Archive for the ‘Topics’ Category

3Connecticut taxpayers fund shorter CEO commutes

CEO Commute Bridgewater Cigna-01

The First Five, Connecticut’s signature economic development program under Gov. Dannel Malloy, prompted five CEOs to move their companies. In return, they got taxpayer funding – and a shorter commute to work.

Last month, a plan to move the hedge fund Bridgewater Associates, one of the world’s largest, from Westport to Stamford at a cost of $115 million in taxpayer money fell through.

Charter

The move would have reduced the commute for its billionaire founder Ray Dalio by two thirds. Instead of driving about 45 minutes from Greenwich to Westport, Dalio would drive only 15 minutes to Stamford, according to estimates based on Google Maps.

In some cases, the move was drastic. Charter Communications moved its headquarters from Town & Country, Four other First Five/Next Five deals still in place will move the company headquarters and keep the same CEO. In each case, the office moved closer to the CEO.

Missouri, to Stamford. For CEO Thomas Rutledge, who already lived in New Canaan, the new location is 990 miles closer to his home.

Alexion

Charter will receive $6.5 million in taxpayer support.

“Our CEO has had an office here and in Philadelphia for years, and still does,” said company spokesman Joe Mondy. “Cigna has offices in 30 nations and jurisdictions around the globe. Our decision to designate our flagship Connecticut offices as our corporate headquarters is all about the opportunity to leverage the highly educated, experienced and talented labor pool our state offers, so that our businesses may grow and flourish here and around the world.”Cigna CEO David Cordani saved himself some travel time by moving the company’s headquarters from Philadelphia to Bloomfield. Cordani’s Simsbury home is about 210 miles closer to the Connecticut site.

Cigna could receive up to $71 million from taxpayers.

Navigators

Spokesmen for Malloy’s office and the Department of Economic and Community Development, which coordinates First Five incentives, did not respond to a request for comment.

The pharmaceutical company Alexion plans to move from Cheshire to New Haven next year in return for $51 million in state assistance. CEO Leonard Bell will cut his commute from Woodbridge in half, from about 30 minutes to 15.

The insurer Navigators Group will receive $11.5 million to move from Rye Brook, N.Y., to Stamford. CEO Stanley Galanski will reduce his commute by a third, shaving about 15 minutes off his commute from Ridgefield.

CEOs in the First Five/Next Five program aren’t the only ones shortening their commutes. Fifth Street Finance received a $5 million forgivable loan from DECD to move from White Plains, N.Y., to Greenwich.

CEO Leonard Tannenbaum cut his commute from Greenwich in half, from about 30 minutes to 15. Fifth Street spokesman James Velgot said the shorter commute was unrelated to Fifth Street’s move.

“Len believes in the state, and wants to help it succeed in the long run,” Velgot said.

Another company, Sustainable Building Systems, was planned as a new joint venture so it did not have a previous location. In any case, the company has had trouble getting started. TicketNetwork withdrew from the First Five program after its CEO was arrested.Some companies in the First Five/Next Five program, like ESPN and Pitney Bowes, did not relocate, instead expanding in an existing location. Other companies changed CEOs around the time of the move, including NBC Sports and CareCentrix. The accounting firm Deloitte did not move its headquarters to Connecticut, but did expand its presence.

FifthStreet-06-06

The Bridgewater move fell apart because of a land use dispute between the project developer, Building and Land Technology, and city officials. Even though the deal fell through, BLT still gets at least $16 million from the state – as much as $2.50 for each $1 invested – to complete the environmental remediation of the property.

Graphics by Colby Pastre.

2Norwalk housing project gets millions from taxpayers while Boston-based developer gives to Dems

Connecticut’s oldest public-housing project, Washington Village in Norwalk, has received tens of millions in taxpayer money recently, including $30 million in federal funding this week, while a top leader of the developer in charge of the $110 million project has been contributing regularly to the Connecticut Democratic Party.

Sens. Richard Blumenthal and Chris Murphy along with Rep. Jim Himes, who represents Norwalk, celebrated the grant from the Department of Housing and Urban Development Monday.

The funding is part of HUD’s Choice Neighborhoods Initiative, which hopes to convert affordable housing into mixed-income housing.

On Tuesday, Gov. Dannel Malloy and state Housing Commissioner Evonne Klein announced $9.8 million in additional federal funding passed through Connecticut’s new Department of Housing. HUD awarded Connecticut a total of $31 million for disaster recovery from Superstorm Sandy.

Previously, Washington Village received a $1.89 million low-income housing tax credit.

Boston-based Trinity Financial will redevelop Washington Village with the Norwalk Housing Authority and the Norwalk Redevelopment Agency.

Patrick Lee, a co-founder and executive vice president of the company, donated $7,500 to the Connecticut Democratic Party in the past year.

In 2013, Lee donated $2,500 on July 18 and again on Aug. 1.

HUD announced the availability of Choice Neighborhoods funding on June 13, 2013, and the deadline for applications was Aug. 12.

Malloy first announced the $9.8 million in disaster funding on April 11.

Lee donated another $2,500 on April 23. He made all of his donations to the party’s federal account. As a top executive at a company that receives state assistance, Lee would be ineligible to give to the party’s state account.

In November 2013, the party received thousands in donations from others with affordable-housing business, also through its federal account.

1SCOTUS ruling strikes blow to CT’s forced unionization scheme

As millions anxiously awaited the Supreme Court’s decision in Hobby Lobby v Sebelius (regarding the Affordable Care Act’s mandate that all employers provide contraception coverage despite religious objections) the Justices released their decision in another case that has quietly dealt a huge blow to public unions and to decisions made by Governor Malloy and the General Assembly.

In Harris v Quinn the Court ruled that home healthcare workers providing services to individuals who receive state or federal funding should not be required to pay dues to a union that represents public employees (mainly the SEIU and AFSCME). This precedent sends shots across the bow of public union advocates seeking to add to their political coffers by forcing anyone who operates near government money to pay some sort of union fee.

The details of this case should sound familiar to folks here in Connecticut. In 2011 Governor Malloy, via two Executive Orders, effectively forced individuals providing home daycare and home health care services similar to those in Harris to pay union dues, regardless of whether or not they wished to unionize. The logic behind this fiat being that since these employees, mainly mothers running daycare out of their homes and healthcare workers contracted by persons needing in-home care, often provide services for individuals who receive public money through Medicare, Medicaid etc. they should therefore be considered public employees.

Unions have tried this in numerous states claiming that these private employees are “free riding” on the collective bargaining efforts of local unions who are of course only seeking to ostensibly improve things for workers, society and the human condition. In reality anyone who follows the money can see that this is a strong arm tactic that enables unions swing the political pendulum in their favor by getting and keeping Democrats in office by expanding their donor base by force.

In response to Malloy’s Executive Orders a slew of lawsuits were filed against him in 2012. Among them was a suit filed by the Yankee Institute on behalf of Cathy Ludlum. Ms. Ludlum, who suffers from Spinal Muscle Atrophy, wished to prevent the twelve people she employed, who helped her with everything from running her business to eating, from being forced unwillingly into the SEIU.

At a personal level it was argued that this forced unionization scheme effectively changes the relationship between employer and employee. When a union attempts to inorganically force its way into this relationship the people who get pushed to the side are the ones that actually need care. Loyalty for the service providers is diverted from their employers, such as Ms. Ludlum, to their union bosses. It was also argued that Malloy’s actions intruded upon a constitutional authority reserved for the Legislature.

Unfortunately for Ms. Ludlum and her peers in 2012 the CT General Assembly, who could not pass up the opportunity for increased campaign support, passed a bill that concurred with Malloy’s executive actions. In late 2012 the State Superior Court ruled that the lawsuits against the actions were rendered moot by the passage of legislation.

Fast forward to Monday June 30, 2014 and it appears as if the suits filed against the Governor may have not been all in vain.

The SCOTUS ruling on the Harris case is extremely narrow and pertains to only home healthcare workers, preventing them from being considered state employees and therefore subject to forced unionization. However, it signals victory for those types of workers in CT like those employed by Cathy Ludlum who do not wish to pay union dues and will now be able to opt out.

While unions will react to this decision by saying it is anti-worker, anti-poor, anti-(insert sacred cow of the left here) those who truly understand the underbelly of union politics should take solace in the fact devious tactics used to expand union influence have been put on hold; for now. For every freedom loving individual the holding in Harris (and Hobby Lobby) represents just a little bit more decision making power returned to the hands of individuals. Such a nice Independence Day gift from SCOTUS!

Andrew is a Tax Consultant at Alternate Tax Solutions and a Summa Cum Laude graduate of CCSU.  

0State awards another $10 million in stem-cell grants to the usual suspects

The state awarded another $10 million in stem-cell research grants Tuesday, but not a single private company benefited.

Like the $80 million awarded in the previous seven years, most of the money this year went to the University of Connecticut Health Center or Yale University.

The Jackson Laboratory for Genomic Medicine, already the recipient of $291 million in taxpayer largess, secured $1.1 million from this batch of stem-cell research funding.

In the history taxpayer funding of stem-cell research in Connecticut, only two private companies received grants totaling $2.4 million out of about $90 million, or less than 3 percent.

2IT audit reveals state may owe $5.2 million for 4,500 non-compliant software licenses

A review by an unnamed software company found 4,500 improper licenses on state computers, according to the Auditors of Public Accounts, a failure that could cost more than $5.2 million.

Auditors, reporting on the state’s former information technology agency now spread across multiple state agencies, suggested the development of a process for disposing of computers and software products. When state agency’s questioned the value of developing the policy considering its costs, the auditors pointed out the manufacturer’s review.

“This is an example of just one software compliance audit,” the auditors wrote. “It would appear, based on potential, future compliance audits and penalties that the benefits of a central software acquisition, management, use, deployment and disposal platform and policy would far outweigh the costs of development and implementation.”

Auditors also found:

– Errors in longevity payments. The agency overpaid at least three employees and underpaid one by more than $12,000 over a number of years.

– Improperly reported cases of misused state resources. One employee had to pay back the state for using a state cell phone for personal calls while another received a 30-day suspension for viewing pornography on state computers, but the agency didn’t report either case to auditors or the comptroller, as required by law.

0IRS has three-year-old, $50,000 tax lien against Sen. Fonfara’s Hartford home

The IRS has a $50,406.93 tax lien against the Hartford home of Democratic Sen. John Fonfara, chairman of the legislature’s finance, revenue and bonding committee which handles state tax policy.

The IRS filed a notice of tax lien in October 2011 with the Hartford City Clerk for unpaid personal income taxes in 2008 and 2009. No release of the lien was filed with the clerk as of Tuesday.

Fonfara’s spokesman did not respond to repeated requests for comment.

According to the IRS, tax liens remain in effect until the entire amount is paid off. If a person has made progress paying down their tax debt but hasn’t paid the full amount, there would be no change to the lien. Conversely, if a person has not made any payments, the amount owed could grow because of interest and penalties.

The lien on Fonfara’s 99 Montowese St. home breaks down the amount owed between the two years. The unpaid balance for 2008 was about $8,600. In 2009, the unpaid balance was a little less than $42,000.

The IRS took out an earlier lien against Fonfara at his 23 Fenwick St. address in 1997 for about $16,500. The lien was released within a month.

In addition to his salary as a state senator, Fonfara works in the billboard business.

Update: View the liens here, now with certain identifying information redacted.

1Will government unions spend millions on Connecticut politics again?

Connecticut’s public employee unions are big players in the state’s elections, spending millions on their political operations, which may affect 2014 races.

The unions are a highly-focused, highly-motivated interest group when it comes to state-level elections, because the candidates who win will sit directly across the table from them during contract negotiations.

It can be a difficult task to “follow the money” when it comes to unions and campaign spending, but by searching the state’s online database of campaign contributions expenditures, a clearer picture of how much public sector unions are spending on state-level campaigns emerges.

In the two years between the 2010 and 2012 state elections, the largest public sector unions – including the Service Employees International Union (SEIU); American Federation of State, County and Municipal Employees (AFSCME); American Federation of Teachers (AFT); and the Connecticut Education Association (CEA) – spent $834,968.51, on campaigns for state and local offices, the vast majority of it going to candidates or committees from the Democratic and Working Family parties.

The two years between the 2010 and 2012 state elections were tumultuous for state employees – it was during this time that they were in heated negotiations with Gov. Dan Malloy over a new contract.

Contributions to PACs and to candidates made up most of the $800,000-plus in spending, which was given primarily to elect state representatives and state senators since there were no statewide races in 2012.

Federal law requires unions to file disclosures on their political spending. The Department of Labor makes those disclosures available through an online database – unionreports.gov.

According to the disclosures filed with the Department of Labor, Connecticut’s public sector unions SEIU, AFT and AFSCME (none were found for the CEA) spent $4,286,949.85 on political activities in the years 2011-2013.

Anything unions do to support candidates for federal or state office is included in that amount – including political contributions or political activities like getting voters to the polls on election day.

0Agreement with parole officers restores nearly three years of expired time off

The Department of Correction agreed last year to restore nearly three years of expired time off for 40 parole officers, an average of 3.5 weeks each.

In 2011, auditors discovered an accounting glitch that allowed a small group of state employees to build up thousands of hours of extra time off. At least 40 parole officers kept compensatory time that should have expired.

The department fixed the error and time off started expiring for the parole officers. Their union negotiated the 2013 agreement to restore 5,800 of properly expired leave.

According to a list attached to the agreement, the Department of Correction reinstated time off ranging from half an hour for one parole officer to 688 hours – more than 17 weeks – for another.

In all, Connecticut owes its employees about $676 million for paid time off, down slightly from fiscal year 2012 when the value exceeded $700 million.

DOC had the parole officers in the wrong category. After auditors found the problem, DOC put the employees into the correct leave plan and opened negotiations with the union to determine how to handle the improperly-earned time off.

The department signed a March 2013 agreement with AFSCME Council 4 to resolve the issue by reinstating time off that expired between October 2012 and January 2013, which amounted to 147 weeks or nearly three years. The parole officers have three years to use the time off granted under the agreement.

DOC spokeswoman Karen Martucci said the agreement with the union set out to “address a discrepancy identified through an audit of the agency’s financial records.”

“Specifically, parole officers were entered into the payroll computer system coded into an incorrect leave plan, which wasn’t consistent with the compensatory time expiration language applicable to that job classification,” Martucci said. “The DOC and the union were in agreement to meet and discuss a fair resolution to the issue, which ultimately resulted in this signed contract.”

0Correctional supervisors at top of pay scale get ‘lump sum payments’

Connecticut’s longevity pay for state employees – $13.8 million in April – is no secret, but a small group of state employees also get “lump sum payments” equal to 2.5 percent of pay.

While longevity payments go to union state employees based on the length of their careers, lump sum payments go to about 100 correctional supervisors who have reached the peak of the pay scale.

The state makes the payments whenever the supervisors, members of the SEIU Local 2001 NP-8 bargaining unit, would otherwise be eligible for an annual increment in their pay.

Due to the payment code used to process the lump sum payments, it is not possible to precisely identify the total cost. However, all payments in the category – which includes certain other payments, too – to eligible employees add up to $184,058.

Two years ago, the legislature ended longevity pay for non-union state employees only to give them a raise of the same amount.

0With fewer served, costs rise at state-run homes for developmentally disabled

Fewer people with developmental disabilities in Connecticut need the highest level of care, but rising costs are growing the gap between high-cost treatment in state-run facilities and lower-cost private alternatives.

According to 2013 data provided by the Department of Developmental Services, the number of people in federally-designated intermediate care facilities for individuals with intellectual disabilities fell below 1,000 last year. The federal government reimburses half the cost of care at these facilities.

The cost of care is growing rapidly at state-run facilities. At the highest-cost regional centers, run by DDS, the average cost per person rose 10.5 percent in a year, from just over $400,000 to a little more than $442,000.

Costs at Southbury Training School, slightly lower-cost but still state-run, increased by more than 8 percent and now exceed $350,000 per person.

Private-run ICF-IIDs saw costs rise by a more modest 3 percent, nearing $165,000 or less than half cost of the state-run programs.

With more than 600 people seeking residential services from DDS as of December, private facilities offer the possibility of helping more people without increasing costs.

A DDS spokeswoman attributed the rising costs to “the drop in consumer counts.”

Recently, DDS has come under scrutiny for the death of a Southbury Training School resident and falling behind on its abuse registry.