June, 2010

Far Reaching Jobs Bill is Now Law

We all know the harsh realties. Connecticut has been hemorrhaging jobs for years. We have lost 94,000 jobs in this recession alone. We are now part of a global economy so we are not only competing with 49 other states, but also with countries around the world. Is there hope for our state to grow? Yes!

I’m optimistic about Connecticut’s future, because a bi-partisan bill to jump-start job creation in Connecticut and lay the foundation for long-term growth was just signed into law. The jobs’ plan arose from a report issued in February by the Majority Leaders’ Job Growth Roundtable—legislators, academics, economists, labor and business leaders, and venture capitalists—calling for a series of initiatives to spur job creation and economic development.

I know this is not the first time that you have heard about a way to “fix” the economy, so why am so excited?

Because politicians—Democrats and Republicans together—turned the recommendations of a report into a bill, overwhelmingly passed it in the legislature and signed it into law all in a few months. Now you might understand my optimism about creating jobs in Connecticut.

Broadly, the jobs’ act contains incentives for entrepreneurship and innovation, based on the report’s recommendations that the state must invest at all stages of business growth, utilizing bonding, investor tax credits, and private equity funds. The report also proposes providing export assistance to companies, realigning selected tax credits, and creating a more seamless, easily accessed government process.

The act will change the way the state interacts with business by removing cumbersome requirements and outdated bureaucracy. We will no longer tolerate multiple agencies requesting duplicative information, refusing to offer web-based government services, or not providing clear outlines about when approval (or denial) will occur. We have created a paperwork reduction commission that will streamline and modernize the state’s information system by reducing unnecessary paperwork and redundant data collection by the state.

The lack of risk investment capital is a serious impediment to businesses growth, so the act starts by creating a series of incentives to increase the number of private sector investors by leveraging state resources. Support will be offered for pre-seed, early stage and later stage funding. We have chosen to support all stages of business growth, so entrepreneurs will have better chances for success. If Connecticut chose to only support businesses at the beginning and not at later stages, when jobs are often created, then businesses could find support some place else and leave, causing Connecticut to loose on its investment.

The act creates a number of tax credits including an Angel Investor Tax Credit as well. Angel investors, individuals who provide funding for business start-ups, will be able to receive tax credits equal to 25% of their investment up to $125,000.

The act also establishes a tax credit for investors that provide funding for small to midsize Connecticut businesses that have operated in the state for less than ten years. Funding will come from the redirection of the Insurance Reinvestment Fund tax credits, which are valued at $200 million. Also included is a job growth tax credit that promotes quality job growth by rewarding employers that create new jobs for Connecticut residents.

There has been an uptick in exporting by American companies since the recession began and a strong desire among other companies to begin exporting. Unfortunately, Connecticut’s Department of Economic and Community Development (DECD) has only one staff person who works part-time on exporting assistance. The act requires that the DECD have adequate staff to provide exporting assistance.

Although there are indicators that the economy is turning around, I’m hopeful this jobs package will accelerate the recovery.

If you are interested in discussing the budget or any other matter, please do not hesitate to email me or call me at 860-240-8635.