Gov. Ned Lamont has announced a pair of job incentive programs, the first proposals he is submitting to the Connecticut General Assembly during the 2020 legislative session.
Jobs CT is a performance-based incentive program for businesses to expand or relocate jobs to Connecticut, while Small Business Express 2.0 is a new version of the state”™s program that helps small businesses.
Jobs CT takes an “earn-as-you-grow” approach in which businesses creating 25 or more full-time jobs can retain (or be rebated) 25% of the withholding taxes from the new employment for up to seven years. Employers in one of Connecticut”™s opportunity zones or distressed municipalities are eligible to retain 50% of the withholding taxes over the same time period.
To earn those benefits, the salaries must be 85% of the median household income in the municipality where the jobs will be located and the jobs must be in the one of the following designated sectors:
- Aerospace/defense
- Clean energy/renewables
- Corporate headquarters
- Distribution and logistics
- Entertainment and digital media
- Financial services
- Information technology
- Life sciences
- Manufacturing
- R&D facilities
Small Business Express 2.0, named and partly patterned after a program launched in 2011 by then-Gov. Dannel Malloy and administered by the Department of Economic and Community Development, will focus on partnering with banks, helping to guarantee their loans and spur more private investment in small businesses.
Small Business Express 2.0 will launch through a new, two-pronged model, First, DECD will leverage the existing Capital Access for Business (CAB) loan guarantee program, similar to what is done in Rhode Island and Massachusetts. Private lenders will thus have the ability to opt into a small business lending program where the State of Connecticut shares a portion of the credit risk alongside the lender.
Second, DECD will work with community development financial institutions (CDFIs) to provide investment in their revolving loan fund programs to build capacity and ensure sustainable capital for higher-risk credit profiles. This is also similar to what is done in Massachusetts and Rhode Island.
Lamont said there are several benefits to making the adjustments to the program:
- The state will partner with the private sector to increase capacity rather than compete;
- Moving an existing program into a new phase will leverage expertise and lower the cost of starting a new program;
- State resources will become better aligned for greater efficiency with a customer-centric approach;
- There is no new fiscal impact, while risks to the state are significantly lowered; and
- Targeted investments can be made to fill market gaps.
“Some of the best investments we can make as a state are in companies that are already here and that want to be here,” the governor said. “This sends a message to the region and the world that Connecticut supports its corporate partners.”
“Over the last decade, the Small Business Express program has helped many entrepreneurs, including women and minorities, build their businesses and create jobs right here in Connecticut,” Lt. Gov. Susan Bysiewicz said. “These new legislative proposals will build on those successes and grow our state”™s economy in order to increase our economic competitiveness, while also reducing costs to our taxpayers.”
“These changes to our economic toolkit are being proposed after extensive dialogue with stakeholders across the state,” DECD Commissioner David Lehman said. “We know that maintaining fiscal discipline is central to boosting business and investor confidence in our state and these legislative proposals are consistent with that approach. Our new performance-based incentives will support growing businesses while also reducing risk and cost to Connecticut taxpayers. Moreover, our new approach is strategically targeted to build on our economic strengths.”
The proposals will be included in Lamont”™s legislative package that he will submit to the General Assembly on Feb. 5, when he is scheduled to deliver his 2020 State of the State address.
