Connecticut taxpayers are providing $115 million in aid to the world’s largest hedge fund.
Ray Dalio, the company’s founder and CEO is the highest paid person in the country. (He made $3.9 billion in 2011 alone.)
The package is, “an incentive to stay and expand in the state.”
They build a $750 million headquarters in Stamford (they are now based in Westport)
They increase their workforce from 1,225 to 2,000 over the next decade.
Apparently it is a win, win situation.
According to an article in Slate.com, “without Connecticut’s cash, places like New York’s Westchester County, New York City and even parts of New Jersey might have lured Bridgewater with incentives of their own. The firm needs to move somewhere, Westchester isn’t that much further away from its current Westport home, and many employees anyway reverse-commute from Manhattan.”
So apparently, we had no choice. We had to give Bridgewater $115,000,000.
The taxpayer-funded package includes a $25 million forgivable loan, at a 1 percent rate for 10 years, $5 million in grant funds for job training, $5 million for an alternative energy system, and $80 Million in Tax Credits. That means that state revenue drop by $80 million and Bridgewater’s profits go up $80 million.
A recent Hartford Courant editorial endorsed Governor Malloy’s action, with a headline that read, “Bridgewater Deal: Hold your nose and help the hedge fund.”
Why? Because hedge fund billionaires create jobs…
In fact, 800 to 1,000 new jobs over the next 10 years. That is, he needs to create those jobs in order to have the $25 million forgivable loan, forgiven. Apparently he keeps the other $90 million regardless.
The jobs are phased in over the next ten years and if each employee makes at least $150,000, per year, Connecticut picks up an additional $10,000 or so, per employee, per year, in state income taxes.
Putting aside the “extraordinary spin-offs” that are also promised, Connecticut’s taxpayers will be able to recoup their “investment” in Bridgewater sometime between 2031 and 2036.
Meanwhile, budget deficits continue to take their toll on vital services. For example, last year Governor Malloy instituted the deepest cuts in state history to Connecticut’s public colleges and universities and Connecticut’s education funding formula remains somewhere between $800 million and $1.5 billion underfunded.
The biggest hedge fund in the world picks up over a hundred million dollars. The highest paid person in the country makes more money and Connecticut ends up with fewer college graduates and a less educated workforce.
Oh, and every hedge fund in Fairfield Country, and there are many, knows that all they have to do is go in to see the Governor and tell him they are thinking of moving to Westchester County, but if Connecticut’s taxpayers cough up at least $100,000 for every employee that they presently have, they’ll stick around for a decade and even promise to add some jobs.
And to all this, the Hartford Courant concludes, “plus, if you buy the theory that inventive people spur the economy, Mr. Dalio is at the head of the creative class, an iconoclastic leader and thinker. So though it may not sit well, the deal may make sense.”
Finally, as one Connecticut business magazine wrote, “there can be no doubt that Gov. Dannel Malloy wanted Bridgewater Associates as part of his extended “First Five” program. He courted the company while attending a global economic forum in Davos, Switzerland, earlier this year. He sought to fulfill Bridgewater’s desire to expand by targeting prime property along the water’s edge. And on Aug. 15 he enthusiastically announced that Bridgewater would become eighth participant in the state’s economic development program that provides lucrative financial incentives to Connecticut-based businesses in exchange for job creation.”
While company officials had considered “a variety of different options” for relocating its headquarters, direct access to the water was a strong drawing card for the Stamford site, said the Bridgewater spokesperson. The city was selected for “a variety of reasons, but mainly what was very attractive was the potential to develop a site along the waterfront was great. What’s good about this is restoring a piece of waterfront property.” The spokesperson also cited Stamford’s proximity to mass transit and what he called “a thriving area close to New York City” as pluses.”
For more about the deal here are a few other news articles: