GE Looking Outside Of Connecticut Following Budget Approval
Connecticut Governor Dannel Malloy is leaving the door open for possible revision of business tax hikes approved by the legislature as General Electric looks at moving its headquarters out of the state in response to the increases.The Democratic-controlled General Assembly agreed to a two-year $40 billion budget before midnight Wednesday despite rare lobbying by corporations protesting business tax increases meant to raise $700 million. Distancing himself from the budget awaiting his signature, Malloy says he’s spoken with General Electric and others about their concerns, adding that Connecticut has the second lowest effective corporate tax rate in the country.
“The legislature has decided to make some changes in that to support a budget,” Malloy said. “A budget which has been negotiated, not the budget that I purposed on February 18th. I think those discussions will continue not just for a special session, but continue on an ongoing basis.”
GE’s CEO sent an email to employees saying he’s assembled an "exploratory team" to review the company's options to move to another state with a "more pro-business environment."
Senate President Martin Looney suggested the company may be using the budget as cover.
“They doth protest too much,” Looney said. “I think for instance GE in particular we understand that they may have been planning some layoffs and maybe using the bill that we passed as a cover for that.”
GE denies that suggestion. Looney defended a new unitary tax saying Connecticut is the only New England state that doesn’t have that tax on multi-state corporations.
“Business taxes in this state are quite moderate overall,” Looney said. “The taxes that most people, whether they be businesses or individuals, find the most burdensome are our property taxes. Businesses will get a break under the property tax too if they are located in municipalities with high mill rates…they’ll get a break on the mill rate on their fleet vehicles. If you think about it historically the percentage of taxes that come from the corporate tax in Connecticut now is less than six percent of our whole budget. It was 17 percent or more 25 years ago.”
GE, Aetna and Travelers objected to the tax and other hikes earlier this week. Headquartered in Fairfield, GE employs about 5,700 people statewide. To support a major investment in transportation, House Republican Leader Themis Klarides says the budget raises $1.5 billion in new taxes. She criticized Senator Looney for celebrating the budget and says Governor Malloy has convinced himself this isn’t his budget.
“I always believed that if the governor had to take a lie detector test he would pass it because he convinces himself of what he says no matter how ridiculous it is,” Klarides said. “I would urge him if he doesn’t believe that this is his budget that he should veto it. We should start over. Because otherwise it’s hypocritical.”
Klarides says the budget stomps on the American dream, the middle class and businesses’ ability to stay in Connecticut.
“I am concerned that while we stand here today there are board rooms all around the state that are meeting and trying to figure out where they’re going to go when they leave Connecticut,” said Klarides.
Senate Majority Leader Bob Duff says investing in transportation and lowering property taxes is a blueprint for the future.
“We’ve asked businesses to help businesses to help with transportation and property tax reform,” Duff said. “We’re asking those who earn over $500,000 and a million dollars to help with that as well. We feel that this will help our middle-class families here in the state of Connecticut.”
A special legislative session is expected in the coming weeks.