WCSU Students Analyze First Five/Next Five

WCSU Students Analyze Gov. Malloy’s

 First Five/Next Five Program

By Scott Benjamin

Connecticut Gov. Dannel Malloy’s First Five/Next Five program has received praise from supporters for establishing brain hubs that are designed to have a multiplier effect in generating jobs, and also criticized by foes for offering corporate welfare when the money could be better utilized to lower personal and corporate taxes to attract more companies to the state.

The plan, which was part of an overall jobs package approved by the General Assembly in 2011, has provided state grants and forgivable loans if major employers – such as Cigna, ESPN, Bridgewater Associates and Cartus, the Danbury-based relocation service company - add at least 200 employees over the coming years.

We discussed Mr. Malloy’s bold initiative in an on-ground section of PS 104: World Governments, Economies And Cultures at Western Connecticut State University (WCSU) during Spring 2014. As a midterm project, the students had to write a paper of at least 1,000 words or a PowerPoint slide show of at least 20 frames, on the assistance to Bridgewater Associates, the largest hedge fund in the world. It can receive up to $115 million in state assistance if it adds at least 1,000 jobs over the next decade as it moves from Westport to Stamford.

There was a range of positions taken on First Five/Next Five, in general, and the Bridgewater Associates plan, in particular, from the students.

The Day of New London reported in February 2014 that the First Five/Next Five program had generated 1,377 new full-time jobs since it was implemented.

Connecticut state Democratic Executive Director Jonathan Harris told a PS 102: American Government class at WCSU in September 2013 that the governor is using the money to help further establish brain hubs in such areas as the digital media, nanno-tech, bio-tech, bio-med and fuel cell industries that usually pay higher salaries and add jobs in the service sectors.

Dr. Enrico Moretti, the University of California-Berkeley economist, stated in his 2012 book, “The New Geography Of Jobs” that for every brain hub job, a metro area usually adds five more positions, two of which are either attorneys or physicians who earn salaries well into six figures.

He has said in an interview that of the 320 metro areas in the United States only about 15 to 20 have brain hubs.

Mr. Harris has said that Mr. Malloy, a Democrat from Stamford who was elected in 2010, is trying to further establish innovation areas in Stamford, which already ranks fourth in the world in financial services, and Farmington, which has the University of Connecticut Medical Center and will soon add the Jackson Labs bioscience center.

Mr. Malloy told the Connecticut Hearst newspapers in 2011 that, for example, public money was used to initially foster development of the Research Triangle in North Carolina.

The Day of New London has reported that State Rep. Andrew Maynard (D-Stonington) said applauded Mr. Malloy for meeting regularly with Connecticut’s business leaders, which he indicated is in contrast to the limited outreach from former Gov. M. Jodi Rell (R-Brookfield), his immediate predecessor.

The News-Times of Danbury reported in April 2014 that Kevin Kelleher, the chief executive officer of Cartus, was impressed that Mr. Malloy devoted extensive time to discussing the expansion plans for the company, which several years has been one of Danbury’s largest employers, but had been considering a move to Texas.

Danbury Mayor Mark Boughton, a candidate for the 2014 Republican gubernatorial nomination, told an on-ground section of the World Governments course in February 2013 that it would the companies, such as Bridgewater Associates, could easily fund their expansions without state aid.

Additionally, he said that Jackson Labs, which is based in Maine, has only guaranteed 300 additional jobs.

“I initially thought that it was a good idea [to have First Five/Next Five], but I think only a small number of people actually benefit from it,” said Lana Vazzano, a student in the Spring 2014 World Governments class.

“I think that Bridgewater Associates has the money to move within the state,” she added in a phone interview.

The Hartford Courant reported in 2012 that Bridgewater Associates had received offers from New York City and the state of New Jersey, which, in part, prompted Mr. Malloy to provide the state assistance.

Jill Caprio-Scalera, another student in the class, said she had some reservations about the program based, in part, from the comments that state Rep. David Scribner (R-107) of Brookfield made during a March 27 talk to the students about Connecticut’s economy.

She said that she agrees with Mr. Scribner that Connecticut could attract more businesses if it lowered its personal and corporate taxes, which are among the highest in the country.

Mr. Scribner has said that Connecticut is one of the least competitive states in attracting businesses.

Ms. Vazzano said that in addition to slashing taxes, she believes some of the First Five/Next Five money should be used to upgrade Connecticut’s infrastructure.

U.S. Rep. Elizabeth Esty (D-5) of Cheshire, a member of the House Transportation and Infrastructure Committee, told the class in April 2014 that the federal government has not done enough to maintain the interstate highways running through Connecticut.

However another student, Dominique Nance, said she supports First Five/Next Five.

She said that she works in the accounts payable department at Blue Sky Studios, which specializes in film animation. She said the company moved eight years ago from White Plains, N.Y. to Greenwich, partly because of Connecticut’s film production tax credits.

“I think that we need these brain hubs because there can be a multiplier effect,” Ms. Nance said. “Stamford is one of those brain hubs.”

Mr. Boughton has said it would be better to devote the state assistance to small companies, which are responsible for a majority of the employment.

However, state Department of Economic And Community Development Commissioner Catherine Smith said in an August 2012 phone interview that  the state has provided considerable assistance through the Small Business Express program that was enacted as part of the 2011 jobs package.

The small business initiative also provides loans to companies seeking to expand.

The Day stated that as of June 30, 2013 the Small Business Express Program had created 3,043 additional jobs.