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United Technologies to get $400 million tax deal
Question of the Day
HARTFORD, Conn. (AP) - State lawmakers gave final legislative approval Thursday to a $400 million tax credit deal with United Technologies Corp., but not without some concerns that Connecticut has to “play defense” to keep its largest private sector employer from moving elsewhere.
But proponents credited the agreement, reached last month by Democratic Gov. Dannel P. Malloy’s administration, with keeping UTC and its subsidiaries in the state for years to come, while creating future job opportunities for young people and helping the approximate 2,500 direct suppliers across the state that provide machinery, other equipment and services to the aerospace conglomerate.
“This initiative … for me, it is a bet on the future,” said Sen. John Fonfara, D-Hartford, co-chairman of the General Assembly’s Finance Revenue and Bonding Committee.
The agreement passed the Senate on a bipartisan vote of 34-to-2, with two Republicans voting against it. The House of Representatives passed the same bill earlier this month on a 134-4 vote. The legislation now moves to the governor’s desk.
Malloy, who said he’ll sign the bill into law, thanked lawmakers for their support, saying the agreement will “bolster the state’s aerospace sector, encourage business growth and investment and, most importantly, foster the retention and creation of thousands of good-paying jobs with good benefits for Connecticut residents.”
Under the new tax credit exchange program, which essentially applies only to UTC, the company can redeem up to $400 million in earned research and development tax credits at an accelerated rate. In return, UTC must spend up to $500 million to upgrade and expand facilities at Pratt & Whitney in East Hartford, Sikorsky in Stratford and UTC Aerospace in Windsor Locks. To take full advantage of the tax benefits, the company must hire more engineers and other workers and boost its payroll.
United Technologies also has promised to maintain its Pratt & Whitney headquarters for 15 years and its Sikorsky headquarters for at least five years. Malloy said the company ultimately expects to invest up to $4 billion in research and other capital expenditures across the state.
Sen. Scott Frantz, R-Greenwich, the ranking Republican on the Finance Revenue and Bonding Committee, lauded the deal for not relying on borrowed state money. But he voiced concern about having to strike such arrangement with a major employer, saying lawmakers need to ask themselves why such a bill is even needed. Several Republicans said Thursday that more attention should instead be paid to making Connecticut more business-friendly.
“I would consider this intelligent defense,” Frantz said of the agreement. “I think it’s unfortunate that Connecticut does have to play defense in the economic development competition.”
Sen. Tony Guglielmo, R-Stafford, called the agreement “the best of a lot of bad deals,” referring to other initiatives pushed by Malloy where the state has funneled millions of dollars in borrowed money to large companies in loans and grants. But Guglielmo said he felt “a little queasy” about providing $400 million in tax credits to a company that has been critical of the state. Chief Financial Officer Greg Hayes, speaking at United Technologies‘ annual analysts’ day in New York in 2010 said “any place outside of Connecticut is low cost.”
A year later, Hayes defended his comment while appearing at a forum with Malloy.
“Singling out Connecticut may have been unfair but it was still the truth,” he said. “Connecticut is a high-cost place to do business.”
Associated Press writer Stephen Singer contributed to this report.
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