With the announcement that Cigna is moving its corporate headquarters to Bloomfield under the state’s ‘First Five’ initiative, Gov. Dannel Malloy lit off a rocket sure to catch the attention of the nation’s business community.
Here is an insurance giant that had chosen not to have its headquarters in the ‘insurance capital’ changing course and saying to the world Connecticut is indeed open for business.
Its commitment to add at least 200 jobs in the next two years won the large package of prizes the state dangled. Initial estimates put the value of the tax incentives, loans and grants at $47 million with the potential to grown to $71 million, depending on how many jobs are ultimately created and how much infrastructure is built.
Certainly there are valid concerns about both the ‘First Five’ program and this first application of the strategy. The blogosphere was quick to do the math and charge that at $250,000 per job, it’s nothing short of a bald corporate handout. There is also reason to suspect the state just paid to finance a corporate expansion that was already underway. Industry observers point out that Cigna CEO David M. Cordani, a Waterbury native, had already set up residence in Simsbury and was busily shifting key executives here from Philadelphia. And in a macro sense, adding a new industry sector might have been better than putting more eggs in the same insurance basket.
But all of that misses the point.
Economic development is a game of momentum as much as anything and momentum hasn’t been on Connecticut’s side for some years. It was a bold stroke for Malloy to set up a program that likely will overpay the first five companies willing to buck the trend and invest in Connecticut. Cigna became No. 1 and it’s clear Team Malloy has others on the hook and is reeling in commitments.
That’s a game-changer, even if the price is high. Nothing breeds success like success and Malloy has moved the state in the direction of success. That’s a sharp and welcome course change from his predecessors. And course changes require some extra expense. Chalk it up as a cost of doing business and move on. If we’re now on the right road, the cost will be well justified.
In making the announcement, Cordani held out the prospect of adding 800 jobs and investing $100 million in technology and real estate, bold words in an industry that’s being buffeted by winds of change from the nation’s capital. We’re rooting for Cigna to collect the full haul of $71 million in incentives. Over the course of a decade, that will be a small price to pay for the economic activity generated.
The company will invest in buildings and buy everything from computers to paper clips; employees will buy houses and cars; businesses from restaurants to clothiers will get a boost; Bloomfield will grow; local tax collections and services will grow.
And then there’s the corollary — with this investment, Cigna won’t be pulling jobs out of the state in the foreseeable future.
Clearly, this is a win both for Connecticut and for Cigna.
Let’s save the quibbling over nickels until we see if this is the start of a sustained economic rally or just a shot in the dark. Over the course of the next four announcements, we should get a strong sense of whether ‘First Five’ is a sound strategy or just throwing money at a problem. The road to economic development is littered with examples of companies that cynically took the incentives and closed shop when the tax breaks expired. Yes, there’s plenty of time to potshot ‘First Five’ later if the effort fails to deliver sustainable employment gains. But today, it’s a dynamic step in the right direction. Let’s enjoy it.
