Commerce Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-5435

Title:

AN ACT CONCERNING THE RECOMMENDATIONS OF THE MAJORITY LEADERS' JOB GROWTH ROUNDTABLE.

Vote Date:

3/23/2010

Vote Action:

Joint Favorable Substitute

PH Date:

3/9/2010

File No.:

SPONSORS OF BILL:

Commerce Committee

REASONS FOR BILL:

● Establishes a $12 million bond funded program to fun pre-seed projects

Administered by CII through nonprofit

Note: 32-41w establishes early-stage program in CI

● Angel Investors

Authorize tax credits for angel investments

Puts representative of angel investors on CI board

● Qualifies Small Business Innovation Research Projects for funding under CII's Early Stage Venture Capital Program

● Authorizes CII to market state as place for innovation

● Adds DECD commissioner to two energy conservation boards and authorizes her to provide technical assistance related to exporting, manufacturing, and cluster initiatives

● Qualifies exporting assistance for MAA funding

● Qualifies energy efficiency improvements for school construction funding

● Job Creation Tax Credits Changes

Extends credit to businesses paying taxes against personal income tax

Reduces minimum job creation from 10 to one

Changes credit from 60% of wages withheld to 15% of wages paid to new employees earning at least 80% of states median wage

Limits maximum credit to $4,000 per year and reduces credit term from five years to three years

Increases total authorized credits from $10 million to $25 million

● Authorizes credits against gross premium tax for investments in funds investing in Connecticut businesses

● Shuts down existing Insurance Reinvestment Fund as of January 1, 2010

● Establishes paperwork reduction task force

Substitute language relocates the gross premium tax credit program in the Insurance Reinvestment Act Statute.

RESPONSE FROM ADMINISTRATION/AGENCY:

Denise W. Merrill, House Majority Leader

Denise Merrill testified in support of the bill stating “In these times, with scarce resources, the best action our state can take is to make it possible for talented people, and great ideas to take root. This new strategy of “innovation economics” can transform Connecticut into a center of innovation that can be magnet for entrepreneurs across the region. There are many people already in our state that want to launch new businesses and within an hour's drive there is one of the largest concentrations of entrepreneurs who operate outside the Silicon Valley.” She continued by adding “The Job Growth Roundtable's recommendations that are reflected in HB 5435 include: Investing in all stages of business growth, exporting assistance, innovation in government, realignment of tax credits, and support for industry clusters.”

Martin M. Looney, Senate Majority Leader

Mr. Looney testified in support of the bill stating “These changes would create a business friendly atmosphere which would foster innovation as well as job creation. Thank you for raising this important legislation which emerged from the three months of research, discussion, and consideration of possible initiatives to stimulate job growth in Connecticut undertaken by the cross-section of scholars, legislators and business development specialists who convened as the Majority Leaders Job Growth Roundtable.

Joan McDonald, Commissioner, Department of Economic and Community Development

Commissioner McDonald testified stating “Regarding sections 1 through 3 we offer conditional support regarding the provisions concerning the Pre-Seed Development fund and Angel Investment Tax Credits.” She also added “We do not support the provision that would require CI to contract with another organization to operate the pre-seed program called for in Section 1. She continued by saying “Section 4 of the bills adds a member of an angel investor group to CI's Board of Directors. We do not believe that provision is necessary” Commissioner McDonald commented on section 6 saying “While we support the concept of marketing Connecticut as a state which supports innovation, we believe the state is better served by a broader economic development.” Commissioner McDonald added comments concerning section 9, which she felt DECD already has a great partnership with U.S. Department of Commerce. She stated she “strongly opposes the provisions of section 11” as well as “the repeal of several business tax credits contained in section 15.”

NATURE AND SOURCES OF SUPPORT:

Martin Mador, Legislative Chair, Sierra Club

Mr. Mador testified in support of the bill stating “This bill will encourage districts which decline to replace school entirely, or make comprehensive renovations to at least upgrade the buildings HVAC systems. These upgrades will significantly improve the energy performance of the building, resulting in considerable cost savings.”

Natalie Real, Chief Administrative Officer, Connecticut Center for Advanced Technology

Natalie Real testified in support of the bill stating “Today we speak in support of this bill, recognizing that some sections may still require greater clarification of the drafted language, specifically sections 1,3,5,6, and 9.”

Charles Rothenberger, Connecticut Fund for Environment,

Mr. Rothenberger testified in support of the bill stating “Some of the job benefits that we believe would accrue from these measures includes: energy efficiency and renewables, clean land and water investments, transportation, and workforce development.”

Craig Mullet, Angel Investor

Mr. Mullet testified in support of the bill stating “In my view the credit would have the following benefits: Promote new ventures to start in Connecticut, jumpstart innovation in Connecticut through a shorter funding cycle for start-up businesses, and stimulate more investors and entrepreneurs to see Connecticut as a state that encourages business formation and growth.”

Christopher Phelps, Program Director, Environment Connecticut

Mr. Phelps testified in support of the bill stating “We urge legislature to support legislative proposals such as these can stimulate the growth of jobs in business sectors that benefit both the state's environment and economy.”

David R. Pepin, Chairman, Next Gen

Mr. Pepin testified in support stating “Connecticut has abundant resources, yet its technology sector lags most other states and is in decline.”

Matthew Nemerson, President, Connecticut Technology Council

Mr. Nemerson testified in support of the bill stating “Government and business must work together to help Connecticut win against the forces of global competition. It is no longer possible to be passive and hope that what worked yesterday will bring success today and tomorrow in the exercise of policies and planning for economic growth.

Thomas P. McClain, Angel Investor

Mr. McClain testified in support of the bill stating “I can't imagine a more conductive piece of legislation in Connecticut to generate the many possibilities I anticipate: additional available funds, easier funding availability, significant numbers of new employees hired for these enterprises, and a more conclusive climate that encourages new business to start in Connecticut.”

William D. Hill, Farmington Resident

Mr. Hill testified in support of the bill stating “The tax credit bill will help to advocate Connecticut's pool of experienced investors to fund and mentor the start-up companies that are critical to creating jobs in our state and retaining our talented young people.”

Joseph DeMartino, President, AIF

Mr. DeMartino testified in support of the bill stating “The proposed tax credit for angel investors and related legislation such as the sidecar fund will, I believe, encourage more investors to put money into the very high risk start up environment by offsetting some of the risk and freeing up more capital for additional investments”

Mary Anne Rooke, Managing Director, Angel Investor Forum

Mary Anne Rooke testified in support of the bill stating “It would be excellent to combine the sidecar fund and SBIR support within the same organization as these will work collaboratively.”

NATURE AND SOURCES OF OPPOSITION:

None

Reported by: George Harlamon

Date: 3/24/10