$40 million for sub base and EB; end tax on manufacturing equipment

HARTFORD - A bipartisan group of legislators and others today voiced their support for a plan to invest $40 million in Connecticut's Naval submarine base and the Electric Boat shipbuilding yard in Groton, and to end the property tax on new manufacturing equipment purchased after July 1.

The legislation, S.B. 1337, "An Act Concerning Support For The United States Submarine Base And Manufacturing And Defense Manufacturing In The State," is designed in part to make Connecticut more economically competitive in the ongoing federal Base Realignment And Closure Commission (BRAC) process. This national process pits various military bases and related defense-manufacturing industries against each other in an attempt to control costs and increase efficiencies.

Various states around the country have already announced plans to invest anywhere from hundreds of thousands of dollars to hire former government and military officials as lobbyists, to investing tens of millions of dollars in infrastructure improvements to their local military bases as a way of improving their chances in the base closure process (previous base-closing commissions have endorsed 85 percent of the Pentagon's recommendations.)

Defense Secretary Donald Rumsfeld will submit his list of recommended base closings, consolidations and realignments to the BRAC by May 16. A final roster of cuts and other changes prepared by the commission is due Sept. 8. President Bush and Congress must then accept or reject the list by Nov. 7.

"My hope is that the legislature and Gov. Rell will step up to the plate and support this legislation," said Sen. Gary LeBeau (D-East Hartford) , a co-author of the legislation and co-chair of the Commerce Committee. "When you look at the race that is going on nationally to save various military bases, and you consider some of the competition we are facing from Florida and New York and Virginia and Mississippi and other states, and when you learn that companies like Electric Boat have subcontractors in nearly every community in the state doing a quarter-billion dollars worth of work on just one class of submarine, you begin to realize the importance that this industry has in Connecticut and the impact that our investment can make."

"I am optimistic that the legislature and the governor will consider this bill on its merits," said state Sen. Catherine W. Cook (R-Mystic) , a co-author of the legislation and a ranking member of the Commerce Committee. "We are in a national competition with other states to save our sub base."

"Today we take a dramatic step to keep Connecticut's sub base strong and viable," said state Senate President Pro Tem Donald E. Williams, Jr. (D-Brooklyn). "The combination of using cutting-edge fuel cell technology -- developed in Connecticut -- to reduce energy costs, and providing incentives for manufacturing at Electric Boat and throughout the state, is a strategy that promotes economic efficiency and security."

"If we are serious about jobs and growth, we need to renew our focus on economic development efforts in the defense and manufacturing sectors," said House Speaker James A. Amann (D- Milford). "State policy should reflect our commitment to a competitive climate for these important businesses that touch every corner of Connecticut."

"The importance of doing this legislation is to send a strong message that Connecticut supports the New London base at Groton and the manufacturing sector of Connecticut," said Rep. Jeffrey J. Berger (D-Waterbury ), who is co-chair of the Commerce Committee. "This bill shows a commitment to manufacturing and continued vibrancy of the Groton base and Electric Boat. We certainly need to act in a strong manner to preserve a $2 billion industry that provides thousands of jobs to individuals and sub-contractors."

The proposed bill has three parts:

• $40 million in state bonding over two years to incorporate energy efficiencies (i.e. a cogeneration turbine) at the United States Naval submarine base in Groton, and to make various capital improvements there. That $40 million will also pay for energy-efficiency projects (i.e. fuel cells) at General Dynamics' Electric Boat submarine-building facility in Groton.
• Eliminating the local property tax on all manufacturing equipment - not just defense manufacturing equipment -- purchased on or after July 1, 2005. The estimated cost of this policy change is estimated to be $10.5 million per year beginning in fiscal year 2011, and increasing thereafter. The bill also proposes increasing the state tax on all corporations by 1.25 percent over 5 years beginning in 2011. That extra corporate tax revenue, estimated to be $50 million, would then be redistributed to towns as part of the state's PILOT (payment in lieu of taxes) grant for manufacturing equipment .