The legislative session in Hartford begins tomorrow. Naturally, a press releas went out extolling the focus of the Senate this session. It’s about creating small business jobs. State Senator Bob Duff explained that the state of Connecticut needs to be serious about job growth, and particularly among small businesses in order to generate a healthy economy.
Okay, so how do these State Senators plan on doing it? Well here’s their very own news release outlining the issue:
Senate Democrats Start 2010 Session with Plan to Grow Jobs, Cut Taxes for Small Businesses, And Shrink State Government
Surcharge on TARP bank bonuses will help pay for tax cuts & loan fund for small businesses; consolidation of economic development agencies will streamline efforts to grow jobs
Hartford – Senate Democrats held a news conference at a drycleaners in
West Hartford on Monday – two days before the 2010 legislative session begins – to announce a new plan to help small businesses protect and grow jobs.
Connecticut’s unemployment rate is at 8.9% and nearly 95,000 people have lost their job since the recession began in 2008. Many economists predict the total number of jobs lost in Connecticut will reach 100,000.
Citing job growth as one of the top priorities for Senate Democrats this year, Senators detailed their four-point $20 million plan to assist small businesses – which account for 97% of all Connecticut employers and nearly half of private-sector employment.
The Senate Democrats’ jobs plan includes:
Provide tax relief to struggling mom and pop shops by suspending the $250 business entity tax on ‘mom and pops’ for two years.
1. Big banks were bailed out by the federal government, but they have failed to make these bailout funds available to small businesses. Big banks have significantly restricted loans and lines of credit to small businesses, and in so doing, have severely restricted small businesses’ ability to survive and succeed during the economic downturn and beyond.
A small business revolving loan fund will be administered by a business financing entity with the consolidated business knowledge and the diversity of involvement necessary to serve all types of small businesses in Connecticut. It is critical that this new entity have the flexibility to offer loans to businesses that have been caught in the credit crunch, not because their business has changed, but because the rules of banking have changed.
2. Create small business revolving loan fund
3. Consolidate state economic development entities
Consolidate CDA, CI and the direct business financing function of DECD into one single entity, as recommended by the recent bipartisan report from the General Assembly’s Program Review & Investigations (PRI) Committee. This will provide a benefit to small businesses and the state in the following ways:
a. Cuts costs by streamlining functions.
i. Operating expenses at CI are high: they have even exceeded loans awarded in some years.
b. Avoids duplication of efforts – eliminates administrative duplication and helps avoid situations where two agencies are working on the same issue.
How to Pay for It: Temporary surcharge on TARP supported bonuses
After receiving billions of taxpayer dollars from TARP, the nation’s biggest banks are back to handing out enormous bonuses and raises. Goldman Sachs, for example, received a bailout of $10 billion in TARP funds while increasing the bonuses it paid its employees in 2009 to $23.7 billion – a jump of nearly 500% compared to 2008.
Under the Senate Democrats’ job plan, bonuses of $1M or more paid to employees of TARP recipient entities will be subject to a temporary surcharge.
a. The surcharge will apply for two years only – Income years 2010 and 2011.
b. The surcharge rate will be 2.47% on the entire amount of a bonus that totals $1M or more. This 2.47% is on top of Connecticut’s existing top income tax rate, meaning that the total state income tax rate on these bonuses is 8.97%.
1. Recipients of these bonuses will pay an income tax rate on the bonuses that is equivalent to the top NY state income tax rate of 8.97%.
2. This rate is still lower than the top NY City / State combined rate of by 12.6% and lower than the top NJ rate of 10.75%
Examples of bonuses being paid by banks:
TARP: $45 billion
2008 bonus pool: $5.3 billion
2009 bonus pool: $5.3 billion
JP Morgan Chase
TARP: $25 billion
2008 bonus pool: $8.693 billion
2009 bonus pool: $9.3 billion
TARP: $10 billion
2008 bonus pool $4.47 billion
2009: has earmarked $14.4 billion for employee compensation in 2009, a 31 % increase from last year.
TARP: $10 billion
2008: $4.8 billion
2009: $23.7 billion – a jump of nearly 500% compared to 2008.
“Helping businesses and reshaping state government shouldn’t be a partisan position,” said Senate President Williams (D-Brooklyn). “As the 2010 legislative session begins I urge lawmakers on both sides of the aisle, and Gov. Rell, to join us in our efforts to grow jobs.”
“Growing jobs and balancing the budget are the top priorities this legislative session,” said Senate Majority Leader Martin Looney (D-New Haven). “We know the success we have in growing jobs will help our efforts to solve the deficit.”
“Sedgwick Cleaners – which is my dry cleaner – is an example of a small business that keeps a community alive,” said Senator Jonathan Harris (D-West Hartford). “And this bill helps keep small businesses alive. Dana is a Rotarian like me, he sponsors youth sports, and he advertises local events in his storefront window. Besides creating jobs, he is a vital part of the West Hartford community. And we need to protect and grow these types of businesses.”
“Small businesses provide the foundation for every community and provide the backbone for our state’s economy – for the duration of this downturn we must help them retain their vitality in any way we can,” Senator Edith G. Prague (D-Columbia) said. “The plan we’ve introduced today will help them retain and perhaps create new jobs, to the benefit of employees in the short term, and to the benefit of our overall economic health for the longer term.”
“This is precisely what Connecticut businesses need; a loosening of credit,” said Senator Gary LeBeau (D-East Hartford). “If we can do that through this bill and get more money out on the street to help small businesses, this will be a home run.”
“As small businesses go, so goes Connecticut’s economy,” said Senator John Fonfara (D-Hartford). “These initiatives target the businesses that will turn our economy around the quickest.”
“The billions in bonuses and raises are back on Wall Street but not on Main Street,” said Senator Eileen Daily (D-Westbrook). “It is time the bank bailout really starts working for the small businesses that fuel our economy.”
“I’ve heard from the owners of many small businesses in my area, and as a business owner myself I know this initiative would be an important first step to provide much-needed relief for small-scale operations,” said Senator Andrea Stillman (D-Waterford). “A new consolidated economic development agency would focus on providing true, one-stop access to information for small business owners and provide a streamlined licensing process.”
“I hear from small business owners all the time about how difficult it is to get credit these days,” said Senator Thomas Gaffey (D-Meriden). “This plan helps to address that concern. “I hope we can work the governor and other legislators to get this passed quickly.”
“One of the most effective ways to reinvigorate the economies of our communities is to provide job opportunities for residents of those communities,” said Senator Eric Coleman (D-Hartford). “Investment in small businesses in the form of financial assistance, focused technical assistance and tax incentives will facilitate such reinvigoration and result in a much more stable economic foundation not only for these communities but for the state as a whole”
“In New Haven we can no longer simply rely upon the colleges and hospitals to grow jobs and sustain the local economy,” said Senator Harp (D-New Haven). “Small businesses, particularly those that cater to the diversity of our population, are the heart and soul of our community – and for that reason this plan to shore up state support for small business job creation is just exactly what we need.”
“Helping small businesses succeed and grow jobs needs to be a priority this session,” said Senator Bob Duff (D-Norwalk). “Focusing on aid to our small businesses, especially by working to open the credit market for them, will help them get back on their feet and improve our economy at the same time.”
“We recognize the challenges that many of our business owners are facing, and our focus needs to be on job creations and economic recovery,” said Senator Andrew Maynard (D-Stonington). “This package will help encourage and assist our small businesses. Any effort we can make to help business—particularly small business—is welcome.”
“In this economy, simply creating wealth for wealth’s sake — like those TARP bonuses do — is not good enough,” said Senator Mary Ann Handley (D-Manchester). “We need to help small businesses, who are the real job creators, survive and thrive in this recession. And this bill helps them do that.”
“These initiatives are a great beginning to resolve an outstanding need in our state; there must be a coordinated and relentless pursuit of new jobs in small businesses, even as we work to restore the loss of old jobs in the insurance and aerospace sectors,” Senator Crisco (D-Woodbridge) said. “I would hope some funding from this revolving loan program would be invested in job training so Connecticut can continue to boast a workforce second-to-none.”