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Suzio to Taxpayers: Call Your Legislators and Gov. Malloy on Wednesday Regarding Flawed Jackson Lab Deal

October 25, 2011

On Friday, October 21, I received the 26 page document, JAX GENOMIC MEDICINE, which contains details explaining the proposed agreement between Jackson Laboratories and the state of Connecticut. This was the first document with more than a superficial explanation of the underlying economic benefits and assumptions underlying the proposed transaction.

The document exposes several serious flaws in the calculation of the impact of the proposed project on jobs in Connecticut. In addition, the document expresses a very troubling explanation of how JAX will use Connecticut taxpayer funds.

The flaws include:

  • The model is based on the assumption that 100% of all jobs created in the “Research and development in biotechnology” sector in Connecticut are completely attributable to the JAX project
  • The model effectively double counts the jobs already counted as a result of the UConn project and used as a rationale to fund the cost of that project

In addition, the document states that taxpayer funds will be used to gain competitive advantage against competitor companies within Connecticut.

In effect, Connecticut taxpayers are being asked to subsidize an out-of-state company to gain advantage against in-state Connecticut companies.

The flawed assumption that virtually 100% of all “spinoff direct jobs” (those in the biotechnology research sector) in Connecticut during the next 20 years will be created as a result of the JAX project is not credible. Nevertheless, on page 8 of the document the assumption is unambiguously explained, “We obtained the Connecticut 2009 employment for the relatively narrow sector in which JAX is situated (2,030 jobs in NAICS sector 541711, ‘Research and development in biotechnology’) and grew this base by 11% a year until 2022.” Thereafter, the Company lowers the growth rate to 4.3% per year through 2031. Using this methodology, the Company determines that it is responsible for 4,035 direct spinoff jobs in 2031 “when the analysis period ends.” This audacious assumption gives no jobs creation credit whatsoever to the UConn project or Yale University or any other factor and simply lacks real credibility. Moreover, by itself this assumption proves that the impact of the UConn facility used to justify funding the UConn project was totally ignored and thereby inadvertently double counted by the DECD when computing the jobs impact of those two projects.

Without considering the double-counting impact the fallacious attribution of all job growth in the Connecticut Biotech R&D Sector may more than doubled the true impact of the JAX project on “spinoff direct jobs”, inflating the number of jobs by nearly 3,400 out of a total of 6,474 jobs estimated to be created by JAX (it can be argued that the indirect jobs created should be reduced as well). This means the economic benefits determined by the DECD are grossly exaggerated.

An error of this magnitude underscores the need to take a more deliberative and careful approach before committing $300 million of taxpayer money to a project whose job creation has been greatly overstated.

Finally, a statement by the Company has very disturbing implications. On page 7 of the document, the writer asserts that taxpayer money used to fund JAX production costs, “renders the firm more competitive with respect to its peers and competitors inside and outside the state.” In other words, Connecticut taxpayer money is being used to provide a competitive advantage against companies currently inside Connecticut.

How can the State choose sides against Connecticut companies and help an operation that is currently outside our state to beat companies inside our state? The wisdom of that choice is open to question.

Based on the foregoing I am urging the governor and my fellow legislators to delay the Wednesday, October 26 vote on the Jackson Labs proposal until all the facts can be carefully vetted and understood.

I also urge you, the taxpayers, to let your elected officials know how you feel on Wednesday.

Call House Democrats at (860) 240-8500.
Call Senate Democrats at (860) 240-8600.
Call the Governor at (800) 406-1527.
This is your money they are spending. $300 million of it.