General Electric CEO Jeffrey Immelt appeared on CNBC Thursday and said the company’s highly anticipated decision to relocate its headquarters from Fairfield, Connecticut, would be decided by the end of the year.
Ankit Ajmera of Reuters laid out how the decision could impact Connecticut, which has been slow to recover from the financial crisis:
General Electric Co (GE.N) is expected to decide on a new location for its headquarters in the fourth quarter of this year, Chief Executive Jeff Immelt told CNBC.
The company has been looking at moving its headquarters out of Fairfield, Connecticut after lawmakers passed a budget in June that includes $1.2 billion in tax increases despite protests from some of the state’s biggest corporations.
“We want to be in some place where people support job creation, which is attractive to talent, good cost of living, and it is supportive in what a high-tech exporter has to be all about,” Immelt said in an interview.
The loss of GE is likely to be a huge blow to Connecticut, which bled thousands of jobs after the financial crisis and has been one of the slowest states to recover from the recession.
The state’s gross domestic product grew less than 1 percent in 2014, compared with a 2.4 percent growth for the United States as a whole.
The Wall Street Journal’s Ted Mann summarized GE’s ongoing concern with maintaining its headquarters in Connecticut:
The first sign of trouble in Connecticut arrived in Republican state Rep. John Frey’s inbox in June, when the legislature was preparing to vote on the budget. The message was from the wife of Jeffrey Bornstein, GE’s chief financial officer, seeking to set up a phone conversation.
In that call, Mr. Bornstein, a constituent of Mr. Frey, said the company would pull up stakes if the proposed tax package was passed into law, according to Mr. Frey in an interview.
One of the changes in the Connecticut budget that GE took issue with was a cap on the amount of prior-year tax losses companies could use to offset their taxes, according to people familiar with the matter and emails from the company’s lobbyists obtained under the Freedom of Information Act.
The change was frustrating to GE because it came as the company is in the midst of selling off most of GE Capital and planned to use the built-up losses to offset any gains from the sales, one of these people said.
The potential loss of GE won’t cost Connecticut much in corporate income tax. People familiar with the matter said the company likely pays the state’s minimum for corporations: just $250 a year. That amount doesn’t include much larger payments, like the company’s property taxes on its Fairfield office campus, the millions paid each year in personal income taxes by the company’s employees and substantial gifts to state charities and nonprofits.
Connecticut officials say the state is juggling balancing its budget while maintaining jobs in the state, noting that the state will make efforts to keep GE at the right price.
“I think clearly we would all be supportive of a reasonable offer and a reasonable effort to keep GE here,” said Senate President Martin Looney, a Democrat from New Haven.
Christopher Keating of the Hartford Courant explained how the state’s government reactioned to Immelt’s interview:
Immelt’s comments prompted Senate Republican leader Len Fasano to again call for a special legislative session to reconsider corporate taxes — including the “combined reporting’’ method of calculating the corporate income tax that GE has sharply criticized.
The reporting method, already used by some companies, becomes mandatory at the start of 2016. It would affect corporations with operations in multiple states.
Fasano had already called for such a session last month, but was rebuffed by Gov. Dannel P. Malloy and Senate Democrats. Malloy’s spokesman said Thursday there are still no plans to call a special session.
“Clearly, GE was not bluffing in June when they said proposed tax hikes in the state budget were making them seriously consider whether it makes any sense to continue to be located in this state,” Fasano wrote in a letter to Malloy and legislative leaders. “They were not speaking in hyperboles. … Now Connecticut is on the brink of losing one of our state’s biggest assets and crowning achievements.
“If you call a special session now, we can send a message together, not just to GE, but to all businesses, that we are committed to a strong business community … We need to rethink the way our state treats businesses of all sizes. We need to rethink the unitary tax, tax credits and loss carry-forwards.
General Electric has about 800 headquarters employees in Fairfield and 5,700 employees in total in Connecticut, mostly with GE Capital, which is largely being sold. The company reissued its statement Thursday about any plans to move, saying it formed a committee to assess the company’s optio
