Tax tiff: When GE gets chills, Fairfield gets pneumonia
Fairfield’s Economic Development Director Mark Barnhart is blunt.
“You don’t replace a GE,” he said last week after the international conglomerate took at least one public step following through on its threat to move its headquarters from Fairfield — and entirely out of state. That possibility was raised by GE officials after the General Assembly’s Democratic majority adopted a budget that raised the tax liability for corporations.
GE opened its corporate headquarters in1974 on a nearly 7-acre campus on Easton Turnpike. The property, adjacent to the Merritt Parkway, includes two office buildings and a “guest house.” According to court papers filed in the company’s 2005 appeal of its local property tax assessment, housed in one of the office buildings are a medical center, a cafeteria, a fitness center, a production studio and an employee store. The guest house has 28 rooms, conference areas and dining facilities.
The white-sided structures built into a hillside have become as much a local icon as the Penfield Reef lighthouse. But unlike the lighthouse, GE adds much to the town’s tax coffers. The largest taxpayer in town, GE accounts for roughly $1.8 million in tax revenue annually based on an assessment of $76.5 million. And many of its headquarters employees live in Fairfield, where they also pay property taxes and patronize local businesses.
“Companies far smaller than GE are constantly being bombarded by offers and enticements from other states,” Barnhart said. “No doubt that pace has only accelerated in the last few days.”
Days after legislative adoption of the budget — which still could be revised in a special session — GE CEO Jeffrey Immelt wrote in an email last week that he has assembled an "exploratory team" to review the company's options to move to a state with a "more pro-business environment." A GE spokesman said this week the company had no new statements to make regarding the issue.
The task of trying to make the case for GE to stay in Fairfield, and Connecticut, Barnhart said, “has certainly become much harder given the recent actions in Hartford.”
“I have been speaking with Governor Malloy, representatives of his administration, our state delegation and GE representatives during this past week,” First Selectman Michael Tetreau said. “I have been having daily discussions with both sides.”
Tetreau said his objective is to keep that dialogue going and added, at this point, both sides indicate a solution is possible, though not guaranteed.
“One of my key objectives is to assist GE and do everything I can to make sure their points are heard,” the first selectman said. “I believe GE’s value to our community goes far beyond the $1.8 million they pay in property taxes. I will do everything I can to keep them in Fairfield.”
The threatened move, Tetreau said, is caused mostly by state budget changes, not only to the unitary tax but treatment of tax credits.
“The state legislative leadership bringing in the 11th hour changes are also a big part of the problem,” Tetreau said. “The process they follow to construct the budget is a really bad example in group decision making. The personal attacks on our corporate citizens from the leaders of the state legislature add to the rhetoric and emotion without moving us closer to a resolution.”
Both sides, he said, have agreed to tone down the rhetoric.
“At this point, the governor’s office and GE management have committed to lower the emotion,” Tetreau said. “I hope the state assembly leadership follows suit.”
But state Sen. Tony Hwang of Fairfield, who said Tetreau — like Malloy, a Democrat — needs to “engage the governor directly,” doesn’t think that is enough.
“Quite simply, our town’s local leader must demand that the governor veto this budget,” the Republican legislator said. “Anything short of that would be an abdication of his responsibility to the residents and businesses of Fairfield.”
Hwang also thinks the town’s Representative Town Meeting should take a vote of “no confidence” in Malloy, much like Trumbull’s Town Council is apparently poised to do.
“While merely symbolic in nature, it would certainly send a powerful message if Fairfield and towns across our state did the same,” he said.
As the state Senate began its debate on the budget proposal last week, Selectman Kevin Kiley, a Republican, initiated discussion of the issue at the end of the Board of Selectmen’s meeting. Kiley asked the Democrats on the board, Tetreau and Selectman Sheila Marmion, to add their signatures to a letter he drafted to Malloy asking that the budget be vetoed. Tetreau said while the suggestion of jointly signing the letter was discussed at the meeting, Kiley sent it to Malloy before it could be discussed again.
“Our entire town is affected by the potential loss of General Electric,” Kiley said. “The governor must veto this budget and return with a tax package that is fair and protects our economy.”
The town, Kiley added, “cannot afford to have its biggest taxpayer and community partner pushed out of town by this budget vote.”
In her freshman year in office, state Rep. Cristin McCarthy Vahey, D-133, broke ranks with fellow Democrats, casting a “no” vote on the budget. GE’s announcement about exploring relocation, she said, is not an idle threat and one that must be taken seriously.
“My conversations with GE in the final days of the session, feedback from constituents and other groups affected by new taxes, including our hospital employees, were all behind my no vote,” Vahey said, despite supporting aspects of the budget including “critical investments in infrastructure and social services.”
GE’s subsequent consideration of a possible move, Vahey said, “should result in a swift, strong response from leaders in our state, from the governor on down.”
She said she has remained in contact with representatives from GE and will continue to “work hard to do whatever I can to keep GE headquartered here in Fairfield.”
Chris Tymniak, a Republican RTM member hoping to oust Tetreau as first selectman in November, said not only must Malloy veto the budget, but the town should issue it’s own “veto.”
He said the town and state “need to send a message that we are open for business.”
“One way this can be accomplished is by normalizing our budgeting process, which will help business with their longer term planning” Tymniak said.
He said the town should draft a comprehensive business plan, in conjuction with local businesses, “not laid out for them by government officials.”
“Let’s ask basic questions like what can we as a town government do to make Fairfield a better place for you to build and grow your business? Let’s hear their concerns and act on them,” Tymniak said. “We can be a better host community and certainly a more business friendly state. Businesses like GE want to be able to plan in a tax-certain environment.”
In addition to the property tax the town is paid by GE, it also receives some extras, like a recent $10,000 donation to enable the Police Department to test and purchase body cameras for officers. Other donations include 40 acres of open space at Lake Mohegan; training, rescue and fitness equipment to the Fire Department, and a multi-year commitment to help fund costs for a police dog. In addition, most of the furniture in Sullivan-Independence Hall is hand-me-downs from GE.
But, local officials admit, GE also derives a benefit from being located in town.
“Yes, we have had a great partnership since the 1970s,” Tymniak said. “Fairfield offers an unmatched quality of life to its residents and business community. Fairfield also offers a highly educated talent pool for GE to pull local workers.”
He said the proximity to New York is “ideal” and allows “a large company to have unmatched key suppliers support their business.”
“I think what Fairfield provides to GE employees is what it provides to all of its residents and businesses — an exceptional educational system, a thriving arts and cultural scene, fantastic restaurants, two universities who partner with business and the town, world-class libraries, a beautiful locale, including lakes and beaches, proximity to Boston and New York, the train, and so many amazing people who are engaged, care for one another and care deeply about this town,” Vahey said.
Hwang agreed. “Equally important for a company like GE, which places such high value on its employees, are the somewhat intangibles that we in Fairfield and surrounding towns have come to know and value: the excellent public and private schools for our children; the safe, family-friendly neighborhoods; a beautiful natural environment that includes both forests and beaches and offers a wealth of outdoor activities and learning opportunities; a culture steeped in the rich history of the founding of our great nation, and a general quality of life that is among the highest in the U.S.,” the state senator said. “These are the things that make Fairfield and Connecticut such a special place to live and work.”
There’s also been debate about how much GE does or does not pay in state taxes, but state corporate tax returns are not public information.
“I expect our corporations to pay their fair share in taxes,” Vahey said. “GE has followed the law and paid what we have asked them to pay.”
Many may feel that what corporations like GE pay is not enough, she added, and that may be true, “but how and when we make changes to our tax laws are important factors impacting any business.”