Governor Lamont Announces 1st Proposals of 2020 State of the State: Retooling Connecticut’s Business Assistance Programs
(HARTFORD, CT) – Governor Ned Lamont today announced that the first proposals he is submitting to the Connecticut General Assembly during the 2020 legislative session will be a package of reforms aimed at retooling the Department of Economic and Community Development’s business assistance programs. The governor is proposing two initiatives that support job creation but also ensure taxpayer funds are protected: Jobs CT – a performance-based incentive program for businesses to expand or relocate jobs to Connecticut – and Small Business Express 2.0 – a new phase of the state’s popular program that helps small businesses.
The governor unveiled the proposals today during a visit to Upward Hartford, a popular co-working space in downtown Hartford that serves as an incubator for startups seeking to develop new innovations and bring birth to projects, where he was joined by business leaders and state officials.
“Some of the best investments we can make as a state are in companies that are already here and that want to be here,” Governor Lamont 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. Governor 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.”
Encouraging Businesses to Expand or Relocate to Connecticut with Jobs CT
Governor Lamont is proposing to create a simple, transparent, performance-based incentive program for businesses to expand or relocate to Connecticut that will be known as Jobs CT.
The bill utilizes an “earn-as-you-grow” approach in which businesses creating 25 or more full-time jobs can retain (or be rebated) 25 percent of the withholding taxes from the new employment for up to seven years. Employers located in one of Connecticut’s opportunity zones or distressed municipalities are eligible to retain 50 percent of the withholding taxes over the same time-period. To earn this benefit, the salaries must be 85 percent 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:
- Clean energy/renewables
- Corporate headquarters
- Distribution and logistics
- Entertainment and digital media
- Financial services
- Information technology
- Life sciences
- R&D facilities
Small Business Express 2.0: An Update to Maximize Impact and Efficiency
Connecticut’s Small Business Express Program, established in 2011 and administered by DECD, was created to help stimulate the economy through the growth of small businesses following the Great Recession when banks were not lending. The program was never intended to be a long-term program, but rather a bridge until the banking sector regained its footing.
After meeting with the banking and lending community on multiple occasions, the Lamont administration believes now is the time to partner with banks and not compete with them, while focusing more of our efforts and resources on training, mentorship, and capital access for minority, women, disabled, and veteran-owned businesses.
Governor Lamont is proposing that the state revamp the program and launch Small Business Express 2.0 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 neighboring states such as Rhode Island and Massachusetts. In doing this, private lenders will 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 other neighboring states, such as Massachusetts and Rhode Island.
There are several benefits to making these 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.
The proposals will be included in Governor Lamont’s legislative package that he will submit to the General Assembly on Wednesday, February 5. The governor is scheduled to deliver his 2020 State of the State address at noon on that date.