The Governor and his Department of Economic Development touted the results of the First Five program, a premier strategy implemented to spur job growth and enhance economic activity. Some 3,759 net new jobs have been created by First Five investments in Connecticut and DECD and the Governor say an additional 13,000 positions have been “retained.”
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The cost: $381 million in grants, loans and tax credits. Based on this expenditure and only counting “new’’ jobs, that comes out to about $100,000 per job. But the real costs are actually higher.
Connecticut borrows the money to support the First Five initiatives.
In some cases the loans are forgiven if the company maintains those newly created positions for as little as three years. Typically we issue bonds to be paid off over 20 years. Assuming the bonds are issued at 3%, that would add an additional $80 million in costs to the initial investment.
Future taxpayers could be paying off the costs well into the future for jobs that may have disappeared, either through layoffs or because companies moved out of state after fulfilling the requirements of taking the loan/grant/tax credit.
We all see the need to invest in our companies, but forging a far more business friendly climate in Connecticut makes better sense.
Throwing money at the largest hedge fund in the world as we did with Bridgewater located in Westport – $22 million at a recent Bond Commission meeting – may not be wisest use of our money. That deal requires Bridgewater to maintain the jobs through 2021 and then the loan can be forgiven.
The argument for giving companies these terms goes something like this: Technology now allows these firms to choose wherever they want to operate from. But it is getting awfully pricey to keep them comfortable in Connecticut.