State Senator Donald E. Williams, Jr.
May 3, 2008
Williams Wins Approval of Bill That Will Ensure Less Taxpayer Money is Being Spent to Grow Jobs in Other States
Thanks to ‘Golden Rule’ Bill - Connecticut Businesses Will Now Have Better Chance of Winning State Contracts and Keep More Tax Revenue and Jobs Here
Senate President Donald E. Williams, Jr. (D-Brooklyn) led the Senate in overwhelmingly approving a measure to help Connecticut businesses win Connecticut state contracts--keeping tax dollars and jobs in the state instead of shipping them elsewhere.
The Senate approved the bill at approximately 1 AM Saturday morning by a vote of 27-6, with several Republican offering their support. The President of the Chamber of Commerce of Eastern Connecticut, Tony Sheridan, also played a critical role in supporting the bill and educating businesses about its importance. According to the bill, which now goes to the House for consideration, Connecticut would give an advantage to in-state businesses competing with certain out-of-state companies for state contracts.
"This can be described as establishing the golden rule for Connecticut businesses," said Senator Williams. "We are leveling the playing field for our companies which compete for Connecticut state contracts with out-of-state businesses."
Currently, the State of Connecticut has hundreds of contracts, worth hundreds of millions of dollars, with out-of-state companies. Many of those companies are from states that have enacted laws that make it difficult--or even impossible--for Connecticut companies to compete for their state's contracts.
For example, a printing company from Michigan can win a state contract in Connecticut, but the same is not true for a Connecticut company competing in Michigan: Michigan sets aside all state printing contracts for Michigan companies.
"Connecticut companies deserve a level playing field and right now that doesn't exist," said Senator Williams. "We can't change the laws in other states but we can give an advantage to local companies when they're competing with certain out-of-state businesses, helping ensure that more of our tax dollars and jobs stay in Connecticut."
"I support the Senate Democrats' effort to create a level playing field for Connecticut businesses," said Sheridan at an earlier news conference to support the proposal. "The Chamber of Commerce of Eastern Connecticut has started a similar 'buy local' program and it is effective and popular. The Senate Democrats have my full support in their effort to keep tax dollars in Connecticut and help grow jobs."How are Connecticut companies being hurt? Twenty states have enacted some type of preference law, giving an advantage to local companies competing for in-state contracts. At the same time, Connecticut does not have a preference law.
How often does the State of Connecticut ship taxpayer money--and jobs--to out-of-state companies? It happens all the time. Information provided by the Department of Social Services (DSS), for example, shows that that agency alone is sending more than $117 million of taxpayer money to out-of-state companies: this includes $38 million to a firm in Georgia to process child support payments and $700,000 to a company in Arizona for actuarial and consulting services for Gov. Rell's Charter Oak Health Care Plan.
What can Connecticut do? Connecticut should enact a reciprocal preference law, joining the 35 other states which already have one. By doing this, Connecticut companies competing for in-state contracts would have an advantage over any competing company from one of the 20 states with a preference law.
How would local companies benefit from a reciprocal preference law?
More taxpayer money and jobs would stay in Connecticut if a reciprocal preference law was enacted because local companies would receive a comparable advantage when competing with companies from the following states:
Alabama: 5% for "preferred vendors"
Alaska: 5%-15% for various target vendors
Arkansas: 15% for correctional industry only
California: 5% for various target vendors (small and micro businesses, businesses operating in an in-state distressed municipality, business operating in an enterprise zone)
Delaware: General preference for in-state public works contractors
Florida: 5% for bidders that use in-state materials
Hawaii: 3%-15% for various types of vendors
Idaho: 10% for printing contracts only
Illinois: 10% for the use of Illinois coal and other various preferences
Indiana: 15% for in-state small businesses
Louisiana: 4%-10% for various target vendors
Michigan: all printing is set-aside for Michigan printers
Nevada: up to 10% for use of recycled products manufactured in-state
New Mexico: 5%
Ohio: 5%
Oregon: all printing set-aside for in-state printers
South Carolina: 7%
Virginia: 4% for coal mined in Virginia
West Virginia: 2.5%-5%
Wyoming: 5% for commodities and construction, 10% for printing
In addition, the law would deter other states from enacting preference laws which would hurt Connecticut companies competing for contracts.
Is it complicated to enact a reciprocal preference law? No. As an example, North Carolina's reciprocal preference law says:
North Carolina General Statutes 143-59(b) For the purpose of determining the low bidder on all contracts for equipment, materials, supplies, and services valued over [amount], a percent of increase shall be added to a bid of a nonresident bidder that is equal to the percent of increase, if any, that the State in which the bidder is a resident adds to bids from bidders who do not reside in that State.
- Resident bidder--A bidder that has paid unemployment taxes or income taxes in this State and whose principal place of business is located in this State.
- Principal place of business--The principal place from which the trade or business of the bidder is directed or managed.
What is the difference between a preference law and a reciprocal preference law?Connecticut is a net exporter of good and services and its companies have contracts in many states. When a state enacts a preference law, it disadvantages in-state businesses that apply for out-of state contracts when the contracting state has a reciprocal preference law (35 states). The disadvantage that business will receive out-of-state is equal to any advantage granted in-state. So, the businesses will have an advantage in one state but be at a comparable disadvantage in 35 others. In short, a preference law could do more harm than good.
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