The study in contrasts these days between Massachusetts and Connecticut boils down to two words: General Electric.
When Fortune 500 behemoth GE announced Jan. 13 that it would move its world headquarters from Fairfield, Conn., to Boston's waterfront, one state celebrated while the other licked its wounds and regrouped.
Massachusetts augmented its reputation for strong metrics and a burgeoning tech hub in Boston's Seaport District adjacent to downtown. Even U.S. Sen. Elizabeth Warren, a Democrat and banking consumer advocate who long decried GE as a tax-dodging evil empire, called GE "a good fit" for Massachusetts.
GE stands to be the largest publicly traded company in the commonwealth.
Reactions in Connecticut were predictably partisan. Republicans said the bad news underscored the state's indifference – some say hostility, even – to business while Democratic Gov. Dannel Malloy in a statement right after the departure cited the need for his 30-year, $100 billion transportation infrastructure improvement plan to materialize.
Corporate disaffection in Connecticut had been simmering since last summer, when GE strongly objected to a tax revenue package that state legislators debated and said publicly it was exploring out-of-state options. Other major corporations within the state echoed, including iconic insurers Aetna Inc. and Travelers Cos., and pharmaceutical company Boehringer Ingelheim GmbH.
"It's an inhospitable state for businesses," state Sen. Scott Frantz, R-Greenwich, said in a Bond Buyer
Hartford, Conn.-based asset management firm Conning, in its State of the States ratings in November, pegged Connecticut 48th – third from the bottom -- by economic indicators that included housing price index, population growth and tax revenue growth.
Municipal observers say the Massachusetts incentives were relatively modest, given GE's size and that New York, Atlanta and Providence, R.I., were also dangling incentive carrots. Massachusetts offered up to $120 million through grants and other programs – probably for transportation infrastructure -- and Boston agreed to chip in up to $25 million in property tax relief.
About 15 years ago, pro football's New England Patriots received a package estimated at $70 for a new stadium in Foxborough, Mass., to keep the franchise from moving to Hartford, Conn. The deal included funds for improvements to a nearby watershed.
"It seems to me that it had more to do with corporate strategy than incentives," Anthony Figliola, vice president at Empire Government Strategies in Uniondale, N.Y., said of GE's move. "They see Boston as providing more opportunities such as the amount of universities – Tufts, BU [Boston University], Harvard, MIT.
"The waterfront has been tremendously revitalized and you have the feel of walkability in that Seaport area. When you look at research and development, Boston is one of the best places to be in the country."
Moody's Investors Service called the move a credit positive for Boston, whose general obligation bonds it rates Aaa with a stable outlook. Moody's referenced $47.5 million in new growth among the city's $128 billion tax base and a 15.6% increase in total assessed value in 2016.
"The news is credit negative for Connecticut and it underscores the challenges the state faces as its revenues and economy continue to underperform amid high fixed costs," said Moody's.
According to Moody's, the loss of GE and 200 jobs is a slight credit negative for Fairfield, a 60,000-population, Aaa-rated town just outside Bridgeport off Long Island Sound, though the town should be able to absorb the loss with its diverse tax base and favorable long-term prospects.
GE's 68-acre headquarters, said Moody's, accounts for merely 0.7% of Fairfield's tax base. Property taxes account for 87% of the town's revenues, according to Moody's, with GE contributing less than $2 million of Fairfield's $264 million in property taxes in fiscal 2015.
The jobs leaving Fairfield, said Moody's, represent only 2.7% of the town's total employment tax base and the staggered departure timetable will also help buffer the short-term sting.
Moody's noted that many affected employees live outside Fairfield and the surrounding region would share downward pressure on home prices due to relocation.
"Connecticut is a larger state, so the loss of 200-plus jobs is not a lot in the grand scheme," said Figliola. "But if a major employer takes 7,000 to 10,000 jobs out of state, that's seismic. In my backyard, Long Island, Northrop Grumman left behind about a thousand jobs. If GE were to leave Schenectady [N.Y.], that would be of major importance."
Still, the loss of GE was a psychic blow in Connecticut, where strong wealth metrics contrast with high debt, a slow economic recovery and an unfunded pension liability estimated at $47 billion.
"On the fiscal front, Connecticut's numbers are a mixed bag," said Alan Schankel, a managing director at
Even the bond rating agencies vary on their outlooks. Last March, Standard & Poor's revised its outlook on the state's AA rating to negative while Fitch Ratings went the opposite direction four months later, improving its outlook to stable.
"Wealthy Connecticut could well stabilize and even thrive if the U.S. economy continues its expansion, but should the nearly seven-year economic recovery run out of steam and turn negative, the state could be vulnerable to credit deterioration and downgrade," said Schankel.
According to Frantz, the picture of affluent Fairfield County in the state's southwest corner – home to waterfront homes and hedge-fund firms – conceals problems elsewhere.
"That definitely is not the image that's applicable to the rest of the state," he said. "You look at Hartford itself and you look at the [other] municipalities, and it's a disaster. They have huge taxes, they have all kinds of urban blight and they cannot balance a budget to save their lives.
"The rating agencies are interesting because often times they are a little bit late to the party," Frantz added. "They want to see the credit rating stay as high as possible for as long as they can for obvious reasons and they tend to be a little bit overly optimistic."
By contrast with Connecticut's partisan bickering, Massachusetts benefits from a Republican governor, Charlie Baker, working in harmony with a state legislature and a Boston mayor, Martin Walsh, that are both Democrats.
Baker and Walsh complement in other ways. Baker, who started in January 2015, brings a finance and corporate resume to the table as a former budget chief under Gov. William Weld in the mid-1990s and as a former chief executive of Harvard Pilgrim Health Care.
Walsh, who began his tenure one year before Baker's, has a strong construction-and-trades background.
"They're saying in unison, 'We want to grow this damn city,' " said Jim Stergios, executive director of the Boston-based free market think tank Pioneer Institute.
About $7 billion worth of construction is under way in Boston.
Massachusetts' growth, however, is Boston-centric. State officials in recent years have fretted that other parts of the state, notably older cities, have missed out on the prosperity.
Baker originally tried to sell GE on a move to a secondary city such as Lynn, 11 miles north along Boston's North Shore, but company officials held out for Boston. And while Boston got GE, Springfield -- 90 miles west -- got a casino.
The biggest GE loose end within Boston is transportation infrastructure, and the incentive package could help improve maneuverability around GE's presumed new home, the Seaport District, a 1,000-acre swath across Fort Point Channel from South Station that city officials have rebranded as a hip innovation district akin to Kendall Square in Cambridge. One Boston writer snidely called it "Uberstan."
The district is also home to the Boston Convention and Exhibition Center, the John Joseph Moakley United States Courthouse and the Institute for Contemporary Arts.
"This is about getting everybody into and out of the Seaport District," said Stergios.
South Station, Boston's busiest transportation hub, serves Amtrak, Massachusetts Bay Transportation Authority Red Line subway trains, commuter rail, bus travel and the Silver Line bus rapid transit that connects the station with the Seaport District and Logan International Airport.
Given the wobbly finances of the MBTA, which is under a fiscal control board, private-sector infusions to mass transit are obviously on the table. Some Red Line trains date as far back as the late 1960s – a major talking point during last winter's fiasco when a record 109 inches of snow crippled the system.
The state, said Stergios, could also bolster maritime and heliport service in the district.
GE's planned relocation has invigorated talks about whether to rehabilitate or rebuild the nearby Northern Avenue Bridge, one of several Fort Point Channel crossings. City officials said they would begin to dismantle the rickety, steel-swing bridge – which opens when boats pass underneath -- in March.
The city closed the bridge in December 2014 and U.S. Coast Guard officials later warned it could collapse into the channel. Preservationists want to restore it and make it for pedestrians.
"The Northern Avenue Bridge is a real puzzle to all of us," said Stergios. "It does very little to address the problems. The real issue is the traffic patterns in the Seaport District and the connections to [Interstate] 93."
