HARTFORD, Conn. – Tax credits worth hundreds of millions of dollars for Connecticut's largest private employer have emerged as a flashpoint in the governor's race, with Republican Tom Foley decrying the aid as corporate welfare and Democratic Gov. Dannel P. Malloy saying it's crucial to keep United Technologies Corp. from leaving the state.
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Legislation signed this year by Malloy allows the aerospace giant to use accumulated tax credits for the millions it's spending to upgrade and improve manufacturing and research operations.
In a state that has been shedding prized manufacturing jobs for years, Malloy and fellow Democrats who run the state legislature say the deal will cement the company's ties to Connecticut for more than a decade.
"I'm certainly proud that we kept United Technologies ... Pratt & Whitney engines and others in our state," Malloy said Tuesday at a debate with Foley.
Foley, a Greenwich businessman, argues that the conglomerate, which posted revenue of $62.63 billion last year, is hardly in need of public assistance. He said he would prefer to focus instead on job creation incentives for small businesses.
"I think you have more confidence in your policy with respect to corporate welfare than I have," Foley responded in the debate.
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Job creation and the economy are key issues in the rematch between Foley and Malloy for the governor's seat. The state has regained 60 percent of the jobs that were lost between March 2008 and February 2010 because of the Great Recession and still struggles with stubbornly high unemployment.
Malloy has pointed to incentive programs for major Connecticut employers as a key success of his first term. His "First Five" program intended to consolidate tax credits to draw the first five businesses that invest $25 million in Connecticut and create 200 jobs over five years.
Foley said he supports tax incentives for small businesses. In addition, he would order state development agencies to focus on supporting seven industries such as highly engineered manufacturing and health care, but his plan does not outline specifically what his administration would do to help boost job growth.
He promises to "reach out personally" to targeted companies and persuade companies to do business in Connecticut. And he would eliminate the $250 business entity tax , charged to most companies every two years, for firms with fewer than 50 employees.
Campaign ads for Malloy go beyond touting the governor's economic development record seeking to hold on to jobs. His ads say he "fought and won the battle" to keep United Technologies in Connecticut when "it was about to leave" four years ago. The conglomerate hasn't said it would leave Connecticut.
When asked about the ad, Malloy's campaign pointed to comments made in 2010 by a company executive who said Connecticut was an expensive place to do business.
A spokesman for United Technologies had no immediate did not immediately comment on the state aid and the campaign issue of jobs.
The deal calls for United Technologies to spend up to $500 million to upgrade and expand facilities at Pratt & Whitney and its research lab, both in East Hartford; build engineering labs and a training center at its aerospace business in Windsor Locks; and improve engineering and design labs and manufacturing at Sikorsky in Stratford.
The state will offset up to $400 million in sales and income taxes over 14 years using research and development tax credits earned by United Technologies. To take full advantage of the tax benefits, the company must hire more engineers and other workers and boost its payroll.
United Technologies also promised to maintain its Pratt & Whitney headquarters for 15 years and Sikorsky headquarters for at least five years.
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