OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

sHB-5573

AN ACT CONCERNING AN EXTENSION OF THE FIRST FIVE PLUS PROGRAM.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 17 $

FY 18 $

Treasurer, Debt Serv.

GF - Acceleration of Debt Service Costs

Potential

Potential

Note: GF=General Fund

Municipal Impact: None

Explanation

The bill expands the First Five program (1) from fifteen to twenty projects and (2) for three additional years. The bill also requires the Department of Economic and Community Development (DECD) to produce an analysis of the program on or after July 1, 2016 in order to implement this expansion.

It is anticipated that DECD will be able to produce the report with no additional resources. DECD routinely analyzes the impact to the state of various financial assistance projects and programs.

In the event that the committees of cognizance approve a recommendation from the report to continue the program, as required under the bill, DECD may provide substantial financial assistance to projects without legislative approval for proposed financial assistance amounts that exceed statutory limits.

Assuming that these projects would have received legislative approval for the amounts exceeding the statutory threshold, there is no fiscal impact. To the extent that a project or projects receive funding that would otherwise have been disapproved by the legislature, there could be a potential impact to (1) the Manufacturing Assistance Act (MAA), a bond fund program, and (2) tax revenue associated with tax credits provided.1

The bill does not change General Obligation (GO) bond authorizations for MAA, which is the primary source of funding for loans and grants provided through the First Five program. Future General Fund debt service costs may be incurred sooner under the bill to the degree that the bill causes authorized GO bond funds to be expended more rapidly than they otherwise would have been. As of March 31st, the program has an unallocated bond balance of $114.3 million.

Background

As of March 31st, thirteen companies are participating in the program, out of an available fifteen openings, for a total of up to $256.6 million in assistance through loans and grants and up to $115 million in tax credits. See the table at the end of this section for more details.

First Five Program

Company

Total Assistance Available

Tax Credits

Loans/Grants (Bond Funded)

Bond Funds Allocated to Date

Remaining Allocation Anticipated

Jobs Retained

Jobs Created (max)1

CIGNA

71,000,000

50,000,000

21,000,000

21,000,000

-

3,883

800

NBC Sports

26,000,000

-

26,000,000

26,000,000

-

116

716

ESPN

10,000,000

10,000,000

-

-

-

3,872

200

Sustainable Building Systems

19,100,000

-

19,100,000

19,100,000

-

-

408

CareCentrix

24,000,000

-

24,000,000

18,800,000

5,200,000

213

290

Alexion

51,000,000

25,000,000

26,000,000

26,000,000

-

368

300

Deloitte

14,500,000

-

14,500,000

9,000,000

5,500,000

1,153

500

Bridgewater Associates

52,000,000

30,000,000

22,000,000

-

22,000,000

1,402

750

Charter Communica-tions

8,500,000

-

8,500,000

8,500,000

-

260

300

Navigators Group Inc.

11,500,000

-

11,500,000

11,500,000

-

-

200

Pitney Bowes

27,000,000

-

16,000,000

16,000,000

-

1,600

200

EDAC Technologies Corporation

48,000,000

-

48,000,000

23,000,000

25,000,000

349

200

Synchrony Bank

20,000,000

-

20,000,000

10,000,000

10,000,000

310

400

Total

382,600,000

115,000,000

256,600,000

188,900,000

67,700,000

13,526

5,264

1The minimum required job creation is 200 for all companies.

The Out Years

The bill extends the First Five program through June 30, 2019. No additional projects may participate in the program after this date. This limits the outyears impact to only those projects which are approved during the expanded timeframe permitted under the bill.

1 Urban and Industrial Reinvestment Site (URA) Tax Credits are the primary tax credits awarded to First Five projects, though not exclusively so.  The tax credit cap on the URA program is $950 million, of which $588 million has been granted as of October 2015.