis by the Fairfield County Business Journal that showed several local banks have sharply escalated their small-business lending in the past year, 55 percent of respondents to the CBIA survey said credit availability is fair at best, the highest percentage in more than a year, and about half said things would worsen through yearend. About a third of respondents had used financing in the preceding three months.

“It’s becoming increasingly apparent that the strength of economic recovery is now being adversely impacted by uncertainty at the federal and state level,” said Don Klepper-Smith, chief economist at DataCore Partners L.L.C. in New Haven, in a prepared statement. “And when uncertainty abounds, businesses are a bit more reluctant to hire, sales volumes tend to taper off and credit availability becomes that much more important.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here