- Governor Ned Lamont reintroduces proposal for JobsCT tax rebate program, which was proposed last year but tabled by the Connecticut legislature
- Program would seek to incentivize growth among smaller companies rather than trying to lure large employers to the state
- Announcement comes shortly after the closure of an animation studio that collected tens of millions of dollars in state incentives
Connecticut’s economic incentives would target a broader base of companies, including small and medium-sized businesses, under a tax rebate proposal pitched by Governor Ned Lamont. This “earn as you grow” strategy would be a departure from past efforts to lure large employers to the state, which have often proved costly while creating only modest job growth.
Lamont’s legislative proposal would establish the JobsCT tax rebate program, which he contends will benefit companies looking to relocate to Connecticut as well as existing businesses seeking to expand. The intent of the program would be to support investment in emerging industries while mitigating risk.
The JobsCT program was first introduced last year, but was tabled by the state legislature.
Qualifying companies that create a minimum of 25 new full-time equivalent positions with salaries above $37,500 or 85 percent of the median household income of the municipality where the business is located, whichever is greater, would receive a fully refundable rebate equal to 25 percent of the withholding taxes from the new positions over the next five to seven years. Companies would have to maintain the benchmarks for at least two years before they would be eligible for the rebate, and rehiring employees who were cut due to the COVID-19 pandemic would not count toward the 25-position requirement.
The program also seeks to incentivize business development in distressed municipalities or Opportunity Zones designated by the state. Companies located in these areas would be eligible for a 50 percent rebate rather than a 25 percent one.
Rebates per job would range from $1,000 to $5,000 per year, with jobs established in 2021 having a minimum rebate of $2,000. Total rebates would be capped at $40 million per fiscal year per employer.
Lamont says the program intends to encourage companies to offer competitive wages rather than incentivize businesses creating low-paying jobs. However, it also allows companies to participate if they hire a large proportion of their employees from disadvantaged populations, such as formerly incarcerated people, even if they don’t meet the wage requirements.
The program would be specific industries that currently play a strong role in Connecticut’s economy as well as its economic development strategy. These include aerospace and defense, clean energy and renewables, entertainment and digital media, financial services, information technology, life sciences, manufacturing, and research and development facilities.
Lamont contends that previous incentives have relied heavily on bonding, at an average of $200 million a year, but that bonding is not necessary for this program. He says this will allow the state to reduce its debt and prioritize bonding for other initiatives. Lamont also says that while previous incentives paid an average of $16,000 per job, JobsCT is anticipated to average $5,000 to $10,000 per position.
Lamont has been critical of the traditional approach states take in offering business incentives, and upon taking office he promised to pare back lucrative offers that try to attract major companies. In announcing JobsCT, he criticized the traditional approach as pitting states against each other, producing “little durable investment” in Connecticut, and excluding medium-sized companies and homegrown small businesses.
The proposal was introduced one day after the news that Disney will be closing Blue Sky Studios, an animation company that moved to Greenwich from White Plains, N.Y., in 2009 and has produced films such as the Ice Age series. The decision came as Disney suffers across-the-board losses due to COVID-19, including diminished movie receipts.
Blue Sky Studios had been averaging a payroll of about 500 employees since coming to Connecticut, and in 2017 it renewed its lease in Greenwich through 2025. At the time of this renewal, the company had received more than $120 million in state tax incentives.
