Gov. Malloy |
Corporate welfare in Connecticut is expensive, poorly tracked and of dubious merit, according to a new report by Good Jobs First, a think-tank dedicated to corporate accountability in state economic development.
Taxpayer subsidies, like Gov. Dan Malloy's First Five initiative, are supposed to create jobs by incentivizing companies to move, invest and hire in Connecticut. Malloy has already lured four corporations, putting up about $106 million in the bargain so far: CIGNA ($71 million), ESPN ($25 million), TicketNetwork ($8 million) and NBC Sports ($20 million).
But the study found that the cost of some jobs exceeds the state's average yearly income (one subsidy, for instance, cost $169,667 per job) while some companies accept generous taxpayer subsidies but don't create jobs.
“Existing programs [should] be evaluated and the state [should] adopt better transparency of costs and benefits before considering new spending,” wrote the report's author, Thomas Cafcas.
Other findings include:
1. Two-thirds of the state’s subsidies ($173 million in FY 2011) are not controlled by the Department of Economic and Community Development (DECD), which has more rigorous oversight standards.
2. Forty-four percent of “business assistance” contracts (70 total) failed to meet job creation promises. These companies were awarded about $86 million. DECD does not disclose repaid subsidies. “Taxpayers have a right to know whether a clawback occurred, and if so, how much money was recaptured,” Cafcas said.
3. The cost of creating jobs is huge. One subsidy cost $169,667 per job. The top 10 subsidies cost $98,672 per job on average (the average yearly per capital income is about $55,000). One study from 2005 found that 14 of 24 tax credits (58 percent) led to net job losses.
4. State reports show some companies receiving subsidies create low-wage jobs that further burden safety-net programs like Medicaid.
5. Most job creation is about relocating or retaining existing jobs. Eighty percent of subsidies go to businesses threatening to leave or shut down. Seventy percent of tax credits are for jobs that would've been created anyway.
6. Jobs that often count toward fulfilling the promise of state subsidies are often just commuters who don't pay state income taxes, property taxes, or sales taxes. “Shifting jobs in the same metropolitan area doesn’t grow regional economies,” Cafcas said.
Taxpayer subsidies, like Gov. Dan Malloy's First Five initiative, are supposed to create jobs by incentivizing companies to move, invest and hire in Connecticut. Malloy has already lured four corporations, putting up about $106 million in the bargain so far: CIGNA ($71 million), ESPN ($25 million), TicketNetwork ($8 million) and NBC Sports ($20 million).
But the study found that the cost of some jobs exceeds the state's average yearly income (one subsidy, for instance, cost $169,667 per job) while some companies accept generous taxpayer subsidies but don't create jobs.
“Existing programs [should] be evaluated and the state [should] adopt better transparency of costs and benefits before considering new spending,” wrote the report's author, Thomas Cafcas.
Other findings include:
1. Two-thirds of the state’s subsidies ($173 million in FY 2011) are not controlled by the Department of Economic and Community Development (DECD), which has more rigorous oversight standards.
2. Forty-four percent of “business assistance” contracts (70 total) failed to meet job creation promises. These companies were awarded about $86 million. DECD does not disclose repaid subsidies. “Taxpayers have a right to know whether a clawback occurred, and if so, how much money was recaptured,” Cafcas said.
3. The cost of creating jobs is huge. One subsidy cost $169,667 per job. The top 10 subsidies cost $98,672 per job on average (the average yearly per capital income is about $55,000). One study from 2005 found that 14 of 24 tax credits (58 percent) led to net job losses.
4. State reports show some companies receiving subsidies create low-wage jobs that further burden safety-net programs like Medicaid.
5. Most job creation is about relocating or retaining existing jobs. Eighty percent of subsidies go to businesses threatening to leave or shut down. Seventy percent of tax credits are for jobs that would've been created anyway.
6. Jobs that often count toward fulfilling the promise of state subsidies are often just commuters who don't pay state income taxes, property taxes, or sales taxes. “Shifting jobs in the same metropolitan area doesn’t grow regional economies,” Cafcas said.
