Gov. M. Jodi Rell announced Feb. 3 that her budget proposals for the new legislative session include a sweeping economic recovery package that offers a tuition loan forgiveness program for certain college graduates who stay in Connecticut, a small business job creation tax credit and a $500 million public-private loan pool for small- and micro-businesses in the state.

The package also includes a Green Manufacturing Sales Tax Exemption that covers the renewable energy and clean technology industry and a panel – created through Executive Order – charged with streamlining the state’s processes for obtaining environmental, public safety and public health permits.

“Whatever bright spots there may be in the overall economic picture, the basic facts are as simple as they are stark: We need more jobs, more economic activity and a freer flow of credit in Connecticut,” Rell said. “We need to keep our highly talented, highly educated young people and retain the immensely productive work force our state for which has always been known. And we need to rekindle the Yankee Ingenuity that has always been the hallmark of Connecticut’s economic success.

“We can not, we should not – and we must not – wait for Washington, D.C., or any other outside agent to come to our rescue,” the governor said. “The notion that a ‘fix’ for our problems will land in our lap is overly optimistic at best and dangerously naïve at worst. We must make smart, targeted investments – investments in our young people, investments in the small businesses that we know are the single largest creator of jobs in our state and investments in industries that will be the foundation of our economy in the decades to come.”

Rell is proposing An Act Concerning A Green Collar, Life Science and Health Technology Job Loan Forgiveness Program, which establishes a $2,500-per-year tuition loan forgiveness opportunity for recent college graduates who spend up to five years in the state working in key industries.

The program defines “green collar” jobs as agricultural, manufacturing, research and development, administrative or service jobs dedicated to preserving environmental quality – including positions in the renewable energy industry, mass transit, biofuels, energy efficiency and sustainable manufacturing. The program would also apply to jobs in the life sciences – industries dealing with the structure and behavior of living organisms – and health information technology.

“These are fields we expect to be at the center of Connecticut’s economic growth in the future,” Rell said. “It is essential that we provide a willing and well-trained work force to maintain our leadership in these businesses.”

Under the program, graduates of Connecticut colleges and universities who spend at least two years living and working in the state are eligible for a reimbursement of up to $2,500 in state or federal tuition loans. Graduates can qualify for an additional $2,500 in reimbursement for each additional year spent living and working in the state, up to a maximum of $10,000 per student.

Because credit markets remain tight – especially for smaller businesses – Rell is proposing a $500 million public-private loan pool. The state would use a total of $100 million in bond funds to establish the pool, allocating $75 million for loan guarantees – which would, in turn, leverage $400 million in private capital for loans ranging from $500,000 t0 $3 million.

The remaining $25 million in state funds would be used to make direct “microloans” – loans of up to $500,000 – that some traditional banks have been reluctant to service during the current credit crisis.

“These microloans – sometimes for as little as $10,000 – can spell the difference for smaller employers that are the backbone of our economy,” Rell said. “A local shop may simply need a modest loan to buy inventory or bring on a single employee – not much in the scheme of a multibillion dollar economy, but that small loan is very nearly a matter of life and death for that one employer or that new employee.

“More than a quarter of the businesses surveyed in December by the Connecticut Business and Industry Association say getting credit is still a problem for them,” the governor noted. “That’s down from nearly a third of companies having trouble when the survey was taken three months earlier – but it is still far too many. Access to credit is the life-blood of business and we must keep it flowing.”

Rell is also proposing extending the state’s job creation tax credit to small employers – businesses with 25 employees or fewer. The program would offer a three-year credit of up to $2,500 per job and would be extended to limited liability corporations (LLCs) and “S corporations” – businesses where profits and losses are split among shareholders and taxed individually.

To safeguard the state budget, the governor’s proposal limits the total amount of credits that could be claimed under the job creation credit to $10 million.

In addition, the governor is proposing a sales tax exemption for the sale, use and other consumption of machinery, equipment, tools, materials, supplies and fuels related to the renewable energy and clean fuels industries. The exemption would apply specifically to technologies to produce, improve or develop solar power, passive or active solar water or space heating systems, geothermal systems and wind power.

Rell is also issuing an Executive Order that creates a Permitting Task Force composed of consumers and representatives of business and industry, the construction industry, labor and the state’s cities and towns. The panel will have 45 days to meet with state agencies, examine the permitting process and recommend ways to cut through red tape, eliminate backlogs and make applications more consistent.

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