Budget Cuts, Corporate Welfare, Economic Development, ESPN, Malloy Budget cuts, Corporate Welfare, Economic Development, ESPN, Malloy
The Urban Dictionary defines “jive” as a “colorful form of speaking” that is “sometimes hard to follow.”
In the real world here is how it works;
On August 2, 2011 Governor Dannel P. Malloy announced that, in return for creating 200 new jobs over the next five years, the taxpayers of Connecticut would give ESPN $17.5 million toward the construction of a new building and at least $300,000 to train the new workers. Malloy explained, “ESPN’s needs are not going to be ignored.”
That corporate welfare package brought the total Connecticut taxpayer support for ESPN to over $100 million in state tax breaks and grants over the past twelve years.
Then yesterday, May 20, 2013, The Wall Street Journal reported that ESPN, “was in the process of laying off a few hundred workers… a sign that the hugely profitable sports cable-TV powerhouse is responding to the rising fees it pays to air games as well as other changes in the media industry…ESPN said some of the job cuts are coming through attrition, or unfilled open positions, and didn’t disclose the precise number or types of workers who are being let go.”
Associated Press added, “ESPN is cutting its workforce, the latest Disney division to reduce staff…’We are implementing changes across the company to enhance our continued growth while smartly managing costs,’ the sports media giant said in a statement Tuesday. ‘While difficult, we are confident that it will make us more competitive, innovative and productive.’”
The AP explained that the ESPN layoffs follow 300 layoffs that occurred at LucasArts and LucasFilms after Disney acquired the companies for $4.1 billion.
As AP noted, “Still, Disney has been on a roll financially, beating or matching earnings per share estimates for the last eight quarters. After it reported a 32 percent gain in net income for its fiscal second-quarter earnings two weeks ago, more than a dozen Wall Street analysts raised their price targets on Disney stock to an average of nearly $72.”
So in essence, despite being an extraordinarily financially successful subsidiarity of an extraordinarily, financially successful company that is doing extraordinarily financially well in this extraordinarily financially successful Wall Street market, ESPN accepted almost $20 million in scarce taxpayer funds and promised to create 200 jobs but is now intentionally keeping vacancies open and laying off Connecticut residents, so that it can appear even more extraordinarily financially successful.
Despite this development, according to the Hartford Courant, when asked about it, a spokesman for the Malloy administration said that ESPN will not be forced out of the First Five program as a result of its layoff plan because it is still intending to add at least 200 jobs during the period starting in August, 2011 when the Governor gave them the public funds.
Meanwhile, the Connecticut General Assembly continues to consider major cuts to some of the most significant and vital human and healthcare services.
Now if that jive is not a “colorful form of speaking” that is “sometimes hard to follow,” I don’t know what is.
Ben Barnes (OPM Secretary), Budget Cuts, Corporate Welfare, Economic Development, Healthcare, Human Services, Malloy, Mental Health Services, State Budget, State Deficit Budget cuts, Economic Development, Malloy, State Budget, State Deficit
Pick up any newspaper and you are bound to see at least one story about the impact of budget cuts and another about how state governments are giving money away to private companies in an attempt to convince them to create or retain jobs.
It is quite a commentary about our times. A lack of adequate funding means people who work for schools, hospitals and nonprofit providers of human services are or will be losing their jobs, while taxpayer continue to provide the money that is being used to try and persuade businesses to pledge that they will create or keep private sector jobs.
True, it may not be the notoriety that we want, but you certainly can’t say that Connecticut hasn’t become the epitome of this paradox.
For example, earlier this week, Wait What? readers were provided an opportunity to read two posts, one entitled Has it come to this…? and another entitled And while cutting essential services, Malloy gives $100,000 to a Stamford Brewery.
The first post reported on a recent Hartford Courant commentary piece by a father lamenting Governor Malloy’s cut to essential programs that help Connecticut’s developmentally disabled residents while the second was about the Governor’s visit to a brew pub in Stamford to celebrate a $100,000 taxpayer-funded grant that the Malloy Administration was giving to help the brew pub expand.
The two stories served to enlighten readers about the reality of our times or the juxtaposition between an era where we are cutting vital services while providing private companies with what some would call economic development incentives and what others would refer to as corporate welfare.
What I failed to report was that, in addition to the brew pub, Governor Malloy and his Commissioner of the Department of Economic and Community Development (DECD), Catherine Smith, were actually visiting three other companies around the state that day. All four of the companies were receiving funds thanks to the State’s Small Business Express Program (EXP).
Over the past eighteen months, the Small Business Express Program has given out more than $80 million. According to state officials, the program has helped “create and retain more than 7,600 jobs.” The Legislature will soon be voting to give the Governor an additional $60 million for this program.
In addition to Stamford’s Half Full Brewery, Malloy was visiting Atlantic Canvas and Awning (a company that received a loan of $50,000 and a matching grant of $10,000); Automotive Core Recycling (a company that recycles and sells catalytic converters and other auto parts and received a $250,000 loan) and Katalina’s (a cup cake bakery that received a loan of $30,000 to add equipment and furnishings to their new retail shop).
According to the Department of Economic and Community Development, the $50,000 loan and $10,000 grant “support the creation of three new jobs and retained four,” the $250,000 loan translated into one new position and retained 8 jobs, while the $30,000 loan to the bakery “created one full time job and retained two full time and two part time jobs.”
The Governor’s press release that day announced that the Small Business Express Program has already created or retained more than 1400 jobs in 2013.
Meanwhile that distraught and frustrated father, along with the others who care for Connecticut’s developmentally disabled, try to cope with Governor Malloy’s $6 million cut to employment and day service programs.
Actually, that $6 million cut was part of a much bigger list of cuts Governor Malloy ordered last November 28, 2012. That day, back in November, Governor Malloy announced $170 million in budget rescissions.
The press release didn’t actually quote Governor Malloy. Instead the task of explaining the cuts was left to Ben Barnes, Malloy’s budget director. Barnes wrote, “Many of these cuts are very difficult to make, especially now when so many residents continue to struggle in a tough economy, But as painful as they are, cuts are necessary to keep this year’s budget in balance. State government needs to live within its means.”
The November list included a wide variety of reductions including a $53,000 cut to the Division of Criminal Justice’s Shooting Task Force; a $200,000 cut to the Jobs First Employment Service Program, a $488,000 cut to the state’s Environmental Quality Program; a $335,000 cut to the Department of Health’s Community Health Services Program and $41,000 cut to their Genetic Diseases Program; a $433,000 cut to the state’s Community Mental Health Centers, a $2.3 million cut to home care services that keep people out of more expensive nursing homes and hospitals and the list goes on and on.
More recently, the state budget plan that Governor Malloy proposed a month ago continued those cuts. In fact, his new budget makes even deeper cuts to a variety of vital and essential services.
So how is it possible that a Governor would be instituting record budget cuts while giving away record amounts of taxpayer funds to private businesses?
Truth be told, it is the difference between how the State operating budget works compared to the way the State Capital or Bond budget functions.
Even in the desperate times, the Capital budget continues to pump out cash.
The State’s operating budget is paid for with tax dollars. The State’s Capital Budget is funded via the state’s credit card.
Because we are borrowing the money and then paying the amount (plus interest) back over twenty years, the argument is that cutting the Capital Budget won’t help to balance this year’s operating budget. This year’s operating budget is still facing a $135 million plus deficit despite the terrible cuts instituted by the Governor and the additional cuts approved by the General Assembly.
Although Connecticut already has the highest per capita debt burden in the nation, since the word “deficit” applies to the operating budget and not the Capital Budget, we end up with a situation in which vital services are cut at the same time money is being handed out.
In fact, if Governor Malloy gets his way, we’ll see more cuts to essential services and more layoffs of hospital and human service workers in the coming months, and at the same time, the General Assembly will be allocating even more money for the Governor to hand out to the private sector.
Corporate Welfare, Economic Development, Economy, Malloy, State Budget, State Deficit Bridgewater Associates, Corporate Welfare, Economic Development, Malloy, Ray Dalio
Don’t let the residue of the Great Recession get you down.
While it is true that America’s middle-class is on the ropes, unemployment remains high, sending a kid to college costs more than most people save in their entire lives, child poverty in Connecticut has gone up 50% in the last decade and the state is facing a $1 billion dollar budget deficit next year, Connecticut’s taxpayers managed to dig deep and find the money to provide one of the world’s biggest hedge fund owners, Ray Dalio, with $115 million in state funds. Meanwhile Stamford’s taxpayers learned this week that they were helping to put the whole deal together thanks to their Mayor’s decision granting a private developer access to some of the most valuable publicly owned waterfront property left in Connecticut.
In return for all this generosity, Dalio, the founder and CEO of Bridgewater Associates, and a man who was paid $3.9 billion last year will move his offices from Westport to a new $750 million office complex on Stamford’s waterfront.
The deal began with Governor Malloy’s decision to give Dalio a taxpayer-funded corporate welfare package that included a $25 million forgivable loan, $5 million in grant funds for job training, $5 million for an alternative energy system and $80 Million in tax credits.
Now, under Part II of the effort, Stamford’s Mayor Mike Pavia has signed a “letter of intent” granting the developer of Stamford’s Harbor Point the right to use city-owned property as part of overall effort to clear the way for Bridgewater Associates’ headquarters.
The mayor’s action will allow the developer to move the South End boatyard to a different location. Never mind that boaters say the alternative site doesn’t accommodate their needs, we’re talking about pleasing a billionaire – and that is billion with a B – so what he wants is what he gets.
Just to make the whole situation as absurd as possible and to add insult to injury, while the letter of intent was signed back in December, it was only made public this week.
According to reports in the Stamford Advocate, “Mayor Michael Pavia said the goal of the document was simply to allow the zoning review process to commence so as to give the city a chance to assess the plan…Pavia said the city has not yet negotiated a price for the land in question. According to the letter of intent, should the boatyard plan be approved by the Zoning Board, the city and BLT [the private developer] will determine the price as part of a final agreement granting the developer property rights.”
Oh, and for those who are into reading the fine print, although initially Mayor Malloy and then Mayor Pavia pledged that no development project would go forward without all of the appropriate approvals, the letter of intent includes special language that reads, “The Applicant shall obtain final approval of such grant by City of Stamford Boards and Commissions as may be required by City Charter, state law or as the Mayor of the City of Stamford, in his sole discretion deems necessary or appropriate.”
The new wording certainly suggests that if Stamford’s various public boards and commissions didn’t act in an appropriately way, the mayor might have to intervene to move the project along without such approvals.
It is nice to note though that when confronted about this latest addition, the Pavia administration claimed that the language is being misunderstood and the letter of intent does nothing more than allow the process to start moving forward.
So here we are.
On the long list of challenges facing Connecticut, we can put a check mark next to the task that reads – “Help the world’s biggest hedge fund and the highest paid CEO in the country pay for a great new office with a great waterfront view.”
More on these latest developments can be found in the Stamford Advocate: http://www.stamfordadvocate.com/news/article/Setting-table-for-Bridgewater-city-paves-the-way-4177724.php#ixzz2HgLY6z9H and http://www.stamfordadvocate.com/news/article/Boatyard-plan-agreement-defended-4184605.php#ixzz2HgLH7Uac
Corporate Welfare, Economic Development, Malloy, State Budget Corporate Welfare, Economic Development, Malloy
But since there are still a few days until Election Day, I’d like to re-post a comment that I made earlier this week on Facebook, thanks to the generator at the local community center.
Let us take a moment to IMAGINE a world in which instead of giving $115 million in taxpayer funds to hedge fund criminals, or tens of millions to UBS who then lay-off 10,000 people or giving scarce public funds to the carrion-birds called “ticket-re-sellers,” all the while postponing vital transportation projects so the money could be shifted to the transportation fund to cover up the deficit in the General Fund, we actually invested in real infrastructure upgrades like burying key electric lines or creating these so-called micro-grids.
Yes, there would still be many people who would have lost power. There might even be many still without power, but we’d have created thousands of jobs for the workers and crews and suppliers burying those lines or creating those grids and tens of thousands of people would have been able to have spent their week at their jobs, making money and paying taxes.
Instead, we have a $3.9 billion dollar hedge fund CEO and insurance and corporate CEOs collecting extra bonuses, for their ability to make even more money, thanks to our corporate welfare.
And I’m pretty sure none of those CEOs sat in dark houses and lamented the few hundred dollars of food that was rotting in their refrigerators.
If you come across a candidate in the next few days – ask them, tell them, order them – that if they win, they need to place a moratorium on the distribution of corporate welfare and, instead, demand that public funds to be used to create and enhance public benefits.
That is not to say that government should never play a role in helping leverage capital, but Malloy’s list of corporate welfare is monstrous and growing, and in many cases will lead to little or no longer-term public benefit. Malloy’s list includes;
Alexion: $51 million
Bridgewater Associates: $115 million
CareCentrix: $24 million
Cigna: $71 million
ESPN: $25 million
Jackson Labs $291 million
NBC Sports: $20 million
Sustainable Building Systems/Steel Buildings Systems International: $19 million
TicketMaster: ($ 6 million, removed itself after CEO arrested)
UBS AG $20 million
Blue Sky Studios $3 million
Created a variety of smaller corporate grant programs totaling over $150 million and expanded the Urban and Industrial Site Reinvestment Tax Credit program from $500 million to $750 million.
** More than $800 million of these “investments” are being financed by borrowing the money, meaning taxpayers will be on the hook for about $400 million more in interest payments.
Corporate Welfare, Economic Development, Malloy Corporate Welfare, DECD, Economic Development, Malloy
Earlier this week, Charter Communications, Inc., “a Fortune 500 company and the fourth-largest cable operator in the United States,” became Governor Malloy’s ‘Next Five’ Corporate Welfare recipients. With revenue of $1.9 billion during the last financial quarter, the company did lose $83 million, but that was an improvement over the same quarter the year before, when Charter lost $107 million.
For most of us, not enough revenue to cover expenses poses a problem. As I can attest, banks seem to frown on giving, or even loaning money to people whose income is deemed inadequate or insufficient.
But we don’t call our economic system “advanced capitalism” for nothing.
In return for promising to create 200 jobs, Charter will receive a taxpayer-funded 10-year loan of $6.5 million with an interest rate of 2 percent. Even better, the Connecticut Department of Economic Development will defer principal payments for the first three years. If the company does create the jobs, the entire loan will be forgiven.
The St. Louis Business Journal wrote a detailed article following the announcement. The good news for them is that the company has said that moving its corporate headquarters will not lead to any lay-offs. In fact, apparently without any state funds, Charter’s social media specialist explained that the company will be adding 300 new jobs in their St. Louis offices.
Ten years ago, Charter purchased their present St, Louis headquarters for $43.5 million. With approximately 16,800 employees nationwide, about 3,000 of Charter’s employees are now working in St. Louis.
According to Governor Malloy’s press release, Charter is the ninth company to participate in the “Next Five” Corporate Welfare program, which is one of a number of economic development programs administered by the Connecticut Department of Economic and Community Development (DECD).
The press release explains that the $6.5 million will go toward Charter’s costs for tenant improvements and the purchase of furnishings and office equipment. Considering the company will start with about 100 employees at the site, those keeping track will realize that our taxpayer subsidy equates to about $65,000 worth of furniture and improvements per employee.
The Stamford location must come as especially good news to Charter’s new chief executive officer, chief operating officer and chief marketing officer. All three left Cablevision Systems Corporation in Bethpage, New York, earlier this year, but never moved their homes to St. Louis.
As an aside, the final sentence of the Governor’s press release states that the package, “also includes funding provisions for future job growth,” but for some unknown reason, it doesn’t quite get to explaining what that might mean.
Corporate Welfare, Economic Development, Malloy Economic Development, Malloy
If Connecticut taxpayers are going to subsidize the world’s largest hedge fund, why shouldn’t we invest in a paint ball gun battle field?
Now don’t get me wrong…
I’m all for helping small businesses survive and grow in these difficult economic times.
Having owned a few of my own small businesses, I appreciate that they are the true engines of economic activity. Connecticut needs jobs and most jobs are created by small business.
In fact, the $115 million the taxpayers of Connecticut recently gave to the world’s biggest hedge fund (Bridgewater) would probably have created a lot more jobs if we’d have used those dollars to support hundreds of small business around the state.
And furthermore, let me be clear, I don’t have anything against paint guns and weekend warriors who go out there and blast each other with balls of paint, although I have heard it can hurt, if you hit someone in just the right (or wrong) place.
Why, back in the day, when I was a just a boy, we’d go down to the sandpit off of Brookside Lane, build some forts, and pelt each other with handmade mud or clay balls until enough kids were bleeding that it was time to go home.
But times change, this is the 21st century, so no self-respecting kid (or adult) is going to accept anything short of replicas of real guns, full battle gear and CO2 cartridges that propel pant ball at 300 feet (91 m) per second. (I don’t know how fast that is, but it sounds pretty damn impressive.)
But more importantly, Connecticut’s Department of Economic and Community Development knows a good investment when it sees one. And so just last March, Gov. Dannel P. Malloy, announced that one of the first businesses to qualify for the new $100 million, “Small Business Express Program,” would be Fields of Fire, a proposed 50-acre paintball facility in Mystic, Connecticut.
Fields of Fire received a $100,000 grant to help them buy the equipment and materials needed to create a full paintball battlefield.
Yes, you read it right, a grant, not a loan.
No need to pay the taxpayers back.
Count it as a donation toward Connecticut’s “Still Revolutionary” Tourism program.
Some people might quibble about why we’d fund a paintball battlefield, when we are laying off teachers and schools are going without supplies.
But those people clearly miss the point.
And some people might complain that we provided the money as a grant and not a low-interest loan.
But, then again, those are probably the same people who’d complain that the $100 million program proposed by the Governor and approved by the Legislature last October, is actually paid for out of bond funds (that is borrowed money.) This means that although the true cost to taxpayers is eventually principal AND interest, we’ve got a few decades to pay the money back, so it’s the best of all worlds. We get to use it facility now and our children will actually have to pay the bill.
And more good news, the facility is open and getting great reviews.
The cost to get into the paintball battlefield is $20 for admission, $20 for gun rental and $45 for paint balls (they come in cases of 2,000). Camo Jumpsuits and paint grenades are also available. And birthday parties start at just $400.
Unfortunately, the website doesn’t say whether taxpayers get a discount, considering we’re sort of like silent partners for the venture.
But I highly recommend you go to http://www.fieldsoffiremystic.com/, just make sure you have the sound turned up. Too low and you really lose the effect.
The only sad part of the whole story is that the website doesn’t have pictures of this governor, or any governor, rowing around in a canoe, or even ducking an in-coming paint grenade.
Bridgeport, Economic Development, Malloy, Mayor Bill Finch Bass Pro, Corporate Welfare, Economic Development, Malloy
Now it’s true that Bass Pro sells guns, so I’d expect the 2nd Amendment to come up in the discussion about Bass Pro coming to Connecticut, but Freedom of the Press and the 1st Amendment? (really?)
Well Mayor Bill Finch’s Chief of Staff, Adam Wood, found a way to do it.
The website Only In Bridgeport sets the scene
For those eager to see how “politics” really works, let’s return to last week’s Wait, What? post about how Bass Pro and Carbela’s have been extraordinarily successful in getting taxpayers to fund their construction projects.
Recall that a watch-dog foundation, The Franklin Center, found that Bass Pro shops and Cabela’s “received or are promised more than $2.2 billion from American taxpayers” over the past 15 years.
Six years ago, Governor Rell and the City of East Hartford spent nearly $30 million to get Carbala’s to build a 200,000 square foot store in East Hartford. Jobs, increased tax revenue and an anchor tenant for a major new retail and housing project were among the promised benefits.
Thus, taxpayers “paid” about $120,000 for each new job, most of which pay just over minimum wage, the town has received virtually no additional tax revenue and there has been no additional construction on the site.
Two months ago, in July, Governor Malloy and Mayor Bill Finch cut a deal with Bass Pro to open a store and anchor a new project in Bridgeport. There is still no word on the size of the public subsidy, but the message from elected officials was Bass Pro will create jobs, increase revenue and attract other business to the area.
One can debate the efficacy of this type of economic development policy, but it’s what happened next that really says something about the health of our democracy.
A month after the big Bass Pro announcement, on Wednesday, August 8th, 2012, Mayor Bill Finch’s Chief of Staff, Adam Wood, sent out an email to a broad range of government and business leaders blasting the Connecticut Post and claiming the newspaper was “hurtful to all of our efforts to improve our city.”
The subject line of Wood’s email read; “A message to Bridgeport leaders regarding CT Post coverage–inaccurate and misleading–A call to action.”
His diatribe included a direct attack on one of the Connecticut Post’s columnists, Keila Torres, who had recently written a piece critical of the way the Mayor and City Council had framed the up-coming ballot question that seeks to trick voters into changing the city charter to do away with the democratically elected board of education, and instead, allow the mayor the simply appoint the board.
However, the real issue that set Finch’s aide off was his belief that the Connecticut Post had been unfairly attacking Bass Pro Shops and the Malloy/Finch’s plan to bring the store to the Bridgeport. At the front end of the effort to woo Bass Pro to Bridgeport, Adam Wood had actually flown to Las Vegas to meet with corporate officials.
To frame the rationale for a “call to action” against the Connecticut Post, Wood claimed that, “Just this summer (the mayor) announced Bass Pro Shops as the anchor tenant at Steel Point and was hammered by the Connecticut Post with 9 negative articles in a row.”
Actually, a detailed review of the Connecticut Post’s archive indicates that Wood is totally incorrect.
There were never 9 negative articles in a row “hammering” Bass Pro. There were a series of positive articles when the plan was announced. Later there were four articles related to the fact that the federal government was suing Bass Pro because the company refused to hire Blacks and Latinos and a couple of articles that were related to the controversy surrounding Bass Pro’s role as a major retailer of guns in the United States.
Throughout the time frame, there were also some editorial pieces, most were primarily positive but some did raise these more controversial issues.
To reach the magic number 9, Wood is either counting letters to the editor or more likely, a number of national stories that did, in fact, mention Bass Pro, but had nothing to do with Bridgeport.
Those stories were not written by the Connecticut Post, but picked up by the Associated Press. The Connecticut Post and virtually every other paper in the United States ran those stories. And that was because they were stories about the Colorado movie theater massacre.
These national stories mentioned Bass Pro because in May, after purchasing a Glock pistol at one store, the movie theater killer purchased a shotgun from a Bass Pro Shop in Denver, Colorado that he used in the assault. A few days later, the killer purchased an AR-15 assault rifle at a different store, and then, the next day returned to the first Bass Pro Shop to purchase another Glock handgun. All the purchases were legal under federal and state law.
But, putting aside why Finch’s aide was upset is the bigger question of what happened after he sent out his email.
Upon receiving the email from the Mayor’s Office, the President of the Bridgeport Regional Business Council sent an email out to his board saying, “One of the key needs of any city that is working hard to build its tax base, grow jobs, and improve its image, is to have as much positive media coverage as is possible… The Connecticut POST is one of the key sources of local news, and, therefore, it plays a key role in helping to mold the image and perception of the city.”
“Certainly the POST has a journalistic obligation to report the news, and report it accurately. It also has on obligation–as a taxpaying, job generating, member of the community–to be a partner with us in economic development and image enhancement…,” added the business leader.
He concluded with, “My ask of you is to–when you get a chance and by whatever method you choose–let the POST know of your commitment to Bridgeport and to let the POST know of your desire to increase the level of positive news for the city.”
Okay, so the Mayor and his aide are upset that the newspaper isn’t writing positive enough stories about Bass Pro, the Mayor’s aide sends out a “call for action,” the head of the business community then diplomatically asks his members to “let the POST know of your desire to increase the level of positive news for the city.”
And the response? When the President of Bridgeport Hospital, Bill Jennings, gets the email, he writes back saying, “I support this and will assist in delivering the message. The pile-on regarding Bass Pro is not only counter productive, but despicable. And represents a new low.”
Despicable? A new low?
What exactly is despicable and a new low?
In their capacity as public officials and business leaders, do they think it is “despicable” and “a new low,” for a newspaper, working under the protections of the 1st Amendment of the United States Constitution, to cover ALL the issues surrounding a proposed government action?
Is it despicable that the Connecticut Post reported that Bass Pro was being sued by the United States Government, after a two-year exhaustive investigation, that found Bass Pro refused to hire black and Latinos at most of its stores?
Or is it despicable that the Connecticut Post covered community concern about whether there would be an increase in violence if a major new gun seller moved into the city.
The Connecticut Post ran editorials and columns, the majority of which seemed to support the Bass Pro project.
So their problem seems to be the “news” and not the “commentary” part of the paper.
Maybe it’s just me, but it seems pretty scary and dangerous when elected officials and their staff, along with business and community leaders, start calling for “action” against newspapers, or suggesting that what is clearly reasonable news coverage is, in fact, “despicable,”
Next the President of Bridgeport Hospital will be writing that it is despicable that the Connecticut Post is covering the extent of safety violations and medical mistakes at his hospital.
For more check out Only In Bridgeport Post http://onlyinbridgeport.com/wordpress/mayors-office-issues-call-to-action-against-connecticut-post-wood-takes-post-to-woodshed-for-inaccurate-and-misleading-coverage/
Economic Development, Economy, Poverty Economic Development, Economy
One of yesterday’s Wait, What? Blog posts dealt with the reality that, here in Connecticut, we taxpayers are giving the world’s largest hedge fund, $115 million dollars to stay and expand in Connecticut. The public subsidy will cost us about $150,000 for each of the 800 jobs they are scheduled to create over the next ten years.
Meanwhile, as a member of the dwindling middle class, it will cost me, after the available public subsidies, about $160,000 to pay for my child to get an undergraduate degree in her chosen field.
We are witnessing modern capitalism in which taxpayers are giving money to a company that paid its CEO $3.9 billion last year while a person making an income at about the state average builds up a debt that drag me down for the rest of my life.
And we are told that things are getting better.
Things might very well be getting better, but that misses the point.
Today, Connecticut Voices has released a report that drives the point home in way that everyone, across the political spectrum will be able to understand.
Entitled, The State of Working Connecticut 2012: Employment, Jobs and Wages in the Wake of the Great Recession,” the report reveals that “the wage gap between the wealthy and others has grown over the recent economic recession and recovery, with the highest wage workers enjoying wage growth four times that of median wage workers, while wages stagnated for low wage workers…”
The report examines the period from 2006 – 2011 and key findings include:
- “The gap between Connecticut’s wealthy residents and everyone else has continued to widen. Connecticut’s median wage grew by only 2.4 percent (after adjusting for inflation) over the lowest paid workers actually saw their wages fall by 0.2 percent.
- “Connecticut’s higher paying manufacturing jobs are disappearing and being replaced by lower paying jobs in healthcare, hotels, and restaurants.” 14 percent of Connecticut manufacturing were lost between 2006 and 2011, while healthcare and social service sector jobs grew by 11 percent.“ The Problem: Healthcare and Social service jobs pay “78 percent of the statewide average weekly wage,” meaning those that are getting jobs are getting them in fields that won’t allow those workers to even reach Connecticut’s existing middle ground.
- “Connecticut’s Black and Hispanic workers have not experienced an economic recovery.”
- “Connecticut’s youngest workers are most likely to be unemployed, but Connecticut’s oldest workers are most likely to face long-term unemployment.” As of 2011, almost in one in five younger workers were officially unemployed. Meanwhile, of the unemployed workers 55 or over, a shocking six in every ten have been unemployed for more than 26 weeks. Losing a job when you are 55 or over is becoming a death sentence when it comes to ever finding work again.
This study should be mandatory reading for every legislative candidate seeking office. In fact, perhaps some Wait, What? readers could print off the executive summary or full report, send it to your local legislative candidates and ask, no demand that they provide the voters with some substantive response.
The Executive Summary is here: http://www.ctvoices.org/sites/default/files/econ12sowctes.pdf
The Full Report is here: http://www.ctvoices.org/sites/default/files/econ12sowctfull.pdf
Corporate Viewpoint, Economic Development, Economy, Malloy, State Budget, Taxes Bridgewater, Economic Development, Malloy
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:
Economic Development, Economy, Malloy Economic Development, Economy, Malloy
When one of my favorite readers sent me the news late this afternoon, I didn’t believe it.
When Bloomberg News Service wrote seeking a comment a few moments later, I almost drove off the road.
Personally, I can’t make my mortgage payments, but like Connecticut’s other taxpayers, it turns out that I managed to scrounge together $115 million for Bridgewater Associates, the world’s biggest hedge fund.
In fact, since the state is borrowing the money, it will actually cost Connecticut’s taxpayers over $200 million.
$200 million to a company that paid its founder, Ray Dalio, $3.9 billion last year.
And what do we get for it.
Bridgewater will build a $750 million headquarters in Stamford, Connecticut.
And the bargain is that it only costs us $25 million for a “’forgivable” 10-year loan with interest set at 1 percent”, plus $80 million in tax credits, $5 million for some type of “alternative-energy system” and $5 million for job training…although the 154,000 Connecticut residents on unemployment and the additional $100,000 who have part-time jobs when they really want full time jobs shouldn’t hold their breath; Bridgewater is very particular about the types of people it hires.
Oh, and the kicker, they will be moving their offices….FROM WESTPORT, CONNECTICUT!
My first response to the reporter wasn’t printable, so I stopped the car, took a deep breath and tried again.
The following is what made the Bloomberg News article, under the sub-headline, “‘Shocking’ Deal”:
“This is stealing from the poor and middle class to make a billionaire even richer…“This isn’t economic development…[it is] shocking beyond words…If a Republican governor did this, we Democrats would be calling for impeachment,” said Jonathan Pelto, a Democrat and former deputy majority leader in Connecticut’s House of Representatives.
(updated) The Governor, who held a press conferences, issued a “statement” which read, in part, “to have a company of Bridgewater’s stature make the business decision to invest $750 million in our state and significantly increase its workforce is not only an extraordinary economic win, but signals to the rest of the world that Connecticut is strengthening its leadership position in the very competitive financial services sector,”
When the Bloomberg reporter called the Governors office and Bridgewater for more details, he was left to write, “Malloy didn’t respond to requests for additional comments. Alexei Nabarro, a Bridgewater spokesman, also didn’t respond.”
That said, the Malloy statement did include some nice words from Bridgewater, who said that the company and Malloy share a “vision of creating a state of the art and environmentally sustainable office campus… [And that the new headquarters will] “facilitate creativity, collaboration and help reinforce Bridgewater’s distinct culture.”
There is more, much more…but my kids and dogs are yelping, so I need to go heat up some leftovers.
The full Bloomberg News article can be found here: http://www.bloomberg.com/news/2012-08-15/connecticut-aids-bridgewater-hedge-fund-to-build-new-hq.html