The Connecticut business laboratory
Connecticut Governor Dannel Malloy is not waiting for the U.S. Congress to pass jobs legislation. Rather, he is moving on his own to get growth happening in his state. Although Connecticut’s output is running on par with national trends he has sent a package of growth proposals to the legislature. It’s an interesting blend of tax cuts, targeted programs for small business and skill upgrades for employees in the manufacturing sector. The Connecticut Mirror recently described the highlights:
$516 million in bonding for business and infrastructure investments, a new tax break aimed at small businesses, and a plan to streamline state regulations.
The single-largest investment in the plan involves adding $340 million to the Manufacturers’ Assistance Account, which provides various low-interest loans and grants to businesses.
The administration also is seeking to double enrollment in the Manufacturing Reinvestment Account, a program that allows manufacturers to invest pre-tax profits for a number of years — after which they must be reinvested into the company. The program currently accepts up to 50 businesses, and that would climb to 100.
Another key component of the plan has been dubbed the “Small Business Express Package,” and involves up to $50 million for loans and matching grants to help small companies create jobs.
A proposed change that requires little fiscal outlay would be making the state’s permitting process more efficient. Getting permits can be especially daunting for start-up firms with few resources. Again from the Connecticut Mirror:
Perhaps the largest area of bipartisan consensus since Malloy first announced plans in June for an October session on job growth was a need to improve what is perceived by businesses as Connecticut’s oppressive regulatory environment.
The new legislative package calls for state government to hire a consultant to streamline regulations, particularly with a focus on four large permitting departments: Administrative Services, Energy and Environmental Protection, Transportation, and Economic and Community Development.
My own personal belief is that economic stimulus efforts at the state level can be much more finely tailored and targeted than federal efforts, and efforts at the state level are likely to be more permanent. A criticism of federal efforts has been that they are aimed at temporary measures and don’t give certainty to business owners who must make long-term commitments of capital and infrastructure.
The only shortcoming of the project is that it would be paid for through a bond issue of about $500 million. The state’s budget director thinks other municipal projects can be defered and annual bond issuance can stay steady. The best solution would be to pay with current revenues.
I hope Governor Malloy’s plan is passed by the Connecticut legislature. It would create an interesting laboratory for business and jobs stimulus.
Chart data source: World Institute for Strategic Economic Research via the Federal Reserve Bank of Boston