Is Border War Over Jobs Brewing Between Connecticut And Massachusetts? [The Hartford Courant]

March 30--Springfield is riding high these days: a state takeover of its finances is firmly behind it, a casino could transform its downtown and hundreds of millions of dollars in development projects are underway.

Now, MassMutual Financial Group is reorganizing the employees in its Enfield and Springfield offices, with a net loss of at least 250 jobs for Connecticut. The insurer will make nearly $60 million in improvements to its Springfield headquarters, sweetened by $3.7 million in incentives from the state of Massachusetts.

Is this the first volley in a border war?

Economic development officials in both Connecticut and Massachusetts say no. But border wars have escalated in recent years elsewhere in the country. High unemployment and weak tax revenues have spurred high-stakes competition between neighboring states, most notably Texas and California, as well as Kansas and Missouri.

A recent study by Good Jobs First, an activist nonprofit group in Washington, D.C., said it was not unusual for border war raids to be accompanied by nine-figure subsidy packages.

Although Connecticut might not be in a full-scale border war with any of its neighboring states, there certainly have been skirmishes.

Connecticut has lured at least four major employers from New York, including two -- Blue Sky Studios and Navigator Management -- from Westchester County. Under the state's First Five program, the state lured NBC Sports</org> to Stamford and persuaded accounting giant Deloitte to increase jobs in the state at the expense of New York.

And Connecticut has been on the other end in at least one instance: Battery manufacturer Yardney Technical Products Inc. moved to Rhode Island when an incentive package was offered.

In this week's MassMutual example, one economist said that it was "ridiculous" for Massachusetts to be offering incentives just to move jobs a few miles across the state line.

"One of my complaints for years has been the striking failure of Connecticut to develop a strong regional collaboration with Massachusetts and Rhode Island," said Fred Carstensen, director of the Connecticut Center for Economic Analysis at the University of Connecticut in Storrs. "Southern New England should operate as one regional geography."

State economic development officials maintain that Connecticut has been working closely with Massachusetts through a decade-old partnership known as the "Knowledge Corridor." The initiative is an economic development strategy for the Hartford-Springfield-Northhampton region that has focused on collaboration among universities and colleges, marketing campaigns and transportation, they said.

"There's always going to be competition, but it's not warlike with Massachusetts," said Catherine Smith, commissioner of Connecticut'sDepartment of Economic and Community Development. "We try to make the natural alliances where we can, and the Knowledge Corridor is one of them."

Smith said she doesn't consider the shift of jobs from Enfield to Springfield as the start of a larger migration to Massachusetts.

Massachusetts economic development officials declined a request for an interview Thursday on the MassMutual incentive.

But Greg Bialecki, secretary of housing and economic development, issued this written statement: "We are pleased to be working with Connecticut on economic issues such as tourism and manufacturing. We believe that there is a lot we can accomplish by working together. In this particular case, we believe our efforts help save jobs for New England that would have otherwise left the region entirely."

Border wars are nothing new, and the earliest date to just after the Revolutionary War. The number increased after World War II and their size began escalating in the 1980s.

Greg LeRoy, executive director of Good Jobs First, said that moving jobs a modest number of miles isn't necessarily going to boost economic growth.

"You're just going to create new commuting patterns," LeRoy said. "People aren't going to move. There's no new personal income taxes, property taxes. Maybe they will buy lunch and pay state tax on a sandwich, but it is going to take a long time to get back the investment that way."

The job shift at MassMutual comes as the insurer moves to integrate its recent acquisition of the retirement services business that it acquired from The Hartford Financial Services Group on Jan. 1.

An as-yet-undetermined number of former employees of The Hartford in Simsbury and Windsor will shift to Enfield, where MassMutual will base its retirement services business. There were 1,600 MassMutual employees at the 430,000-square-foot campus in Enfield before the reorganization was announced.

Smith said that the state met with MassMutual shortly after the acquisition was announced and was told that the shifting of employees was tied to the company's wanting retirement services in Enfield and its U.S. insurance business at its Springfield headquarters.

The state came away with the impression that MassMutual has a strong commitment to Connecticut, Smith said. It also plans to renovate its Enfield campus, she said.

"We're always disappointed to have jobs move out of state," Smith said. "But we're so grateful they are keeping all the jobs from The Hartford."

Smith acknowledged that Connecticut hasn't been shy about talking with companies that might want to relocate from New York.

"There is a difference between Massachusetts and New York," Smith said. "In New York, [employers] are managing costs and they don't necessarily want to have all their employees in higher-cost areas such as Manhattan."

Smith said the state's economic development incentives, however, have been focused on long-established companies in the state, noting the recent packages given to Alexion Pharmaceuticals, Cigna and CareCentrix.

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