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State Needs Business-Friendly Strategy

By Stan Simpson

June 21, 2013

I reckon when it comes to Connecticut's reputation as a state unfriendly to business, it all depends on your perspective.

During the time when Texas Gov. Rick Perry and South Dakota Gov. Dennis Daugaard were shamelessly panhandling The Nutmeg State, begging for new businesses, an emerging pharmaceutical company expanded from Cheshire into New Haven.

Billionaire oilman T. Boone Pickens was also in Connecticut, giving the commencement address at Goodwin College and lauding Connecticut's plans for natural gas expansion as one of the more progressive in the country.

Alexion Pharmaceuticals will serve as the anchor of what is touted as an exciting renaissance in downtown New Haven. The company is using up to $51 million in state aid and leveraging a partnership with Yale in promising 300 new jobs in an 11-story building off College Street. Alexion's return to New Haven is a boost to the city's and state's business retention effort.

From a business friendly criteria Alexion is an example of the extremes that Connecticut, under Gov. Dannel P. Malloy, has taken to gin up job growth and retention. He is investing well over $1 billion in the bio-science industry and in the University of Connecticut, anticipating a new sector of economic growth in partnership with the state's flagship university.

Also, Malloy's First Five jobs program lavishes of millions in tax credits, no interest loans and job training grants over five years on companies that promise to create 200 jobs within the first two years.

The First Five, which includes Alexion, is expected to expand to 15 companies.

Critics say that Malloy is recklessly rewarding companies already in the state, which would likely expand here without the inducements. Malloy believes that retaining an expanding business is as valuable as recruiting a new one. His office estimates that First Five will retain 8,450 jobs, create 2,640 jobs and generate $561 million in private investment.

The most notable of the First Five coups was the luring of NBC Sports from prestigious 30 Rockefeller Center to a former Clairol plant in Stamford. As part of its consolidation in New York, Connecticut and Pennsylvania, NBC will relocate and anchor about 500 jobs in Connecticut this summer. The Nutmeg State, Stamford in particular, now has an impressive hub for sports and entertainment media — ESPN in Bristol, NBC Sports, WWE and the New York Yankees' Yes Network.

With a year left to go on his term, Malloy finds himself in the unique position of getting ripped — sometimes by the same people — for not doing enough to change Connecticut's dismal business climate and at the same time going overboard to create an atmosphere more inviting to business.

The biggest problem Connecticut faces is its deep debt. One of the richest states in the union is undisciplined in its spending. It has the highest per capital debt in America and owes $19.3 billion in bonding loans. The state also has among the highest energy costs in the country and still owes millions to employee retirement funds. The state's cash flow problems and massive tax increases, however, have not deterred Malloy and lawmakers from investing as if the state is flush with Texas oil cash. This is where the disconnect with Connecticut's businesses begin.

Last year, 70 percent of the businesses surveyed by the Connecticut Business and Industry Association said the state's business climate was unfriendly. The recent extension of the surcharge on business taxes, continuing to charge businesses $250 annually to renew limited liability corporation status, increases to the minimum wage, passing a paid sick leave law and new gun control laws are among the policies deemed antagonistic by businesses.

The perception is bolstered by a staggering report from the U.S. Bureau of Economic Analysis that lists Connecticut dead last in economic growth in 2012 — the second consecutive year in which the state's economy reflected no growth.

Yes, some sort of special summit is needed this year. Connecticut has to come up with a more comprehensive strategy that speaks favorably to small and large businesses, and begins scaling back it excessive debt and spending. The low down on Connecticut is that its debt and spending are out of control. And the cost of doing business is too high.

Stan Simpson is host of "The Stan Simpson Show'' (www.ctnow.com/stan and Saturdays, 6:30 a.m., on FOX CT).