By CHRISTOPHER KEATING
12:17 PM EDT, October 17, 2011
Gov. Dannel P. Malloy announced with much fanfare recently that a research laboratory will be coming to Farmington with the state's help, but the plan is running into a buzzsaw of criticism from Republican legislators who say there are too many unanswered questions.
Lawmakers are concerned about the projections for the Jackson Laboratory, a well-known Maine genetic research institute with nearly 1,400 employees that has pledged to bring 300 new jobs over 10 years to the University of Connecticut Health Center campus. They note that Jackson, as a nonprofit company, will not pay any corporate taxes to Connecticut and no property taxes to Farmington. As such, the immediate, direct economic return to the state's tax coffers would be only from the state income tax on the workers' salaries.
When Malloy announced the deal, the numbers caught the attention of legislators — an overall project of $1.1 billion with 6,800 direct and spin-off jobs to be created. But Republicans say those numbers are the best-case scenario over 20 years — a lot of time in a fast-changing world that is subject to recessions and volatility on Wall Street. In 1988, they say, no one could have predicted the collapse of Lehman Brothers investment bank, the bailout of venerable American corporations, and the massive downturn on Wall Street that occurred in 2008.
But the fine print of the Jackson deal says that a much smaller number of jobs are promised in a project that comes soon after a separate Jackson deal in Florida collapsed due to a lack of funding. The deal calls for a $192 million construction loan that will be forgiven if Jackson meets its job projections, plus $99 million to support research.
"I'm a little concerned that the ultimate commitment is only for 300 jobs over 10 years,'' said Sen. John Kissel, an Enfield Republican who is among the longest-serving senators. "Ten years is an awful long time to wait for 300 jobs, especially when your investment is $300 million. … It's a hope and a dream. If this wasn't a satisfactory proposal for Florida, why are we grabbing at it? Their proposal in Florida was kicking around for 2 ½ years.''
Saying that Connecticut has already been using its credit card too much, Kissel said the state must also add the total from Malloy's original $864 million proposal this year to upgrade the UConn Health Center with a new hospital, two new parking garages, and the expansion of the medical and dental schools. Now, the state will be spending an additional $291 million, on top of the original amount, for a total of $1.16 billion.
Kissel said that no one during the initial debate mentioned that additional money beyond the $864 million would be needed to attract companies to Connecticut.
"The promise seemed to be — if you build it, they will come — to borrow from 'Field of Dreams.' … We, the legislature, have had a very short time to review this, but Jackson Labs has 10 years to get 300 jobs," said Kissel.
But Malloy is strongly defending the deal as an exciting and groundbreaking economic development proposal, saying the legislature needs to take a bold step with a growing industry to jump-start the state's sluggish economy.
"Listen, if you don't build a bridge, nobody can cross it,'' Malloy said. "Connecticut has been out of the bridge-building business for a long, long time. I'm using that as a metaphor for appropriate investment in business infrastructure. … I will tell you this. If we don't make the investment in UConn and Jackson doesn't make the investment, we're not going to see any jobs.''
Despite questions raised by Republicans, Malloy has solid support among the Democrats who control both the state House of Representatives and the Senate. The proposal is expected to be debated Oct. 26 during a special legislative session on jobs at the state Capitol. The two sides are seeking to craft a bipartisan package that would help small businesses, and the controversial Jackson plan would be voted on separately from the less-contentious bill on job growth. Bonding for the project needs the legislature's approval by a simple majority in both chambers.
Republicans are also questioning the projection of more than 6,800 jobs over 20 years, which was developed by an econometric model that has been touted by the Malloy administration. Malloy himself pointedly referred to a conservative Republican, Sen. Leonard Suzio of Meriden, who has raised questions about the plans.
"If they give me a model that they want me to use, we'll run it on their model,'' Malloy said. "Tell me what model you want to use. … If they want me to use the Suzio model, I'll use it. Just tell me what it is.''
When told of Malloy's remarks, Suzio started laughing — and then ripped into Malloy's proposal.
"It's a stupid, unbelievably reckless thing for the state to do,'' Suzio said. "It's a giveaway. It's not a loan. I can't believe how stupid this deal is. … This is a governor who is desperate for some kind of dramatic economic activity, but we have no business being in venture capital. It was turned down in Florida. He's willing to take risk that is far beyond what we should be taking. This is nuts. This is a $291 million bribe, plus interest.''
As a former employee of a bio-tech company in Meriden, Suzio said he has personal experience on the issue because he was there in the 1980s when the firm worked on a vaccine for the AIDS virus. The effort was unsuccessful, which he said is all-too-common in the risky business of scientific research.
"It's not the business of government to take venture capital risk,'' Suzio said. "It's discriminatory. It's unfair to companies who have been in Connecticut for generations and haven't demanded anything like this. If you single out one company, it's unfair. … I thought the Democratic Party was against corporate welfare. It's totally contradictory to the Democratic message.''
But Malloy's senior adviser, Roy Occhiogrosso, says the legislature needs to embrace the fast-growing bioscience industry and stop hesitating because of the failed deals of the past in Hartford that involved professional sports teams and other projects.
"There is an economic development hangover from the Patriots deal, where Robert Kraft took John Rowland to the cleaners,'' Occhiogrosso said of the football team's owner and the former governor. "This is a much, much different deal. This is a world leader in an emerging industry. We should be welcoming and grateful. This is, by all accounts, a growth industry. This is the most exciting economic development deal Connecticut has seen in a long, long time.''
He said that Jackson and state officials have actually made conservative estimates that 6,661 jobs will be created. That includes 861 new construction jobs at the peak of the building and 661 new, direct jobs over 20 years at the Jackson Lab itself. It also includes 4,000 new spin-off jobs and 2,000 new, indirect jobs. That's where Republicans are skeptical, saying that predicting anything accurately over 20 years is virtually impossible. Twenty years ago when the state income tax was created, they said, most economists would not have predicted that Connecticut would have no net new jobs over the 20-year period.
Like Malloy, Jackson says that the economic projections of job growth are solid.
"We feel very comfortable that the numbers are achievable,'' said Charles Hewett, the laboratory's chief operating officer, who made a presentation last week to Republican legislators in Hartford.
A Republican insider said the caucus does not want to see taxpayers' money go down a rat hole for a mice lab.
Following a detailed presentation by state and Jackson officials in a caucus, House Republican leader Larry Cafero of Norwalk said that many of his fellow Republicans did not receive solid answers.
"A lot of their responses were 'I don't know. I'll get back to you,'" Cafero said. "Will they have those answers and be able to satisfy all the questions by the 26th? I don't know. What's the rush? We have a regular session that starts in February. Could it be done then?''
Cafero added that he is hopeful that all of the job projections are correct so that the state's economy will rebound.
"Do I want to believe it? Yes,'' Cafero said. "Do I know enough about it to believe it? No. … The question is, can we pull this off in two weeks with all these unanswered questions. I don't know.''
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