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One month into the Connecticut legislative session, the ground over which this year’s political battles will be fought is still being laid. As the committees rush to raise their bills, the lines of a playing field are gradually being drawn. And in the backrooms, one closely decided contest is being lined up for a rematch. Among the bills already raised by the Labor and Public Employees Committee is one entitled “An Act Concerning Standards for Economic Development Assistance.” The sanctions contained in this proposed bill, once referred to as “corporate responsibility” legislation, have in recent years been resurrected under the label “economic development standards.” The proposed legislation would require companies receiving state economic funding to comply with standards in areas such as wage scale, job creation and environmental accountability. Proponents of the bill say that it would ensure the state a base-level return on its investment of taxpayer funds. Opponents argue that it would create a chilling effect on economic development in the state. Similar bills raised by the Labor Committee in recent years have, without exception, been defeated in the General Assembly. A nearly identical bill to the one the Labor Committee plans to present this year was narrowly defeated in the state Senate by a tie vote on the last day of the 2000 legislative session. That bill would have required companies with more than 50 employees and receiving at least $500,000 in state aid to pay an industry-standard wage level and provide full-time benefits on a pro-rated basis to part-time workers. The bill also would have denied state economic aid to companies found to be in violation of any state or federal laws. The proposals would have affected about 16 percent of companies in Connecticut. Joseph Brennan, a vice president at the Connecticut Business & Industry Association (CBIA), is an ardent opponent of economic development standards, which he refers to as “anti-jobs legislation.” Calling the legislation overly restrictive and unnecessary, Brennan maintains that there are already plenty of accountability measures in place, such as Connecticut’s “clawback” statute. The provision requires companies that move their entire operations out of state within 10 years of receiving assistance to pay back the funds awarded. Opponents, however, say the clawback statute is inadequate and offer Pratt & Whitney as an example. The company, after receiving economic development incentives, faced no penalty when it announced plans to move hundreds of jobs out of state. A provision in the current proposal would require companies moving more than 25 percent of their workforce out of state to pay back their assistance. Brennan also points to additional accountability measures already in place, such as statutes that give priority in economic aid to companies that provide generous employee benefits. Other measures, such as the number of jobs to be created and preserved, are set when economic development deals are negotiated. A state auditor report from 1997, however, cited inadequate oversight and accountability of corporate financial assistance projects. One of the strongest objections raised to economic development standards is that job expansion and new economic development would go elsewhere if Connecticut’s programs were made more restrictive. According to state Sen. Edith Prague, D-Columbia, the validity of that argument has somewhat diminished in recent years as more and more states have adopted stricter economic development standards as an alternative to “corporate welfare.” Currently, 36 states have legislatively imposed economic development assistance standards, including Maine, New York, Rhode Island and Vermont. Vermont’s law requires of companies applying for public aid advance disclosure of the expected number of jobs to be created, along with descriptions of the benefits and wages associated with those jobs and the public benefits to be gained in the transaction. If companies fail to live up to their promises, the state can demand payback of all economic assistance awarded. As co-chair of the Labor Committee, Prague has been a perennial sponsor of economic development standards, which she calls “common-sense legislation.” She maintains that large businesses that accept state money have certain responsibilities to the taxpayers — otherwise they can get their money elsewhere. “It’s outrageous for the CBIA to continue saying that companies can take state money and do as they please here in Connecticut,” said Prague. Voting on the issue in recent years has been divided almost wholly along party lines, with Democrats voting for and Republicans voting against. With two additional Democrats in the Senate this year, and with pledged support from the Senate leadership — which has not backed such legislation in previous years — Prague is confident that the bill will pass this session in the Senate. Prague admits skepticism, however, concerning the bill’s chances in the House, where fighting over the issue is certain to be fierce.

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