Posted on 13 Jul 2011
CIGNA Corp. changed its headquarters from Philadelphia to Bloomfield, Connecticut on Tuesday and will add at least 200 jobs and spend $100 million in Connecticut in exchange for up to $47 million in benefits from the state.
Gov. Dannel P. Malloy and CIGNA CEO David M. Cordani announced the move at noon under a tent at the company's Bloomfield campus, which has long been home to CIGNA's largest operation.
CIGNA is the first company to take advantage of the state's First Five program, which offers tax incentives to companies that add at least 200 employees. Malloy held a ceremonial signing of the First Five bill, which he recently signed into law. Malloy said Connecticut was competing to retain CIGNA jobs in the state, suggesting that the company had considered moving positions elsewhere.
But the main focus Tuesday was on growth at the office complex that made architectural and cultural history in the late 1950s, when the old Connecticut General Insurance Co. moved there from downtown Hartford. CIGNA could get a maximum of $71 million in tax credits and job-training and infrastructure grants over the next 10 years if the company adds 800 jobs.
"My fondest desire is that it will be 800 jobs, but what will drive that is growing the corporation," Cordani said in an interview. "You grow positions by growing the corporation, and our company is focused on a very clear growth strategy … and as we continue to be successful with that, we'll have an opportunity to add employment in many locations, Connecticut being one key."
By bringing 200 full-time positions, and agreeing to keep in place the company's nearly 3,900 Connecticut positions, CIGNA is guaranteed a $15 million, zero-interest, forgivable loan, $2 million in grants that can cover employees' relocation expenses or training, and tax credits capped at 70 percent of its corporate income tax in years four through 10, which are valued at as much as $30 million.
Examining The Deal
Malloy and his economic development team have been working hard to land an early First Five company. The triumph came, ironically, on the same day that the governor sent out layoff notices to some state employees after the defeat of his deal with state unions to bridge a budget shortfall — a move he tried to avoid, he reminded reporters.
"Fostering an environment in which Connecticut businesses can create new jobs and thrive in a highly competitive market is our top priority," Malloy said. "CIGNA is proof that these tools work and that Connecticut is open for business."
Some critics, however, said the payoff to CIGNA was too rich or that the First Five program is too narrow.
"We can't afford to do this for more than five companies, otherwise we'd be doing it for every company," said State Sen. Andrew Roraback, R-Goshen, the ranking GOP member of the legislature's tax-writing committee.
Roraback, who voted against the First Five bill, said CIGNA should be commended for keeping and adding jobs here, and agreed that Connecticut must offer incentives to compete. "It's good news for Connecticut to have the jobs, but again, I think we all have a responsibility over time to ask the hard questions about what we're getting for our investment."
Catherine Smith, commissioner of the state Department of Economic and Community Development, said economic models show that Connecticut will receive more in taxes than it pays out in incentives.
"I believe the CEO when he says he wants to under promise and over deliver. I can't tell you they'll get all the way to 800 but they'll pass the 200 without trouble," said Smith, who until March was a high-ranking executive at ING Group in Windsor.
The deal is certain to stimulate new debate about what price the state must pay to prod corporations to add jobs. It's hard to compare this package with other state job-creation incentives because of CIGNA's agreement to spend at least $100 million on buildings or technology, which has a large economic effect.
Joachim Hero, a senior policy fellow at Connecticut Voices for Children, pointed out that there's a guessing game about whether the company would have proceeded regardless of incentives, or if it would have done the same things for a lower incentive.
"It's practically impossible to know," Hero said.
Hero said he would not comment on the CIGNA deal because he hadn't researched it. In general, he said, pursuing economic growth through the tax code isn't as effective in the long run as spending tax dollars improving community colleges and other infrastructure and workforce development programs.