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August 10, 2023

CT economic development agency audit finds errors and omissions totaling millions

PHOTO | CONTRIBUTED Attendees at DECD’s Dec. 2 Economic Development Summit network at The Bushnell theater in Hartford.

A recent audit report found that the state Department of Economic and Community Development under-reported and over-reported some grant funding and assets between 2020 and 2022 in their annual report.

The audit includes three findings: omitted statutorily required information and unsupported data and economic impact analysis. All three findings were repeated from previous audits.

The report by State Auditors John Geragosian and Clark Chapin says the DECD omitted statutorily required information by failing to report the economic impact of incentives administered by Connecticut Innovations, the state's quasi-public venture capital arm, and failing to indicate whether their programs were meeting intended goals.

The auditors determined the omission was caused by CI “not promptly analyzing the estimated effects on the state’s economy for programs it administers.”

In response, DECD said it agreed with the finding and that it would include the reports in the future.

Under the unsupported data finding, the auditors said DECD overstated the amount of Urban and Industrial Site Reinvestment tax credits awarded in all three years by $10 million.

That was because DECD reduced a company’s maximum tax credit award by $10 million for failure to meet all job obligations; however, DECD did not reflect this reduction in its report.

Also, the auditors found that DECD understated the fiscal year 2021 brownfield investment by $1.5 million. Also, DECD understated the leverage ratio by 3.76 (18,800%), they found.

DECD said it would correct the errors, but they did “not materially impact” the 10-year portfolio value for the programs evaluated. 

Last, under economic impact analysis, the auditors found DECD over-reported revenue from  Film Infrastructure tax credits by $644,897. That was because DECD included ineligible acquisition costs for a tax credit recipient, the agency said.

Also, DECD erroneously reported repayments for Recovery Bridge Loans as revenue for the Small Business Express program, despite the DECD’s annual report indicating that it did not include those numbers, according to the auditors.

DECD said it would correct the errors.

The auditors urged DECD to “ensure the amounts included in its calculations are accurate” because errors and omissions could affect the state’s ability to make decisions about business assistance and incentive programs.

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