Political Capitol

I’d like to think I know a little bit about the state’s still fairly new film and television production tax credits.

Stamford’s the home of the Connecticut Film Center, whose founder, Kevin Segalla, helped lawmakers mastermind the legislation three years ago; the tax credits have drawn several high-profile films to lower Fairfield County, including some critical hits and some big flops (“Righteous Kill” anyone?); and the credits have also recently lured digital animator Blue Sky Studios to Greenwich and raucous talk show host Jerry Springer to Stamford.

Needless to say myself and my colleagues at The Advocate have written A LOT about the credits and their pros/cons. And so have other reporters.

That’s why I was a bit puzzled by the sudden interest yesterday in the fact that Stamford-based World Wrestling Entertainment has so far collected $3 million worth of tax credits and stands to receive around $5 million more from the state film office.

It’s been no secret that WWE, along with other companies based in Connecticut prior to the creation of the tax credits, has benefited. That’s been one of the major complaints of Connecticut Voices for Children, which for a couple of legislative sessions has urged lawmakers to take a closer look at whether Connecticut truly gets a bang for the buck out of the tax credits.

The argument is the credits were created to attract NEW businesses, while others counter they are also needed to maintain existing companies like WWE.

There has been renewed interest in WWE’s participation because company founder Linda McMahon in her bid to secure the Republican nomination for U.S. Senate in 2010 has been railing against government “bailouts.”

Fair enough. Question her about the film and television tax credits. Heck, challenge her to return the cash.

BUT here’s why yesterday’s criticism of McMahon and WWE, using film and television critic lingo, jumped the shark.

First Colleen Flanagan, a spokesman for the state Democratic Party, issued a press release that read: “Connecticut voters may find it interesting that Linda McMahon – in the midst of a state budget crisis, when core government services are being slashed and taxes are being raised – took a $3 million taxpayer-funded bailout just weeks before pledging to spend $30 million to run for U.S. Senate in Connecticut.”

Flanagan’s statement begs the question is this whole film tax credit program really such a good idea? These are, as she noted, tough times when the state needs as much revenue as possible to maintain core services.

But if Flanagan and state Democratic Party officials find the program flawed, they have no one to blame but their own party.

Former House Speaker Jim Amann, D-Milford, spearheaded the film and television tax credit formula that allows existing companies to benefit and continues to take credit for it as he seeks his party’s nomination to run for governor in 2010.

And when the General Assembly considered earlier this year placing tighter restrictions on the credits, it was the Democratic-majority who sided with industry insiders and decided to oppose Republican Gov. M. Jodi Rell’s idea of capping the total amount of credits issued annually by the film office.

(Ironically WWE is, according to the state film office, one of the very few recipients actually using the credits rather than transferring them to other taxpayers. Connecticut Voices for Children has been lobbying to make the credits non-transferable.)

Now let’s examine what former U.S. Congressman Rob Simmons, who is vying with McMahon for the GOP Senate nomination, had to say yesterday when he learned of WWE’s tax credit windfall.

“This Halloween, Mrs. McMahon may be masquerading as an opponent of government bailouts and stimulus packages for everyone else, but she is happy to take taxpayer dollars for her own personal benefit,” said Simmons’ spokesman Jim Barnett. “Rob Simmons supports tax incentives for small businesses and entreprenuers to grow and thrive, but it is troubling that Linda McMahon … is asking economically-strapped taxpayers to provide her with her own personal stimulus package to produce adult-oriented entertainment that some find objectionable.”

Slippery slope alert! Remember “Righteous Kill,” the Al Pacino/Robert DeNiro/50-Cent cop thriller I mentioned above? That production, according to the state film office, qualified for over $12.5 million in film tax credits.

It was also rated “R” for “violence, pervasive language, some sexuality and brief drug use.”

Should “Righteous Kill” have been denied those tax credits, Rob? For that matter, should the state have denied Jerry Springer the credits? Some people find his talk show objectionable.

Heck, according to the state film office a company called “Six Wives, LLC” earned about $2 million in film and television tax credits. You might want to check that out too, Rob. Sounds a bit adult-oriented.

And I wonder if Simmons knows the legislature’s Republican Minority decried efforts during this year’s budget battle to impose higher taxes on businesses, including doing away with tax credits.

The final kicker here is that, until a few months ago, Simmons was the official Connecticut Business Advocate. If he had any qualms about the film and television tax credits, that was the time to speak up.

Connecticut Voices for Children and others have raised valid questions about the state’s film tax credits and similar programs nationwide, and there have been several opportunities over the course of the past few legislative sessions for critics to voice their opinions and for Connecticut lawmakers to respond.

So I’d rather sit through a marathon viewing of “Righteous Kill” than be subjected to late-to-the-party outrage from politicians and their spokespeople who appear to have just now realized, when it is politically useful, how the film and television tax credits work.

UPDATE: Flanagan just sent out the following response:

“No one is arguing that these tax credits are not valuable tools for the State of Connecticut to attract and keep new business here in the state – that’s not the point. It’s hypocritical of McMahon to say she built the WWE ‘without the help of big government’ when it was millions of taxpayer-funded, government-provided help that put billions back into her own pocket.”

“Furthermore her claims that she’d be a ‘different kind of Senator’ fall on deaf ears when she’s continually talking out of both sides of her mouth.”

“One might wonder why the WWE deserved to get these tax credits to begin with, considering the company was worth billions already and McMahon slashed its workforce by 10 percent earlier this year. That $3 million she accepted on WWE’s behalf could put more than 1,400 cops on our streets – a far more worthy use of taxpayer dollars than funding necrophilia, public sex and steroid-fueled female degradation masquerading as family entertainment or sport.”

A handful of state legislators, including House Speaker Christopher Donovan, D-Meriden and House Minority Leader Lawrence Cafero, R-Norwalk, made their way into an otherwise quiet capitol just after 4 p.m. this afternoon to hold a so-called technical session of the General Assembly.

The purpose of the gathering? To formally close-out the special budget session convened in late September and early October to vote on a variety of bills implementing the Democratic-majority’s two year spending plan.

Such tech sessions are just that – technical formalities that entail a quick vote and everyone goes home.

But Cafero took the opportunity to urge Democrats to instead keep the session open-ended so the full General Assembly could soon address the ongoing budget crisis, including a rising deficit and recently-announced troubles involving Connecticut’s credit-rating.

“It to me is imperative we as a legislative body get together and handle this crisis,” Cafero told the small audience of colleagues, along with two GOP staffers who were filming his comments. “We have a responsibility to prepare this state for the worst.”

Donovan and the few Democrats present did not respond, and simply voted in favor of ending the special session. Cafero voted “no” and this year’s historic budget battle concluded with a whimper.

Donovan afterward told reporters there is currently no business before the legislature requiring the special session remain open.

“We could come in at some point but we don’t have special sessions just maybe,” Donovan said. “There’s nothing before us right now.”

He downplayed Cafero’s concerns about the fiscal crisis, arguing he was more optimistic about the financial outlook of the state and country.

Donovan said he knew Cafero planned to make a statement but was unaware the Minority Leader was going to vote “no” against ending the technical session.

Legislative Democrats continue to talk about the possibility of overriding Republican Gov. M. Jodi Rell’s veto of a catch-all budget-related bill that, among other things, exempted the Judicial Branch from additional spending cuts and prevented the administration from privatizing/closing group homes.

There had been talk of the legislature reconvening this week for a possible veto session.

But yesterday Doug Whiting, spokesman for House Speaker Christopher Donovan, D-Meriden, in an e-mail to reporters said that was no longer a possibility.

“There will be NO House session on Thursday or Friday this week,” Whiting wrote. “We will continue discussing a possible override internally and let you know if anything develops for next week.”

But the chances of an override appear slim if impossible. A few Democratic Senators joined the Republican minority in voting against the legislation and at least one of those – Sen. Bob Duff, D-Norwalk - said he has no plans to change his mind.

All 24 Senate Democrats are needed to support an override.

Duff told me although he is concerned about the impact Rell’s veto could have on local courthouses – the Judicial Branch is weighing major changes to the Norwalk and Stamford operations as a result of the budget cuts – “there’s many parts of the bill I don’t like. There’s spending in there of money we don’t have now to spend.”

For example he opposes a section of the bill committing $1.3 million for a needs assessment for children of incarcerated parents.

UPDATE: House Speaker Christopher Donovan, D-Meriden, this afternoon told reporters the veto session is a dead issue and there are not enough votes in the Senate.

This went down last night on Comedy Central’s faux-conservative Colbert Report “political” program.

Stamford’s own self-described “independent Democrat” has been a favorite punching bag of Colbert’s since the 2006 Senate race when Lieberman declined an invitation to appear.

Ned Lamont, the Greenwich millionaire who challenged Lieberman for the party’s nomination, did brave an interview with Colbert, and I got a chance to tag along and report on their meeting.

It dawned on me while watching this last night how fantastic it would be if Colbert decided to try and take on Lieberman in 2012, should Lieberman decide to seek re-election. He could form Colbert for Connecticut or Connecticut for Colbert or somesuch.

You’d have a Democrat who is loved by many Republicans defending his seat from a fake Republican who is loved by many Democrats.

Somehow work in Alan Schlesinger, the Republican nominee abandoned by his party when Lamont won the 2006 Democratic primary and Lieberman formed the Connecticut for Lieberman Party to remain in the running, and you’ve got the makings of a mad entertaining, if somewhat confusing, 2012 race.

Just a few weeks after Chris Healy, the chairman of her party, criticized the federal stimulus plan, Republican Gov. M. Jodi Rell today proudly announced the investment has created/retained “more than 6,000 jobs in Connecticut.”

“The proof is in the numbers and they tell a positive story for Connecticut workers in terms of creating and preserving jobs,” Rell said. “From paving our roadways and upgrading bridges to retaining teaching jobs and weatherizing homes, we are using stimulus funds to put people to work while addressing pressing state needs.”

Those numbers are nowhere near the estimated 40,000 jobs initially promised earlier this year, but one could argue 6,000 is still better than nothing.

In the meantime it’s going to be interesting to see what the various Republicans vying to run against Democratic U.S. Senator Chris Dodd in 2010 say about the stimulus and how their positions square with Rell’s, particularly if she decides to seek re-election next year.

Linda McMahon does not appear to be a big fan. Neither does Peter Schiff. And Rob Simmons last month called the stimulus package a “failure.”

In a letter issued today to legislative leaders Republican Gov. M. Jodi Rell broke the news that Moody’s Investor Services downgraded the outlook of Connecticut’s general obligation bonds from stable to negative.

The state relies on favorable credit ratings from Moody’s, Fitch and Standard & Poor’s to help market its bonds, used to fund large projects, and to keep borrowing costs to a minimum.

Rell in her letter complained that Moody’s took action in response to the Democratic-majority legislature’s passing a new two-year budget “which relies excessively on borrowing and one-time fixes to close a deficit of about $8.5 billion.”

Rell, following a summer-long budget battle with the Democrats, allowed their budget to become law without her signature in September. She claimed it was done in protest, recognizing the state needed a budget two months into the current, 2009-10 fiscal year. Critics continue to argue it showed a lack of leadership.

Stamford Mayor and potential Democratic gubernatorial candidate Dannel Malloy shot out a press release blaming much of the situation on, obviously, Rell, who may or may not seek re-election in 2010.

“It was largely her inability to shepherd a smart fiscally-sound budget process from beginning to end that got us here,” Malloy said.

Sen. Minority Leader John McKinney, R-Fairfield, as expected, blamed the Democrats.

“By refusing to act with any sense of urgency to reduce the size and cost of state government, Democrats seem intent on leaving Connecticut in a perpetual financial crisis,” McKinney said in a press release.

Senate President Donald Williams, D-Brooklyn, of course, did not take kindly to the criticism.

“We all should be concerned about the structural holes in the budget and the challenges they represent. Now is not the time for the Governor to try to disown parts of the budget that she intially proposed – such as securitization, borrowing and one-time fixes.”

Oookkaaay. Now that you’ve all gotten that out of your systems, what does this really mean?

The most measured and informative response came from state Treasurer Denise Nappier, a Democrat, who back in July warned the state faced credit repercussions as the result of not having a two-year budget in place by the start of the fiscal year on July 1.

Instead of playing the blame game, Nappier said “in the final analysis both the Governor and the legislature struggled to strike a balance between what we need and what we can do without (in the budget). Moody’s perspective reinforces what the state already knows it must do, and that is head back to the drawing board and strengthen the state’s fiscal footing going forward.”

As for the immediate impact of Moody’s announcement, Nappier specified that the downgraded outlook from stable to negative does not necessarily mean Connecticut’s coveted Aa3 (excellent) credit-rating with Moody’s changes.

“A ‘negative outlook’ means that the state’s credit rating is under review by Moody’s for a possible change over a period of the next 18 to 24 months,” Nappier said. “It is not as signficant a step as placing a jurisdiction on a ‘watchlist,’ which implies that change in a credit rating is pending … It has been the history at Moody’s that a ‘negative outlook’ determination does not necessarily result in a credit downgrade.”

Or, as one insider at the capitol explained to me in layman’s terms, think of it in terms of someone who is considering breaking up with their signficant other, but first issues a letter that states “these are all the issues in the relationship. If you fix them maybe we can stay together.”

Although Malloy also took issue with Rell’s noting other states have been downgraded – “As if their shortcomings somehow excuse our own” – Nappier made the same point.

“Currently Moody’s has specifically placed a number of states on ‘negative outlook’: Arizona, Florida, Kentucky, Michigan, New Jersey, Ohio, Pennsylvania, Rhode Island and Wisconsin,” Nappier said. “This, obviously, is the result of the impact the Great Recession (as it is now referred to) has had on so many state budgets.”

The news about Moody’s comes just days ahead of Friday’s meeting of the Rell-chaired state Bond Commission, which will vote to authorize borrowing for a variety of projects the Governor in recent days has been touting in visits to Fairfield County and elsewhere.

Rell spokesman Rich Harris said he did not expect Moody’s decision to cause Rell or the commission to hold off on some of the projects.

“It’s important to remember the things that are being bonded, much of it is stuff we frankly simply have to do, like school construction,” Harris told me by phone. “The other projects on there are critical economic development projects or infrastructure investments that also have to be made simply for the maintenance of what we have.”

I did call over to Nappier’s office to find out if word about the downgrade might make it more difficult for Connecticut to market its bonds or in any way increase the state’s borrowing costs at this time, even if the credit-rating with Moody’s remains Aa3.

“We don’t think the outlook change will impact demand from a vast majority of our investors (but) it’s something investors will be watching,” Nappier spokesman Christine Shaw said.

As for impacting interest rates, Shaw said: “There’s so many variables which impact the state’s cost of borrowing we can’t even speculate. Often when official statements are released in Connecticut with bonds it is a representation of the state’s fiscal health at that time. But the price that we pay to borrow also depends on other transactions being marketed, investors’ liquidity, so the overall yield on our bonds really hinges on a number of factors that are very market specific. It’s very hard to anticipate.”

We ran a story over the weekend about the possible fate of J.M. Wright Technical School in Stamford, which was shuttered for the current and next school year in order to save what the Governor’s budget office estimated to be about $5 million annually.

But since the stated intention of the Connecticut Department of Education is to re-open Wright Tech at some point with an overhauled curriculum and mission, the state is paying an estimated $45,000 per year just to maintain the vacated building and prevent the aging structure from falling into further disrepair.

Another interesting fact: About four years ago, when the Department of Education was moving in the completely opposite direction and planning a renovation of Wright Tech, officials hired a Middletown-based architect – Bianco, Giolitto and Weston – to begin design work.

According to the Department of Education, $1,864,884 was spent on architectural fees before the decision was made to delay the renovation and close the school.

Just keep the above in mind whenever state lawmakers and officials talk about being responsible with taxpayer dollars…

Because of the tight security at Friday night’s fundraiser in Stamford for U.S. Sen. Chris Dodd, we had to reach many of the attendees by phone afterward for a reaction to the keynote address by U.S. President Barack Obama.

One of the first people I reached was state Democratic Party Chairman Nancy DiNardo, who was kind enough to pass her cell phone on to a couple of other prominent Democrats so I could speak to them.

During our discussion, DiNardo said she anticipates Obama will return to Connecticut in the run-up to the 2010 elections.

“I did not ask him, but can predict I think he’s going to be back here again,” she said.

Dodd faces a tough race and freshman U.S. Congressman Jim Himes of Greenwich will likely have to fight to keep his seat from falling back into Republican hands. Himes defeated Chris Shays last November.