Accountable USA - Connecticut

In recent years, Connecticut has put increasing emphasis on large tax-credit deals. This is driven in large part by a spending cap enacted in the 1990s curbing the Department of Economic and Community Development's ability to give large cash grants for corporate relocations. In FY 1992, revenues lost to corporate tax credits totaled just $4.6 million; by FY 2009, the cost was $305.6 million. In 2009, corporations in Connecticut could claim up to 30 different kinds of tax credits or exemptions. A 2011 report by Good Jobs First found high costs and poor monitoring in the state's subsidy programs.

Most beneficiaries are large companies shedding large tax liabilities. In 2001, 13 percent of companies filing a corporate income tax return accounted for 77 percent of the total value of tax credits being claimed. In 2003, only one of Connecticut’s 100 largest companies paid more than $1 million in corporation business taxes after credits were accounted for. 

This trend has continued in recent years under Gov. Daniel P. Malloy, whose First Five program shelled out $413 million in tax credits and loans to a handful of large companies in just a few months after he took office in 2011.  Many of the subsidized firms would likely have expanded without the funds and one recipient, UBS, even saw a drop in employment of 1,500 jobs over the course of its $20 million deal with the state.

Over the years, finance and insurance companies have lobbied for and won numerous special subsidies like the Insurance Reinvestment Fund. These and the other subsidies are often used to lure financial services firms from New York. For example, the Royal Bank of Scotland received a $100 million deal to hop the border in 2005 (see below).  The IRF tax credit, valued at $200 million, was redirected in 2010 to fund the Angel Investor Tax Credit program; no more credits can be claimed through IRF after Dec 2015.

Wall Street financiers aren't the only paid border-jumpers. In 2009, Starwood Hotels and Resorts received a $90 million headquarters relocation package for moving a dozen miles (see below). Diageo, an alcoholic beverage company, got a $40 million deal to make a similar move.  Under Gov. Malloy’s First Five program NBC Sports and Deloitte received subsidies to relocate at the expense of New York.

The manufacturing lobby has won subsidies like Manufacturing Assistance Act grants and loans as well as the various tax credits provided by the Enterprise Zone and Urban Jobs program. For corporate tax credits overall, manufacturers are the big winners (30 percent of the total), along with utilities (15 percent). Two‐thirds of Connecticut's tax credits are uncapped, meaning the state cannot control the cost of these programs even in difficult budget years when it has to reduce appropriated spending.

Connecticut has also tried to develop high-tech industry clusters through equity investment programs and lavish tax credits, like the Electronic Data Processing Facility Tax Credit. Film tax credits (2014 cost: $129 million) have gone to companies such as Blue Sky Studios for hopping the state line from New York.

On the megadeals front, Connecticut awarded a $400 million deal to United Technologies in 2014 for 14 years of sales and income tax offsets.  This deal was largely made possible by the state’s research and development tax credits, a program which Gov. Malloy is now looking to cut in half.

In April 2014 Connecticut released a new online disclosure tool which is a model for economic development disclosure nationally.  Had this tool been available when Good Jobs First transparency rankings were released in January 2014 the state’s ranking of 14 would easily have been boosted into the top ten. 

The 2014 report found online recipient disclosure in three of the five major subsidy programs we examined: Urban and Industrial Site Reinvestment Tax Credits, Manufacturing Assistance Act, and Job Creation Tax Credits. Nevertheless, the quality of tax credit disclosure is low. Statements by officials suggest the state is hiding behind the long-ago discredited claim that sunshine on costs and benefits would somehow reveal proprietary business information.

Key Subsidy Programs

Subsidy Program Recent Annual
Online Recipient
Recipient Disclosure
Job-Quality Score**
Enforcement Score***

Enterprise Zone and Urban Jobs Tax Credits

a variety of tax credits for companies creating jobs in specially designated zones; criticized for being costly and ineffective

$4.2 million (2011)

Film and Digital Media Tax Credits

an expensive and controversial corporate income tax credit for up to 30 percent of film production costs

$118 million (FY 2012)

Jobs Creation Tax Credit

a growing program which turns 60 percent of employee personal income tax withholdings into tax credits for employers; criticized for loose standards

$10 million statutory cap

Manufacturing Assistance Act

a multi-faceted law enabling large economic development subsidies in the form of grants, loans and a four-year property tax exemption

$69.9 million (FY 2012)

Small Business Express

loans and grants made to companies with less than 100 employees

$20.6 million (FY 2012)
not included
not included

* The score is derived from the Good Jobs First report Show Us the Subsidized Jobs (January 2014).

** The score is derived from the Good Jobs First report Money for Something (December 2011).

*** The score is derived from the Good Jobs First report Money-Back Guarantees for Taxpayers (January 2012).

Major Subsidy Deals

Starwood Hotels and Resorts (2009)

In November 2009 Gov. M. Jodi Rell proudly announced that her administration had persuaded Starwood Hotels to move its headquarters with about 800 jobs about a dozen miles across the state line from White Plains, New York to Stamford. All it took was the largest subsidy deal in the state’s history, about $90 million. Most of that consisted of Urban and Industrial Site Reinvestment Credits, supplemented by a low-cost $9.5 million loan and $5 million in sales tax exemptions on building materials. The Wall Street Journal stirred up a controversy in February 2010 when it revealed that Connecticut also planned to make substantial transportation infrastructure improvements for Starwood using federal Recovery Act (stimulus) funds, even though such funds were not supposed to be used to lure jobs from one state to another. The company replied that its move to Stamford was not contingent on the infrastructure improvements. It was later reported that Starwood was also receiving an 80-percent property tax abatement for five years. (Key sources)

Royal Bank of Scotland (2005)

In a sign of its eagerness to build its financial sector, Connecticut announced in 2005 that it was providing a $100 million tax credit to the Royal Bank of Scotland and its RBS Greenwich Capital Unit, which would together occupy a new $400 million office building in downtown Stamford. The building was supposed to consolidate 550 jobs from New York City, 700 existing Connecticut jobs and some 600 new positions. In addition to Urban Reinvestment Tax Credits, the state provided a sales tax exemption on construction materials.  The 12-story building includes a huge trading floor and a variety of creature comforts for traders, including a food court, various retail outlets and a gym. The building was completed and largely occupied by 2009. (Key sources)

Walmart in Connecticut

  • Good Jobs First found no instances of Wal-Mart subsidies in Connecticut, but given the absence of comprehensive centralized data, it is still possible that deals have quietly occurred.
  • We found no instances of property tax assessment challenges by Wal-Mart in Connecticut, but given the absence of centralized data, it is still possible that appeals have occurred.
  • Wal-Mart was found to have more workers than any other employer in the state relying on publicly-funded health insurance. This shows how taxpayers end up subsidizing Wal-Mart’s policy of providing low wages and inadequate benefits.

For more information, see the Connecticut page of Wal-Mart Subsidy Watch.