CT Eyes $25M Expansion Of R&D Tax Credit Program

by Donald Eng

FARMINGTON, CT — Small businesses that invest in innovation could get a financial boost under a proposal currently under consideration in the Connecticut General Assembly.

Senate Bill 84 includes language directing the Department of Economic and Community Development to administer a system of tax credit vouchers to allow small businesses — defined as having gross income not exceeding $70 million — to earn and use them for research and development. The fund would max out at $25 million, and no business would be eligible to receive more than $1.5 million in credits.

Speaking at Burke Aerospace in Farmington, a manufacturer of parts for military and commercial turbine engines that state officials said was an example of the kind of business the credits would help, DECD Commissioner Daniel O’Keefe said the extension of tax credits was “super important” for the state economy.

O’Keefe said Connecticut had the fourth-fastest growing state economy in the country, and that the manufacturing sector was the largest contributor to that growth.

“It’s about 12% of our economy, and if I look at the billions of dollars that we’ve seen in absolute growth, the most significant contributor to that was our advanced manufacturing sector,” he said. 

Burke Aerospace President and CEO Brittany Isherwood called the credits a tremendous opportunity for businesses like hers to compete with much larger companies.

“Innovation isn’t just part of our strategy, it’s essential for our survival and growth,” she said. “In our industry, development cycles are long, capital-intensive and highly regulated.”

The tax credit, she said, helped offset the risk.

“These incentives directly influence our decisions about where we expand, where we hire and how we invest in next-generation capabilities.”

Chris DiPentima, president and CEO of the Connecticut Business and Industry Association, said Connecticut’s research and development tax credit program already was one of the strongest in the country.

“And as a result, we had the seventh-best R&D spend per capita,” he said. He cited a Department of Revenue Services study that he said showed the state earned $2.36 in revenue for every $1 claimed under the credit.

“If we want companies to invent, build and scale here in Connecticut, we need to support how those companies operate,” he said.

On the day after the UConn men’s basketball team lost in the national championship game, Lamont compared small businesses to team sports.

“It’s a reminder of what it means, how you recruit and how you develop a team,” he said. Things like the space program also operate like a team, he said.

“We now have folks who have gone further from the planet Earth than anybody in the history of this country, history of this world. And a lot of it is thanks to companies just like this.”

The bill passed the Finance, Revenue and Bonding Committee March 31 by a 35-17, party-line vote. Senate Minority Leader Stephen Harding, R-Brookfield, said any proposal that made the state more affordable for job creators was welcome, adding the state was unaffordable under Democratic control and that “small business owners and innovators are getting crushed.”