GE’s planned departure prompts strong reaction

Record Journal

Reaction to Wednesday’s news that GE was moving its corporate headquarters from Fairfield to Boston was swift and decisive from state economists and lawmakers on both sides of the aisle.

Senate Minority Leader Leonard Fasano, R-North Haven, and Rep. Tony Hwang, R-Fairfield, didn’t hesitate to blame what they said were years of failed Democratic tax policies for GE’s departure.

“GE’s statement confirms that after the largest tax increase in state history in 2011, GE started its plan to leave the state of Connecticut,” Fasano said in a statement. “After the second largest tax increase in June 2015, GE initiated their former review to look at other options. This is proof positive that the Democrat majority’s fiscal plans are failures. Until we make structural changes to Connecticut’s budget, I fear that many more businesses will continue to leave this state. Any other conclusion, spin or rationale demonstrates a complete loss of touch with reality.”

An analysis of the economic impact of GE’s decision by economist Don Klepper-Smith, of DataCore Partners LLC, states that for every GE job lost there are conceivably another 1.8 jobs lost elsewhere in the local economy, with the ripple effect extending beyond Fairfield County.

“These are high-paying jobs too, with strong multipliers, Klepper-Smith said. “In fact, for every dollar spent in this part of manufacturing, there is another $1.06 spent elsewhere in Connecticut’s economy.”

Gov. Dannel P. Malloy had met with GE leaders over the summer after Chief Executive Officer Jeffery Immelt complained about the state’s finances and tax policies.

Malloy called Wednesday’s decision “a clear signal that Connecticut must continue to adapt to a changing business climate.”

The governor repeated his focus on improvements in transportation infrastructure and higher education.

“Taken as a whole, there is no denying that Connecticut has had more good days than days like today,” Malloy said. “Of course, we are disappointed, and we know that many in Connecticut share that frustration. While GE’s headquarters may be leaving, I have been assured that the company will continue to have many employees working here in Connecticut. Equally important, GE will continue to work with and support many smaller businesses throughout our state.”

Some Democrats brushed aside criticism of the state’s tax policy by pointing out that Massachusetts has combined unitary reporting, the very tax policy Connecticut stepped away from in a second budget negotiation. Others compared GE’s move to Boston with Bristol-Myers Squibb’s decision last year to leave Wallingford.

“GE is rebranding its image and shifting its central business platform away from heavy industry and financial services to digital software and technology, changing the very structure and composition of its headquarters,” said Sen. Martin Looney D-New Haven. “It’s clear that GE’s decision has nothing to do with taxes or even business costs, and cannot fairly be viewed as a referendum on Connecticut’s growing economy. Connecticut’s unemployment rates have dropped to the lowest level since March 2008.”

GE and Immelt have also become more political. In addition to biting at tax incentives valued at as much as $145 million to lure the company to the Boston, it also valued Boston-area representatives who supported reauthorization of the Export-Import Bank. According to the Wall Street Journal, GE publicly removed from its list of possible headquarters sites in some of the districts whose representatives opposed GE’s position.
GE was criticized in the Wisconsin business media in September for threatening to close a Waukesha, Wisconsin, engine plant in Canada because Congress rejected reauthorization of the Export-Import Bank, a vehicle for private export financing that supporters say strengthens businesses and increases jobs, but critics call a form of crony capitalism and corporate welfare.

“GE’s decision to relocate across the border to downtown Boston is certainly disappointing, yet we remain a favored location for companies to thrive,” said House Speaker Brendan Sharkey, D-Hamden. “It appears, particularly from GE’s advertising, that their decision is not about taxes but more about rebranding into a high-tech company, and Boston is well known as a high-tech industry hub. Connecticut’s piece of the corporate pie remains strong, and our state’s ongoing commitment to work closely with business leaders to encourage future economic growth will ensure we continue to be a great place to live, work and raise a family for years to come.”
But Fasano countered that without long-term changes in policy instead of short-term tax hikes and fixes to budget holes the state will continue to lose key companies.

“GE made their decision because they, like so many other employers and state residents, are sick and tired of the unpredictability of Connecticut’s financial health,” Fasano said, “and how that volatility translates to knee jerk tax hikes and damaging service cuts.”