Sen. Martin: CT should offer “consistency and predictability” to businesses when it comes to taxes. (Bristol Press)

March 3, 2015

Article as it appeared in the Bristol Press

BRISTOL — A move by Gov. Dannel Malloy to restrict corporate tax credits is being met with strong opposition from Bristol lawmakers who worry the proposed change would undermine Bristol-based ESPN’s commitment to Connecticut.

“I feel like it’s a broken promise,” said state Sen. Henri Martin, a Bristol Republican.

State Rep. Whit Betts, another Bristol Republican, said he is “extremely disheartened and upset” that Malloy would try to rescind tax breaks he handed out to ESPN only a few years ago to encourage its growth.

In a bid to boost state revenue by $72 million in the coming year, Malloy proposed to cut in half the yearly tax credits offered to companies in television and digital media production. He already froze credits for film production two years ago.

While it’s unclear how much the governor’s proposal would cost ESPN, the company received more than $20 million in tax credits from its new $180 million digital center that opened last spring.

When the New York Times tallied it up in 2013, it determined that ESPN had received “about $260 million in state tax breaks and credits” since 2001, including more than $84 million in film and digital media tax credits.

Mike Soltys, a spokesman for ESPN, said the company is analyzing the governor’s proposal, part of Malloy’s $40 billion, two-year spending plan that legislators are busy dissecting.

“The proposed changes could have a significant impact on ESPN and the growing Connecticut television industry,” said Mike Soltys, a spokesman for ESPN.

Soltys said the tax credits Malloy targeted “have had a positive return for Connecticut.”

Betts and Martin said their concern is that Malloy is trying to pare tax credits he already offered to companies that made investments that relied on the state’s promises.

“In our world, our word is our bond,” Betts said. “This could have a chilling effect for keeping or attracting additional business in the state of Connecticut.”

Martin said the state needs to offer “consistency and predictability” to businesses when it comes to taxes.

“We’re making it difficult for them to believe” anything the state promises, Martin said, because officials can’t get the budget under control and tax rates are so unpredictable.

“We’re confusing them,” he said. “Why should they take the risk of expanding?”

Betts, whose 78th District includes Plymouth and northwestern Bristol, said reneging on agreements that helped convince companies such as ESPN to expand won’t help to develop Connecticut.

He said it’s one thing to revise the terms going forward, but revising deals already in place is quite another thing.

“Going back on our word on agreements that have been consummated” will only exacerbate the state’s poor reputation in the business community, Betts said.

The existing law, put in place in 2006, created a sliding scale for production companies to get up to 30 percent of their eligible expenses as a tax credit. That credit can be applied against the taxes a company would otherwise have to pay.

Malloy’s budget proposal, delivered to lawmakers in mid-February would cut the amount of tax credits businesses can use to lower their state tax bill from 70 percent to 35 percent. It would increase the amount of tax credits businesses can claim in subsequent years to as much as 60 percent.

Advocates said the tax credit revision doesn’t wipe out the savings businesses expected, it merely limits how much a company can claim in a single year.

“The credits aren’t going away. We are eliminating how much you can knock off your tax bill in a given year,” Malloy told reporters.

In addition to ESPN, the proposed tax credit change would have a major impact on NBC and other media firms that have made major investments in Fairfield County.

Steve Collins can be reached at (860) 584-0501, ext. 1801, or at [email protected].