DECD offers economic plan - Westfair Communications

If Joan McDonald accomplishes nothing else as commissioner of economic development in Connecticut, she can at least say she authored the Mother of all Book Reports.

Of course, McDonald is shooting for far more after her Department of Economic and Community Development (DECD) released a 550-page strategic economic plan for the state. A combination of previous proposals and new ideas, the plan does not attempt to estimate how much it would cost to implement in total, nor the benefits it could produce for the state as measured by jobs, tax revenue or other yardsticks.

The document does lay out specific strategies, however, for Connecticut to improve in what DECD says are a trifecta of key policy arenas: nurturing worker talent and technology industries to cultivate competitiveness, while achieving “responsible” growth by encouraging or mandating mass transit, affordable housing, invigorating city cores, preserving green space and other strategies meant to arrest urban and suburban sprawl.

Those strategies include hitting up banks statewide and prominent Fairfield County companies such as General Electric Co., Pitney Bowes Inc. and Boehringer Ingelheim Pharmaceuticals Inc., along with Hartford-based United Technologies Corp. ”“ which last week spurned $100 million in state aid to keep a pair of Pratt & Whitney operations running in Connecticut.

Gov. M. Jodi Rell said she hoped the DECD document would encourage a spirit of “regionalism” in which cities and towns work together rather than compete with one another in economic development activities.

“The plan outlines the smart, targeted investments we need to make in housing, our transportation system and work force development,” Rell said, in a statement. “It spells out the commitments needed from government leaders in both the executive and legislative branches to work together to eliminate roadblocks to growth and build on a climate for success, and it makes clear that these steps must be taken with the principle of responsible growth foremost in mind ”“ preserving the charm and character of our state for our children and for generations to come.”

DECD held public meetings 10 cities and towns in late 2007 and early 2008 to gather input from residents, business leaders and lawmakers. DECD is planning a second round of hearings to get further input based on business and resident experiences over the past year, on the expectation that the recession and subsequent countermeasures might have a lasting impact on some industries such as financial services and environmental industries.

“The collapse and restructuring of Wall Street, for example, will have a lasting effect on Connecticut,” Rell said. “Tens of thousands of our residents work in insurance, financial services and banking ”“ and the job losses in these businesses have been excruciating. The final shape of the financial industry is still unknown, but any economic plan for the future must anticipate and reflect these dramatic changes.”

Breeding new businesses
In the wake of increases in the state”™s income taxes on corporations and wealthy individuals, DECD also proposed a commission to evaluate Connecticut”™s tax structure, including the effectiveness of tax credits or exemptions currently in effect, and those that could be brought to bear to encourage growth in targeted sectors. Such exemptions could cover sales tax on renewable energy projects and hybrid vehicles, DECD surmised.

To promote awareness of Connecticut”™s attractiveness as a place to live and do business, DECD would create an annual $20 million fund to support marketing programs to draw businesses and visitors from other states.

While DECD expresses the desire to maintain the financial services sector that burgeoned in the most recent economic upswing, it places the biggest stock in the high-tech sector.

To promote those industries, DECD wants to use $20 million in state funding to raise up to $80 million in additional funding from corporations to establish a new “CTech Fund” modeled on the Connecticut Innovations Inc. venture capital fund, which was created 20 years ago from state funding and which takes credit for creating 5,000 jobs since.

The past few years, Rocky Hill, Conn.-based Connecticut Innovations has been unsuccessful in obtaining new funding to establish a new investment pool similar to DECD”™s proposal. DECD said Kentucky, Ohio and Pennsylvania have established similar programs.

DECD also wants a $25 million International Opportunities Program to help recruit high-tech companies overseas to establish their North American headquarters in Connecticut ”“ a program almost certainly to heavily favor Fairfield County given its relative proximity to international airports in New York and New Jersey.

DECD said three international companies have already been recruited and three more are in the pipeline, without specifying the incentives that have been offered.

To spur startups, DECD reiterated the need for an angel investor tax credit in Connecticut, designed to get wealthy individuals or institutions investing in high-tech companies at the earliest stages. DECD would create both a 25 percent tax credit for such investments in biotechnology, information technology, digital media and green technology; and would offer a separate tax credit to cover a percentage of any loss over a three-year period as a result of an investment.

On another front, the plan calls for expanding the federal Small Business Innovation Research (SBIR) model in Connecticut by establishing a research-and-development ombudsman to spot emerging technologies ripe for investment, while dedicating $5 million for matching grants to SBIR recipients.

Separately, DECD would rope SBIR staff into a consortium to collaborate on high-tech development in colleges and universities, with possible members including business CEOs and representatives from Yale University, UConn, Wesleyan University, University of Hartford and relevant state agencies. The consortium would focus on recruiting faculty, creating centers of excellence, ferreting out research dollars and identifying funding sources to commercialize technologies under development in labs.

In hopes of spurring collaboration across the Massachusetts border, DECD suggested a “knowledge corridor” stretching from New Haven to Springfield to collaborate on developing medical devices. DECD did not suggest a similar corridor that might be formed connecting Yale and other Connecticut researchers with prominent labs in New York City.

Mindful of the impact Wall Street”™s collapse had on the credit markets, DECD would also create a $20 million Technology Company Working Capital Fund to extend lines of credit to small businesses that might otherwise have problems due to lack of collateral or insufficient cash flow.

Riding to work
With McDonald having previously held a succession of transit planning and operations positions in New York, the plan includes suggestions for myriad transportation projects. Those suggestions include:

creating a Connecticut Port Authority consisting of the ports and airports;
forming a Maritime Investment Fund for port infrastructure, pursuing funding under the Maritime Highway program and others, while creating a state financing program for seaport investments;
implementing a freight feeder barge service between Connecticut and the Port of New York/New Jersey;
increase regional use of Bradley International Airport by coordinating services with major Northeast airports; developing international routes; expanding terminals and improving Bradley”™s image;
building a rail line connecting New Haven and Springfield, Mass., with a spur to Bradley; and
adding at least 3,000 parking spaces along the New Haven Line and Shore Line East commuter rail corridor.

DECD would make responsible growth a cabinet-level position and would consolidate all state-administered discretionary municipal grant programs into a Responsible Growth for the 21st Century Fund, while establishing a competitive process for towns to apply for funds. Priority would be given to towns that have adopted model zoning, have increased density and are in close proximity to rail or bus transit.

DECD also proposed a homestead exemption allowing first-time home buyers or purchasers of homes within designated urban areas to claim reductions on their state income taxes. Also proposed is a “location efficient mortgage” program to help homebuyers obtain low down payments, interest rates and flexibility for housing near transit points.

DECD would also create a $100 million fund to support redevelopment of mildly contaminated brownfield properties and develop a scorecard to assess municipal improvements in creating incentive housing zones, expediting the processing of zoning applications and training land-use staff.

New data center
To help the governor and legislature better train workers for needed industries, DECD proposes creating a work-force and education cabinet. The cabinet would attempt to create and manage new programs more effectively by group department heads into policy and budget teams, without actually consolidating departments into “mega-bureaucracies,” in the words of the strategic plans”™ authors.

Informing those teams would be a vastly improved apparatus to collect and distill economic information, “billions of facts” in the document”™s words to give policy makers better insight into the state”™s assets and disadvantages and how best to create policies and use resources to promote economic growth while making the state an attractive place to live.

DECD wants to create a state data center, a nexus for economic information that would mine data from agencies and analyze it in fresh ways to help policymakers deduce the state”™s competitiveness against others as they work to improve the state”™s education and worker training programs.

A state data center would either be staffed by employees at the state Department of Labor, the Department of Higher Education, the State Department of Education, and UConn or would create a memorandum of understanding to coordinate and share information between those agencies.

One of the few proposals to get a DECD price tag is a $100 million loan forgiveness fund for college graduates in some fields who remain in Connecticut. DECD proposes funding the pool from the state pension fund and banks chartered in Connecticut, without providing further specifics. Graduates would be able to tap the fund to pay off their student loans in proportion to how long they remain in the state, and perhaps by how critical policymakers deem their occupations. Any student that remains in the state 10 years would see their entire loan forgiven under DECD”™s plan.

At the opposite end of the career spectrum, DECD suggests implementing a 2007 Connecticut Commission on Aging plan to keep workers nearing retirement on the job longer.

DECD also envisions a “Learn Here, Live Here” program that would allow Connecticut students to contribute their annual state income tax liability (or alternatively $3,000 annually) to a first-time homebuyer trust fund, which they could tap at any point for up to 10 years to buy a home in Connecticut.
In a bid to find better-qualified teachers for schools with the greatest need, DECD suggests building on the existing alternative route to certification (ARC) program to identify retirees with expertise in math, science, engineering and technology. Such programs would have teachers address a career development component in the classroom to give students a better sense of the opportunities available to them in technology companies and emerging industries.

On the education front, DECD said the state should implement a plan to redesign high school curricula already proposed by the State Department of Education. DECD added the state should designate the Connecticut Career Choices (CCC) program as the primary vehicle to create an “early college high school” capability, advancing teaching and learning in science, technology, engineering and math on a statewide basis. It would consolidate the existing Connecticut Pre-Engineering Program and Project-Lead-the-Way into CCC, and would support the program by consolidating funding from the Office of Workforce Competitiveness and the State Department of Education, using federal recovery funding where possible.

DECD would also implement a proposed “middle college” program that was a budget casualty this year.

DECD would also have the high-tech sector steal a page from construction, and adopt the latter industry”™s Connecticut Job Funnels program to produce workers with expertise in bioscience, digital media and green technology.

That program would be aligned with existing adult literacy programs managed by the Connecticut Employment and Training Commission, and technology certification programs offered by the One Stop Job Centers.