Sen. McLachlan: Democrats’ tax hikes jeopardize investments at Boehringer and in CT private sector. (Danbury News-Times)

June 5, 2015

Article as it appeared in the Danbury News Times

RIDGEFIELD — Boehringer Ingelheim executives on Wednesday warned at least $200 million in upgrades to its U.S. corporate campus could be in jeopardy if lawmakers in Hartford move forward with proposed tax increases on state businesses.

Boehringer Ingelheim was the latest local company to join a growing list of corporations including General Electric, who threatened to curb operations in the state as a result of proposed tax hikes.

The proposed state budget calls for $500 million in additional revenue from corporations through new restrictions on tax credits and other rule changes, including a new tax on out-of-state operations, while boosting the special sales tax rate on data-processing services from 1 to 3 percent, according to state Sen. Michael McLachlan, R-Danbury.

The proposals, officials with the pharmaceutical company said, could derail their plans for $300 million in previously unannounced capital improvement projects in the next five years, including research and development facilities and optimization of their equipment.

“We have several hundred million dollars that are being planned over the next four to five years in additional capital expenditures on our Ridgefield/Danbury site,” company spokeswoman Erin Crew said Wednesday. “Depending on the outcome of this session’s budget negotiations, we may be forced to reconsider these projects and future investments at the site.”

Boehringer Ingelheim has already spent more than $300 million on upgrades to its near 300-acre campus that straddles the Danbury/Ridgefield border, including the new $65 million pilot manufacturing plant unveiled by company officials earlier this year.

While the company didn’t use any state incentives for the construction projects, unlike some other corporations in the Danbury area, Boehringer Ingelheim did receive a seven-year local property tax abatement on the new structures from town officials.

Stephen Bull, president of the Greater Danbury Chamber of Commerce, said that in his 25 years working in the region, he has never received more phone calls from businesses and individuals threatening to leave the state as a result of the tax proposals.

“When companies like Boehringer Ingelheim start to question their future growth in the state, it should give our legislators and governor cause to rethink what they are doing to the state’s competitiveness,” he said. “These are companies that are typically very quiet about state politics, but they are now letting their opinions be known.”

McLachlan said the proposed tax hikes could not only jeopardize ongoing projects, but the potential to attract new businesses to the state.

“Slapping an ever-increasing tax on data-processing services in this digital age while telling corporations that might consider having a headquarters here that Connecticut will try to tap their operations elsewhere for taxes is not going to make things better,” McLachlan said. “When the corporate community objected with General Electric, Aetna and Travelers among those questioning whether they could continue to afford doing business here, Democratic leaders seemed shocked, suggesting just how out of touch they may be.”

Dr. James Baxter, Boehringer Ingelheim’s senior vice president for development in the U.S., said when the previous projects were announced about four years ago, it was a sign of the company’s commitment to Connecticut.

“It points to our global commitment to our local community,” Baxter, who was was joined by Gov. Dannel P. Malloy during the announcement, said at the time.

Since then, the company’s financial picture has declined. Company officials announced layoffs in February that affected about 2 percent of its local workforce as a result of declining sales and other market pressures.

In April, the privately held German company reported a 20 percent drop in quarerly profit, blaming “challenging” conditions.

Democratic leaders in the Legislature, including Deputy Speaker Bob Godfrey, D-Danbury, and state Senate Majority Leader Bob Duff, D-Norwalk, were not available for comment Wednesday.

(Editors note: An earlier version of this story had an incorrect figure of the value of future capital improvements.)