Governor Ned Lamont unveiled his JobsCT Tax Rebate Program, through the State of Connecticut Department of Economic and Community Development, which he describes as “a simple, transparent, targeted, earn-as-you-grow incentive program for businesses to expand in or relocate to Connecticut.”
The benefit is earned as jobs are created and maintained over time, instead of providing upfront incentives, which force the state to borrow money to pay out and, in some cases, clawback if companies don’t live up to their promises.
Lamont’s economic development team, led by Department of Economic and Community Development Commissioner David Lehman, was poised to propose similar legislation last year before the pandemic cut short the legislative session.
“For too long, Connecticut has promoted economic development primarily by providing ad-hoc incentives for large businesses to locate here,” Lamont’s proposal says. “That approach invited companies to play states off one another, produce limited durable investment in the state, did little to support medium-sized businesses that cannot attract the same level of attention, and did nothing to help home-grown businesses and entrepreneurs.”
Lamont’s proposed program provides incentives to employers in the state’s top and emerging industries ‒ including aerospace and defense, clean energy and renewables, entertainment and digital media, financial services, information technology, life sciences, manufacturing, and R&D facilities ‒ that create a minimum of 25 new full-time equivalent positions with salaries above $37,500, or 85% of the median household income of the municipality where the jobs will be located, whichever is greater.
Employers that hit and maintain those benchmarks for at least two years will receive a fully refundable rebate equal to 25% of the withholding taxes from the new employees over the next five to seven years. They can use that money to reinvest in their business.
Rebates per job range from $1,000 to $5,000 per year, except for jobs that are created in calendar year 2021, which will have a minimum rebate of $2,000 per employee.
Rebates per employer are capped at $40 million in tax rebates per fiscal year. Re-hiring for jobs lost as a result of the COVID-19 pandemic will not count towards the minimum 25 new FTEs.
The proposal also allows companies that hire a large proportion of their employees from disadvantaged backgrounds, such as the formerly incarcerated, to participate in the program even if the jobs created don’t meet the $37,500 or 85% of median household income requirement, Lamont said.
Also, companies that locate or expand in distressed municipalities or Opportunity Zones are eligible for a 50% rebate.
Lamont said previous economic incentives offered by the state required an average of $200 million in bonding per year. He said his proposed program does not require any bonding.