As the Connecticut General Assembly resumes the second month of its session and lawmakers prepare to address the impending budget deficit, a local representative hopes his proposed legislation will draw bioindustry businesses into New Haven and the rest of the state.
At Connecticut’s legislative session this January, State Rep. Dave Yaccarino, R-North Haven, proposed two bills which have now been referred to the Commerce Committee. House Bills 6746 and 6760, the two pieces of Yaccarino-sponsored legislation, seek to make Connecticut a more welcoming business environment for bioindustrial companies. However, lawmakers as well as government and business officials interviewed by the News expressed uncertainty about the bill’s chances of passing.
HB 6746 would create a program for industry investors that would allow 50 percent of eligible investments to receive tax credits. The credits would be capped at $50,000 for individual investors and $250,000 for entities such as corporations and venture capital firms. HB 6760 exempts startup bioindustry companies linked to academic-business incubators from the state’s corporate business tax for five years.
“My plan is to, as a state, really embrace and expand our bioscience and biomedicine to help folks,” Yaccarino said.
Yaccarino said his plan is about harnessing what he sees as one of Connecticut’s greatest strengths: its institutions of higher learning. Last month, he visited Yale University to discuss his proposed bills with three Yale faculty members: Managing Director of the Yale Entrepreneurial Institute James Boyle, Deputy Provost for Science and Technology Steve Girvin and Managing Director of Cooperative Research John Soderstrom.
Democratic Senate President pro tempore Martin Looney, D-Hamden, said the bill may face opposition from companies already in Connecticut on the grounds that it gives businesses new to the state an unfair advantage.
Looney believes Connecticut should base its pitch to businesses not on tax exemptions but on its workforce. In the state’s manufacturing heyday, he said, Connecticut workers were seen as “more efficient, better prepared [and] more skilled than workers in other states.” For Looney, the key to recapturing that reputation is education from kindergarten to college.
“I think we need to continue to focus on making sure we have the best prepared workforce, so that employers will continue to be attracted to Connecticut,” he said. “That has to be our primary objective in terms of economic development.”
Senate Republican President pro tempore Len Fasano ’81, R-North Haven, said that while he is “very supportive” of Yaccarino’s plan, he is unsure whether it will pass.
Nonetheless, Yaccarino remains optimistic. He acknowledged the tax exemptions that concerned Looney could prove a sticking point but urged legislators to look at “the overall scope of what’s really happening.” Both Yaccarino and Fasano argued that the tax exemptions are not depriving the state of money because without the exemptions, investors would not move to the state anyway.
“We should all work together,” Yaccarino said. “We should all come to the table with different views … Or you do nothing and stay stagnant. I’d rather do something and be positive.”
Though Yaccarino’s bills have yet to reach the floor, two preexisting Connecticut tax credit programs have helped develop bioindustry in New Haven and other cities across the state, according to Matthew Nemerson SOM ’81, New Haven’s economic development administrator.
The state’s research and development tax credit program, which Nemerson characterized as “very, very powerful,” allows certain research and development expenditures to qualify for tax credits. The other incentive, the Angel Investor Tax Credit Program, gives “angels” — those who invest in startups in exchange for equity — a credit on the state’s income tax when they invest at least $25,000 into qualifying businesses.
Given these two existing programs, Nemerson said, “we expect the technology companies are going to go to our city or other Connecticut cities.”
Other proposed legislation would instead seek to further regulate the bioindustry. Paul Pescatello, the senior counsel and executive director at the Connecticut Bioscience Growth Council, said two senate bills currently being drafted would attempt to control prescription drug costs and push for greater pricing transparency. Once the bill reaches committee, legislators will hash out the details. And during this process, Pescatello said he expects the potential laws to be surrounded by discussion and publicity.
The General Assembly’s 2017 regular session is set to adjourn on June 7.