Proposed reforms to JobsCT hiring incentive program would broaden small biz access

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When it was enacted as part of state budget revisions in 2022, the JobsCT tax rebate program was hailed by businesses as a significant incentive program to create and retain jobs in the state.

Eligibility guidelines for the program, however, make it difficult for small businesses to qualify.

To correct that, the state legislature’s Finance, Revenue & Bonding Committee has introduced House Bill 7268, which would decrease the number of jobs a small company would need to create in order to qualify for a tax rebate.

The bill, one of several on the agenda for a public hearing on Wednesday, would reduce the number of new full-time equivalent (FTE) employees required under the program from 25 to just five for a qualified business with 75 or fewer employees.

According to the bill, an FTE is based on the hours worked or expected to be worked by a full-time or part-time employee in a calendar year. A job in which an employee worked or is expected to work 1,750 hours or more in a calendar year equals one FTE.

Few participants

Under the existing program, to qualify for the tax rebate a business must:

Be engaged in an industry related to finance, insurance, manufacturing, clean energy, bioscience, technology, digital media or any similar industry approved by the state Department of Economic and Community Development (DECD).
Create a minimum of 25 new FTEs. Pay a minimum wage of $37,500, and
Provide salaries that must be 85% of the median household income of the municipality where the jobs will be located.

Eligible employers can earn a rebate equal to 25% of the withholding taxes from net new employees. Employers that locate or grow in a distressed municipality or Opportunity Zone are eligible for a 50% rebate.

According to DECD’s annual report on JobsCT for fiscal year 2024, there are just seven companies in the state taking advantage of the tax rebate program.

Three of those companies — Avelo Airlines Inc. in New Haven, Ensign Bickford Aerospace Defense Co. in Simsbury and Greenbriar Equity Group L.P. in Greenwich — signed on for JobsCT in 2023, the first year it was available.

Four other companies — Fuss & O’Neill Inc. and Talcott Resolution Life Inc., both of Hartford, and TTM Technologies North America LLC and WaveAerospace Inc., both of Stratford — signed on in 2024.

Combined, the seven companies have created and/or retained 2,463 jobs through the end of fiscal year 2024, which ended June 30. The program allocates $2,708 tax credits per job, for a total of $6.67 million in tax credit rebates.

Rebate payouts are earned in years three through seven, while years eight and nine are discretionary, so the first rebate payments will be made during the current fiscal year, DECD said.

Christopher Davis, vice president of public policy for the Connecticut Business & Industry Association, said his organization supports the bill because expanding the incentive will help small businesses that continue to struggle with the high costs of creating jobs in the state.

In testimony submitted in favor of the legislation and shared with Hartford Business Journal, Davis noted that 90% of CBIA’s members are small businesses with fewer than 100 employees.

“House Bill 7268 not only alleviates financial barriers for small employers but also stimulates job creation, fostering sustainable growth while making a strategic investment in employers in every community,” Davis states in his testimony. “By expanding the JobsCT tax rebate program, small employers will be empowered to compete more effectively by allowing the investment of resources into infrastructure, innovation and workforce development while being incentivized to create greater opportunities for Connecticut residents.”