The spinoff of multiple financial services units by General Electric Corp. — a cash cow meant to assuage shareholders and return the company to its core business — has created a tempest in Connecticut.

It threatens to chip away at the $78 billion profit that Fairfield-based GE is projected to turn from the sale this year of GE Capital, as well as its health care and vehicle fleet money-lending units.

The most closely kept secret in the state — perhaps other than GE CEO’sJeffrey Immelt’s cell phone number — is by how much?

Until this year, Connecticut allowed companies such as GE to defray up to 100 percent of their corporate tax liability by applying operating losses they had accrued over 20 years. But, looking to erase billion-dollar budget deficits, the state has cut that benefit in half.

The change, expected to generate $246.4 million over the next two years, has drawn the ire of the Fortune top-10 company and led to it being romanced by several other states, including New York.

“I’m sure GE was looking to shelter as much of that profit (as it could) from taxation in the state of Connecticut,” said Kevin Sullivan, the state’s revenue services commissioner. “I think it surprised them.”

Loss-and-carry change

GE declined to say how much of a hit the company is expected to take.

“The governor and the Legislature should do the right thing for small and large businesses and the citizens of Connecticut to improve the economic vitality of the state,” GE spokesman Seth Martin told Hearst Connecticut Media by email.

Critics of the change to what is known as a the loss-carry-forward tax say that businesses deserve to know the lay of the land so they can plan moves such as the sale of GE Capital.

“You don’t make these decisions quickly and rashly in a day’s time,” said former state Senate Minority Leader John McKinney, R-Fairfield. “To have the state all of a sudden pull up and change the loss-carry-forward rules is a damaging blow.”

Sullivan, a Democrat who was lieutenant governor from 2004 to 2007 and state Senate president before that, said there is $78 billion in outstanding net operating losses that companies could use to reduce their taxes owed to the state. It’s a huge liability, he said, not that the state is going to try to void all those potential credits.

“Obviously, if that ever happened, that would be no state of Connecticut,” Sullivan said.

Contrary to declarations by some of his former colleagues in the Legislature diminishing GE’s contribution to the tax base, Sullivan said the loss of the company to another state would hurt revenues, though he couldn’t specify an amount. In addition to corporate taxes and income taxes of its employees that reside in the state, he said, GE pays sales tax and local property tax to Fairfield. The latter has been estimated at $1.8 million annually.

“As a business, GE is paying substantial taxes and a variety of kinds in Connecticut, and we want them to continue to do that, and we want them to continue to be here,” Sullivan said. “We are working with them to make sure we anticipate and understand their concerns.”

Sullivan dismissed reports that GE is smarting over a looming change to how Connecticut taxes companies with business entities in multiple states and countries.

As of Jan. 1, 2016, a unitary tax will come on the books, requiring businesses to itemize how much of their earnings are tied to Connecticut. Sullivan said the change, which is consistent with other states in the region such as Maryland and Rhode Island, will level the playing field for companies based in Connecticut and ensure that outside corporations pay their fair share of taxes.

“This is not GE’s issue,” Sullivan said.

State Sen. Tony Hwang, R-Fairfield, disagreed, and has co-authored a letter calling for lawmakers to return to the Capitol for a special session to fix the damage from the unitary tax.

“The idea of GE leaving our community is a kick to the stomach,” Hwang said. “The fact is, if they move to New York, it is a double insult.”

Wooed by Westchester

Devon Puglia, a spokesman for Democratic Gov. Dannel P. Malloy, ruled out the possibility of a special session .

“We do not intend to call a special session on this topic,” Puglia said. “However, if the senator has a thought-out, thoughtful, realistic proposal that doesn’t involve phantom savings, we are happy to listen to it.”

Ned McCormack, a spokesman and senior adviser to Westchester County Executive Rob Astorino, said officials there had approached GE and that several commercial New York properties in Armonk, White Plains and Somers have been floated as potential landing spots for the company.

“Westchester is open for business,” McCormack said. “We would love to have GE here, just like we would love to have other corporations.”

State Rep. Cristin McCarthy Vahey, D-Fairfield, who lives 2 miles from GE’s headquarters, was one of 11 members of the Democratic majority who voted against the recent tax increases and the budget.

“I’m not an alarmist, but I’m a realist,” she said. “I think we have to keep working on this.”